Energy Department Seeks Electric Grid Proposals
Earlier this month, the U.S. Department of Energy announced a Request for Proposals for its Transmission Facilitation Program, which aims to expand and modernize the nation’s electric grid.
“There’s no way around it: to realize the full benefit of the nation’s goal of 100% clean electricity by 2035, we need to more than double our grid capacity,” said U.S. Secretary of Energy Jennifer M. Granholm.
“President Biden’s historic clean energy legislation is helping modernize the nation’s transmission to deliver reliable, more affordable energy to every American community in turn driving down costs for American families and generating good paying jobs for American workers.”
About the RFP
In its second round of funding, the Transmission Facilitation Program is a revolving fund supported by the bipartisan infrastructure law to overcome financial hurdles facing large-scale new and upgraded transmission lines. It is administered by the Grid Deployment Office.
The department anticipates providing up to $1.2 billion in federal support to accelerate transmission buildout through capacity contracts, an innovative approach that increases the confidence of investors and potential customers while reducing risk for projects.
According to the DOE’s recent National Transmission Needs Study, by 2035, the United States must more than double existing regional transmission capacity and expand existing interregional transmission capacity by more than fivefold to maintain reliability, improve resilience to extreme weather and other disruptive events, relieve congestion, and provide access to low-cost clean energy.
Additionally, regional and interregional transmission needs must increase significantly by 2050 to meet evolving demand, increasingly extreme weather and the needs of the clean energy transformation.
The latest RFP will reportedly use capacity contracts to commit the DOE to purchase up to 50% of the maximum capacity of a transmission line. Transmission infrastructure financing relies on demonstrating to potential investors that the line has committed customers; however, customers often can’t commit until they are sure a project will be developed and available when needed, the department says.
The DOE’s capacity contract reportedly establishes the agency as an anchor customer who can provide certainty for potential financers and other customers. Additionally, it will sell its capacity rights in these projects to other customers to recover its costs.
By offering capacity contracts to late-stage and “shovel ready” projects, the DOE explains it can increase the confidence of investors and potential customers and reduce the risk of project developers under-building or under-sizing needed transmission capacity projects.
The department adds that, in response to industry comments, the application and review process for the RFP is split into two parts to help better manage the administrative burden on applicants. The submission deadline for Part 1 of the application is March 11, 2024.
A public webinar to provide additional information will be held at 3 p.m. ET on Feb. 21, 2024. Registration is required.
The Grid Deployment Office adds it expects to soon release a separate RFP focused on public-private partnerships to build transmission infrastructure that connects isolated microgrids to the grid in Alaska, Hawaii and U.S. territories.
Other DOE Grid Funding
In September, the DOE announced that nine states and five tribal nations will receive funding as the seventh cohort of Grid Resilience State and Tribal Formula Grants.
According to the DOE’s news release, the combined $125 million in grants could help modernize the electric grid in order to reduce the impacts of climate-driven extreme weather and natural disasters while also helping to ensure the power sector’s reliability.
The funding is expected to enable communities to access affordable, reliable and clean electricity while helping deliver Biden's clean energy goals.
The release states that the cohort of nine states and five tribes will obtain a combined total of $125 million. Since May 2023, the DOE has reportedly given out over $580.5 million in Grid Resilience State and Tribal Formula Grants due to the Investing in America Agenda.
Prior to that, in 2022, the DOE announced the launch of its “Building a Better Grid” initiative to modernize the country’s national grid as party of the bipartisan infrastructure bill.
Through the program, the department would work with community and industry stakeholders to identify national transmission needs and work to create facilities that use clean electricity and zero emissions.
The initiative was expected to help reach President Biden’s goal of 100% clean electricity by 2035 and a zero emissions economy by 2050. The program planned to make the U.S. power grid more resilient against the impacts of climate change, increase access to affordability and reliable clean energy and create jobs across industry sectors.
According to the DOE, studies from the past decade had found that 70% of the grid’s transmission lines and transformers are over 25 years old. Independent estimates had also found that electricity transmission systems need to be expanded by 60% by 2030 and could have also needed to triple it by 2050.