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Smart-Grid Stimulus

Utilities hurry up and wait to apply for grant money.

Fortnightly Magazine - June 2009

outcomes and directions for the smart-grid community and supporting industries.

To understand this conundrum, it’s useful to review the regulatory background—what the Recovery Act requires and what guidance it provides, the role of DOE’s initial, but withdrawn, guidance for funding, the role of the National Institute of Standards and Technology (NIST) around standards, guidance from FERC, the potential impact of new federal smart-grid legislation, and the role of separate state efforts.

Evolving Guidance

The Recovery Act provides minimal guidance on how the money should be spent. Very broad areas are listed ( e.g., demand response, energy storage, security, reliability, supply disruptions) as are the general uses ( e.g., equipment, development, demonstration, deployment).

The Office of Electricity Delivery and Energy Reliability (OEDER) within the DOE will oversee much of the grant making. $100 million will go to worker training, $80 million for studying future demand transmission requirements and $10 million for the NIST to establish a framework on smart-grid interoperability. The use of the balance of the funds isn’t prescribed as to amounts, but gives latitude under some circumstances for the Secretary of Energy to use funds for transmission improvements and the hiring of staff. Funding earmarked for EISA Section 1306—the matching grant investment program—will represent at most a 50-percent cost share with the grantee. Of significance is that the $4.5 billion of smart-grid funding is only 10 percent of the total Recovery Act funds for which DOE finds itself responsible. (Congress provided another $27 billion to DOE as part of general appropriations for 2009). Given that the goal is to commit all Recovery Act funds within 18 months, DOE has a lot to accomplish in a short period of time.

There’s a raft of unresolved questions about how this funding will, or should, be used. The Recovery Act required the Secretary of Energy to issue guidance within 30 days of the Recovery’s Act’s passage in the form of a notice of intent (NOI) to issue a funding opportunity announcement (FOA) for the regional demonstration projects, and 60 days for the investment grant program. DOE released the NOI and a draft FOA on April 16. The NOI provided instructions about eligibility criteria for projects and grantees, and the draft FOA outlined the department’s plans for a formal solicitation for proposals.

At this writing, DOE was assimilating comments it received during the April NOI’s 20-day public comment period. However, even though the NOI and FOA aren’t yet finalized, prospective grantees already have begun the process of fine-tuning grant applications, in anticipation of a final FOA scheduled for release in mid-June. Whether the NOI and FOA resolve funding priorities is another question.

Within OEDER there are many different program areas, including those held under the research and development branch. Smart-grid monies likely will be sought after, and allocated, across all the program-area sponsors ranging from energy-system security, energy storage, cyber security, superconductivity, integration of renewables, transmission and smart metering and distribution automation systems. The $4.5 billion in total funding, less-specified commitments ( e.g., training, etc.) may devolve quickly into $200 million to $400 million