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DOE Issues Two Smart Grid Funding Opportunity Announcements
(Get a .pdf of this article.)

By V&E lawyer Jo Ann Biggs
July 8, 2009

Smart Grid Investment Grant Program
Smart Grid Demonstrations

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The American Recovery and Reinvestment Act of 2009 (the Recovery Act; also known as the Stimulus Act or ARRA) amended the Energy Independence and Security Act of 2007 to increase the federal funding available for Smart Grid Investment Grants and Smart Grid Demonstration Grants from the U.S. Department of Energy (DOE). On June 25, 2009, DOE issued two Financial Assistance Funding Opportunity Announcements (FOAs) related to the funding available for Smart Grid Investment Grants and Smart Grid Demonstrations under the Recovery Act. These FOAs provide the requirements for applications to receive federal funds for eligible Smart Grid projects and the deadlines for those applications. A brief description of each FOA is provided below.

Smart Grid Investment Grant Program

The DOE’s Office of Electricity Delivery and Energy Reliability issued its FOA for the Smart Grid Investment Grant Program, which indicates that approximately $3.4 billion is expected to be available for new awards under the FOA. Awards are available for up to 50 percent of eligible project costs. Approximately 40 percent of the available funds will be allocated for smaller projects in which the DOE’s share would be in the range of $300,000 to $20 million. Sixty percent of the available funds will be allocated for larger projects in which the DOE’s share would be in the range of $20 million to $200 million. While DOE expressed a preference for a shorter period of performance, the period of performance for the eligible projects specified in the FOA is three years. Eligible projects are required to support or advance one or more of the “smart grid functions” identified in the Energy Independence and Security Act of 2007 (as amended by the Recovery Act), including the following:

• the ability to develop, store, send, and receive digital information concerning electricity use, costs, prices, time of use, nature of use, storage, or other information relevant to device, grid, or utility operations, to or from or by means of the electric utility system, through one or a combination of devices and technologies;

• the ability to develop, store, send, and receive digital information concerning electricity use, costs, prices, time of use, nature of use, storage, or other information relevant to device, grid, or utility operations to or from a computer or other control device;

• the ability to measure or monitor electricity use as a function of time of day, power quality characteristics such as voltage level, current, cycles per second, or source or type of generation and to store, synthesize, or report that information by digital means;

• the ability to sense and localize disruptions or changes in power flows on the grid and communicate such information instantaneously and automatically for purposes of enabling automatic protective responses to sustain reliability and security of grid operations;

• the ability to detect, prevent, communicate with regard to, respond to, or recover from system security threats, including cyber-security threats and terrorism, using digital information, media, and devices;

• the ability of any appliance or machine to respond to such signals, measurements, or communications automatically or in a manner programmed by its owner or operator without independent human intervention;

• the ability to use digital information to operate functionalities on the electric utility grid that were previously electro-mechanical or manual;

• the ability to use digital controls to manage and modify electricity demand, enable congestion management, assist in voltage control, provide operating reserves, and provide frequency regulation.

The FOA provides a detailed description of the information that applicants should provide and indicates that the Project Plan (which is the only portion of an application to be considered by the DOE’s technical merit reviewers of the applications) must not exceed 40 pages.

Applications will be evaluated in three phases:

Phase	Letters of Intent Due Date	Application Due Date	Anticipated Award Schedule
Phase 1	July 16, 2009	August 6, 2009	October 2009
Phase 2	October 23, 2009	November 4, 2009	March 2010
Phase 3	February 10, 2010	March 3, 2010	June 2010

The FOA indicates that applicants are requested, but not required, to submit a letter
of intent for each phase in which they intend to submit an application. The FOA also
specifically caveats these application deadlines with the following: “DOE cannot predict
at this time that funds will remain available beyond awards provided after the first due date.”

It is possible, therefore, that the DOE will make awards to applicants in the first phase of
the Application Process in an amount equal to the $3.4 billion available in this program.
The Phase 1 deadlines for filing the requested letter of intent (July 16) and application
(August 6) are rapidly approaching, and persons interested in participating in Phase 1
of this program should be preparing their filings.

Smart Grid Demonstrations

The DOE’s National Energy Technology Laboratory issued an FOA for “Recovery Act - Smart Grid Demonstrations” under which it intends to accept only applications that specifically address the following two program areas of interest:

(1) Regional Demonstrations, which should be carried out in cooperation and collaboration with the electric utility that owns the grid facilities. The smart grid technologies of interest include advanced digital technologies for use in planning and operations of the electric power system and the electricity markets such as microprocessor-based measurement and control, communications, computing, and information.

(2) Grid-Scale Energy Storage Demonstrations, which should be carried out in cooperation and collaboration with the electric utility or ISO/RTO that controls the grid facilities in which the energy storage system is being installed. Energy storage systems include the following technologies: advanced battery systems (including flow batteries), ultracapacitors, flywheels, and compressed air energy systems. Areas of application include wind and PV integration, upgrade deferral of transmission and distribution assets, congestion relief, system regulation, utility load shifting, ramping control, and distributed energy storage.

Approximately $615 million is expected to be available for awards under this FOA. The FOA also specifies that the anticipated award size for Regional Demonstration projects is up to $100 million. For Energy Storage projects, the anticipated award sizes range from $25 million to $60 million, depending on the type of storage project proposed. The FOA contains a very detailed description of the information that applications should contain as well as a description of the criteria upon which applications will be evaluated. Applications are due August 26, 2009. DOE anticipates notifying applicants selected for award by early November 2009 and making awards beginning in December 2009/ January 2010.

For further information on this topic, please contact V&E attorney Jo Ann Biggs. Visit our website to learn more about Vinson & Elkins’ Energy, Energy Regulation, and Climate Change Regulation practices.