On June 25, 2009, the Department of Energy (DOE) announced that $3.4 billion in federal grants will be available through the Smart Grid Investment Grant Program (SGIG) and an additional $615 million will be available under the separate Smart Grid Demonstration Program (SGDP). Funding for these programs was provided in the American Recovery and Reinvestment Act (ARRA), which gives a preference to projects that can be started and completed quickly.
This update describes the funding available under these programs, eligibility requirements, application requirements and deadlines, and DOE's process for reviewing applications.
SMART GRID INVESTMENT GRANT PROGRAM
The SGIG was originally authorized under Section 1306 of the Energy Independence and Security Act of 2007, and recently modified under the ARRA. The purpose of the SGIG is to spur the deployment and integration of smart grid technology to modernize the nation's electricity grid. Smart grid investments that support the manufacturing, purchasing, and installation of smart grid devices and related technologies for both residential and commercial use are eligible.
How Much Funding Is Available?
DOE has allocated approximately $3.4 billion in federal grant funding under the SGIG for smart grid development projects. Funding for the SGIG is divided into two categories: small projects ranging from $300,000 to $20 million, which will receive 40% of the funding allocation, and larger projects ranging from $20 million to $200 million, which will receive 60% of the funds.
Federal grants issued under the SGIG will cover up to 50% of all eligible project costs; at least 50% of the cost must come from non-federal sources.
In an earlier notice, DOE had indicated that it would provide a separate funding allocation within the SGIG for phasor management units (PMUs), but the June 25 announcement requires PMUs to compete for funding under the SGIG on equal footing with all of the other smart grid technologies.
Who May Apply?
The solicitation for the SGIG lists numerous eligible applicants, including, but not restricted to:
- electric power companies, including investor-owned utilities, electric cooperatives, regional transmission organizations, and municipal and public utility districts;
- state, county, local and municipal government agencies;
- residential, commercial, industrial and agricultural consumers;
- appliance and electric equipment manufacturers;
- software and communications and information service providers; and
- other private entities, including retail electricity suppliers, independent power producers and demand response service providers.
DOE's National Laboratories and all federally funded research and development centers are ineligible for SGIG funds.
Foreign entities are eligible for SGIG grant funds, but all projects funded must be performed within the United States.
Eligible applicants are not required to have all regulatory approvals at the time of application but must describe within the application how any outstanding regulatory approvals will be attained. Examples include applications that require approvals for cost recovery or dynamic pricing tariffs.
Applicants may submit multiple applications for funding under the SGIG on the condition that each application is for a distinctly different project. Proposed projects, however, are ineligible for awards under both the SGIG and the SGDP.
What Projects Are Eligible?
Eligible Projects should advance one or more of the "smart grid functions" identified by DOE. These functions include the development of technology to:
- receive, measure and store information from the grid and other digital devices regarding electricity use and prices;
- detect and respond instantaneously to changes in power flow;
- detect and prevent security threats to the grid;
- manage appliances, machines and grid functions without human intervention; and
- use digital controls to manage and modify electricity demand and congestion.
Eligible projects must be completed within three years, and DOE has expressed a preference for projects that will be completed in a shorter period of time.
Types of qualifying investments under the SGIG also include:
- expenses for designing, manufacturing, etc., internal devices that allow an appliance (for purposes of establishing energy conservation standards) to engage in smart grid functions;
- expenses incurred by the manufacturer or owner of specialized industrial or commercial equipment to modify the equipment or install certain devices so the equipment can engage in smart grid functions;
- expenses incurred by electric utilities to fit transmission and distribution equipment with specific devices to enable smart grid functions;
- expenses incurred by the electric utility, distributor or marketer and its customers to purchase and install smart grid metering devices;
- purchase costs for any software needed to enable a computer/device to engage in smart grid functions;
- expenses incurred by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) for smart grid equipment purchase and installation;
- expenditures for integrating/monitoring generators (other than those owned by electric utilities) into the grid using smart grid functions; and
- expenditures related to devices allowing electric/hybrid vehicles to engage in smart grid functions (except electricity storage for vehicles).
What Are The Steps For Applying?
First: All applicants must have a DUNS number and must be registered in the Central Contractor Registration (CCR) database to be eligible for an award under the SGIG. A DUNS number is a unique nine-digit identification number issued by Dunn and Bradstreet that can be obtained by accessing http://fedgov.dnb.com/webform. Registration in the CCR database can be completed by visiting http://www.ccr.gov/. DOE recommends that applicants allow 21 days to complete the registration process.
Second: All registered applicants intending to apply are highly encouraged to submit a Letter of Intent to DOE by July 16, 2009 for the first round, October 23, 2009 for the second round, and March 3, 2010 for the third round of funding. Although a Letter of Intent is not required, DOE strongly recommends submitting a Letter of Intent to expedite an application's review process. Letters of Intent should include: the name of the lead and supporting organizations, whether an application is for a small or large project, the total project cost, and the applicable topic area.
Third: Applicants must designate their proposed project within one of the six SGIG topic areas based on the primary objectives of their project or the largest portion of the project that will receive funding. The SGIG topic areas include:
- Equipment Manufacturing
- Customer Systems
- Advanced Metering Infrastructure
- Electric Distribution Systems
- Electric Transmission Systems
- Integrated and/or Crosscutting Systems
Fourth: Applicants are required to submit a project plan with the following components: 1) a project abstract; 2) a description of the proposed project with relevant tasks and schedules; 3) a management plan for the project; 4) a description of how the project will advance the adoption and integration of smart grid functions; 5) a technical approach to ensuring cyber security and the project's interoperability with the smart grid system; and 6) a detailed project cost–and-benefit analysis.
DOE considers cyber security an extremely important component to all applications. Applicants must address cyber security at every phase of the project from design and procurement to ongoing operation, and must provide assurances that the cyber security that is employed will protect against broad-based systemic failures in the electric grid. Meritorious applications that fail to meet these standards may be denied funding.
Additionally, DOE requires applicants to provide an in-depth explanation of the required cost-and-benefit analysis. Under this analysis, applicants must include an explanation of the data collection methods used to determine the overall benefit of the project, quantitative estimates of the project's impact on lowering electricity prices, peak demand, greenhouse gases and consumption of oil, among other things. Applicants must also provide an explanation of all relevant costs. Awardees are required to reach an agreement with DOE regarding the format and type of data that will be collected under the cost-and-benefit analysis or may subsequently be refused funding.
How Are Applications Reviewed?
Applications that pass an initial review will be subject to a merit review based on the four criteria outlined in the SGIG funding solicitation. These criteria and their corresponding levels of importance include an assessment of the adequacy of:
- the technical approach for enabling smart grid functions (40%);
- the plan for project task, schedule, management, qualifications and risks (25%);
- the technical approach for addressing interoperability and cyber security (20%); and
- the plan for data collection and analysis of project costs and benefits (15%).
Furthermore, DOE is no longer considering the number of jobs created by a proposed project in its merit evaluation, but still requires awardees to report this information quarterly, as required by Section 1512 of the ARRA.
In addition to the noted merit review criteria, DOE maintains discretion to award less meritorious applications funding if they advance one of DOE's policies. These policies include the existence of different types and sizes of organizations, different geographic areas, different topic areas, a shortened project performance period, documentation showing that the project supports the goals of the AR RA or a cost share exceeding the minimum required 50%.
DOE anticipates notifying awardees of SGIG funds within 90 days following an application deadline. All applications that are not awarded funding in the first round will be considered in the second and third rounds, should remaining funds exist following round one.
What Are The Application Deadlines?
For the SGIG, DOE is employing a phased approach for grant application deadlines with three rounds of applications: August 6, 2009, November 4, 2009 and March 3, 2010. Applicants are, however, encouraged to apply to the first round early since DOE does not guarantee that funds will exist beyond this round.
Additional information regarding the SGIG program funding solicitation is available at http://www.grants.gov/search/search.do?mode=VIEW&oppId=46833.
SMART GRID DEMONSTRATION PROGRAM
The SGDP was authorized under Section 1304 of the Energy Independence and Security Act of 2007 and also recently amended under the ARRA. The goal of the SGDP is to demonstrate more cost effective and new smart grid technologies in order to improve upon those already in common practice in the industry or those that are likely to be utilized in the near future.
How Much Funding Is Available?
Approximately $615 million in federal funds are available under the SGDP. DOE will provide up to 50% of all eligible project costs, however these funds will be provided as cooperative agreements rather than grants. There is no award ceiling or floor, but DOE has estimated award sizes for the two program areas of interests identified by DOE in the solicitation:
- Regional Demonstrations For Smart Grid. DOE intends to select eight to 12 applications within this category. DOE will award up to $100 million (out of the total of $615 million for the program) for projects in this category.
- Grid-Scale Energy Storage Demonstrations. DOE intends to select 12 to 19 applications within this category and will distribute the remaining funds (those not distributed to Regional Demonstrations) to projects in this category. DOE will issue awards for grid-scale energy projects based on five subareas identified in the solicitation. The following is a breakdown of the anticipated award sizes and number of applications that will be selected for each subarea:
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- Battery Storage for Utility Load Shifting or for Wind Farm Diurnam Operations and Ramping Control – $40 million to $50 million and one to two applications selected.
- Frequency Regulation Ancillary Services – $40 million to $50 million and one to two applications selected.
- Distributed Energy Storage for Grid Support – $25 million and four to five applications selected.
- Compressed Air Energy Storage – $50 million to $60 million and one to four applications selected.
- Demonstration of Promising Energy Storage Technologies – $25 million and five to six applications selected.
Who May Apply?
All domestic entities are eligible to apply for funds under the SGDP, however, foreign entities are ineligible for SGDP funding. Eligible applicants include, but are not limited to, state and local government agencies, institutions of higher education, and nonprofit and for-profit organizations. Federal agencies and Federally Funded Research and Development Center Contractors are ineligible for funds under this program.
Applicants must also provide a non-federally funded 50% cost share for the total costs of all demonstration and commercial projects. However, DOE does encourage applicants to propose projects that exceed the minimum 50% cost share, as they may be ranked higher in the selection process.
What Projects Are Eligible?
Only "demonstration" projects are eligible for funds under the SGDP solicitation. Proposed projects should demonstrate how existing and emerging smart grid technologies can be innovatively applied and integrated, and should be readily available for replication across the country. Although proposed projects may include incidental research and development work, the overall purpose of the project must be demonstration.
As noted above, the solicitation for the SGDP contains two program areas of interest: Regional Demonstrations for Smart Grid and Grid-Scale Energy Storage Demonstrations. Applicants should select the program area that applies best to the majority of the project and must target only one area of interest for each application.
DOE anticipates awarding funds to demonstration projects with project periods of three to five years.
How Are Applications Reviewed?
Applications that pass an initial review will be subject to a merit review based on four criteria outlined in the SGDP funding solicitation. These criteria and their corresponding levels of importance include an assessment of the:
- project's approach, including the Statement of Project Objectives, completeness of project goals outlined, and validity of the proposed project and likelihood of its success (35%);
- significance and impact of the project (25%);
- interoperability and cyber security of the project (20%); and
- completeness and qualifications of the project's team and level of commitment to the proposed project (20%).
Similar to the review of applications under the SGIG, DOE will consider a variety of additional program policy factors during the selection process, including projects that advance the goals of the ARRA, represent diverse technical approaches and have a higher than 50% cost share.
What Are The Deadlines For Applying?
All applications to the SGDP are due by August 26, 2009. This program does not require applicants to submit a Letter of Intent prior to submitting a full application for SGDP funding. Unlike the phased funding approach used by DOE under the SGIG solicitation, there will only be one round for funds under the SGDP.
Additional information regarding the SGDP funding solicitation is available at http://www.grants.gov/search/search.do?mode=VIEW&oppId=46836.
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