Energy and Clean Technology Alert: Smart Grid Investment Grant Program Deadlines Looming

7/15/2009

General Info

The Department of Energy’s (DOE) Smart Grid Investment Grant Program (SGIG) aims to accelerate the modernization of the nation’s electric transmission and distribution systems. It will pursue this goal through merit-based, competitive solicitation of projects to receive federal grants for up to 50% of eligible project costs and by promoting investments in smart grid technologies, tools, and techniques that increase flexibility, functionality, interoperability, cyber-security, situational awareness, and operational efficiency.

Eligible investments and projects will support the manufacturing, purchasing, and installation of smart grid devices and related technologies, tools, and techniques for immediate commercial use in electric system and customer-side applications, including electric transmission systems, electric distribution systems, building systems, advanced metering, appliances, and equipment. The ultimate aim is to enable smart grid functions on the electric system as soon as possible.

$3.4 billion is expected to be available for new awards under this announcement. There are two categories:

Smaller projects in which the federal share would be in the range of $300,000 to $20 million.
Larger projects in which the federal cost share would be in the range of $20 million to $200 million.

Approximately 40% of SGIG funding will be allocated for smaller projects, while the remainder will be allocated for larger projects.

The following are the critical milestone dates for both Letters of Intent to Apply (LOI) and Applications:

Phase	LOI Due Date	Application Due Date	Expected Award Notification	Expected Award Payment
1	July 16, 2009	August 6, 2009	By Nov. 5, 2009	Oct./Nov. 2009
2	Oct. 23, 2009	Nov. 4, 2009	By Feb. 3, 2010	March 2010
3	Feb. 10, 2010	March 3, 2010	By June 2, 2010	June 2010

Qualifications for SGIG Grant

The proposed applicants, projects, and investments must meet the eligibility requirements, which are summarized below.

Eligible Applicants

Eligible applicants include individual entities or teams of entities. Organizations eligible for both lead and/or supporting roles include, but are not limited to:

Electric power companies, utilities, cooperatives, and organizations
State, county, local, or municipal government agencies
Universities and colleges
Electricity consumers (singly or aggregated together)
Appliance manufacturers
Electrical equipment manufacturers
Software providers
Communications and information services providers
Other private companies (retail electricity suppliers, energy services companies, independent power producers, demand response services providers, metering services providers, project developers, electricity marketers, and consultants).

Eligible Projects

Eligible projects will help implement digital upgrades to:

Electric transmission and distribution systems
Residential, commercial, industrial, and public buildings
Appliances
Equipment that connect with those systems.

The DOE will favor projects that support the two-way flow of both electric power and information between electric power companies and electricity consumers and projects that specifically address interoperability (the capability of two or more components to share and use information securely and effectively with little or no inconvenience to the user).

It is expected that SGIG grants will be awarded primarily to projects that enable the entire electricity supply and delivery chain (including power plants, transmission lines, substations, distribution lines, meters, and customer systems) to operate in a more reliable, efficient, secure, and affordable manner, through operational improvements in areas such as:

Outage detection
Equipment maintenance
Asset deferral
Reduced environmental impact.

To be eligible for a SGIG grant, the project must be completed within 3 years of the grant award. In awarding grants, however, the DOE has a preference for a shorter period of performance.

Finally, the eligible projects are required to support or advance one or more of the “smart grid functions” as listed in the Energy Independence and Security Act §1306(d). Among the listed functions are:

The ability to generate and transmit digital information concerning electricity use and costs
The ability to measure or monitor electricity use
The ability to automatically sense and fix power flows disruptions
The ability to prevent cyber-security threats and terrorism.

The full list of eligible functions can be found here: Energy Independence and Security Act §1306(d).

Eligible Investments

It appears that approved expenditures are those incurred to purchase, design, manufacture, or install smart grid functioning technology.

Some expenditures are explicitly ineligible for SGIG consideration. Among the excluded expenditures are those for:

Projects that fail to incorporate the interoperability standards, once they are published
Ongoing salaries, benefits, or personnel costs not incurred in the initial installation, training, or startup of smart grid functions
Travel, lodging, or meals
Routine operation, billing, customer relations, security, and maintenance expenditures.

The full list of eligible and ineligible investments can be found here: Energy Independence and Security Act §§1306(b)-(c).

Review & Award Process

The DOE expects to review all applications and notify grant recipients within 90 days of each application deadline. Grants will be awarded on the basis of merit and policy considerations.

Merit Review

The DOE has published the categories it will consider in reviewing applications. Additionally, the relative importance of each category in the review process has been outlined:

Adequacy of the Technical Approach for Enabling Smart Grid Functions (40%)
Adequacy of the Plan for Project Tasks, Schedule, Management, Qualifications, and Risks (25%)
Adequacy of the Technical Approach for Addressing Interoperability and Cyber–Security (20%)
Adequacy of the Plan for Data Collection and Analysis of Project Costs and Benefits (15%)

Policy Factors

After the technical merit review process is complete, the DOE may choose to apply policy factors in the selection of grant recipients. In so doing, the DOE reserves the right to select applications of lesser merit than other applications. The DOE’s stated goal is to ensure that the selection process results in an appropriate mix of methods, approaches, concepts, and strategies. Policy factors that the DOE likely will consider are (1) type and size of applicant organization, (2) geographic area, and (3) topic area. Finally, the DOE has explicitly stated it will favor projects with cost share in excess of the minimum required 50%.

Application Steps

To view and/or download a comprehensive outline of the steps required for application, click here.

Applicants must download the application package, application forms and instructions, from Grants.gov.

Applicants must submit their application through the FedConnect portal.

* * *

For more information on federal smart grid initiatives and incentives, please click here for a comprehensive timeline of recent developments.

If you have any questions about the new regulations or the regulatory process, please call your Mintz Levin service professional or any of those listed below.

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