US Energy: Biden Administration Launches $2.5 Billion Fund to Modernize and Expand Capacity of America’s Power Grid

The U.S. Department of Energy today issued a Request for Information (RFI) seeking public input on the structure of the $2.5 billion Transmission Facilitation Program (TFP), which President Biden’s Bipartisan Infrastructure Law created to help build out critical new transmission lines across the country. The launch of this new program, the largest infrastructure law investment in solely transmission, is one of the first down payments on over $20 billion of investments under DOE’s new Building a Better Grid Initiative. The TFP is an innovative revolving fund program that will provide Federal support to overcome the financial hurdles to large-scale new transmission lines and upgrade existing transmission as well as the connection of microgrids in select States and U.S. territories. Expanding and modernizing the electric grid will create good-paying jobs to deliver clean, affordable, and reliable energy to everyone, everywhere, anytime. A reliable, resilient electric grid is critical for withstanding climate change impacts and to achieving President Biden’s goal of a national grid run on 100% clean electricity by 2035.

“Expanding and strengthening our power grid means we can get Americans power where and when they need it most, and in so doing deploy the clean energy we need to reach our climate goals and ultimately bring down energy costs,” said U.S. Secretary of Energy Jennifer M. Granholm. “With nearly 70% of the nation’s grid more than 25 years old, the President’s Bipartisan Infrastructure Law is a pivotal catalyst for transmission projects across the nation that will deliver good-paying jobs in the process.”

The current electric grid was not developed with today’s electrification needs in mind. Expanding transmission capacity through new and upgraded transmission lines will improve grid reliability, allow new clean power onto the grid, reduce costs, improve energy equity, and drive economic growth and growth in good jobs. As the Biden Administration ramps up expansion of new renewable energy sources, additional transmission will be required to carry that energy across regional lines making it available where it is needed most.

Independent estimates indicate that we need to expand electricity transmission systems by 60% by 2030, and may need to triple it by 2050 to meet the country’s increase in renewable generation and expanding electrification needs. Rebuilding and improving our nation’s aging electric grid is a cornerstone of the Bipartisan Infrastructure Law. More than 70% of the nation’s grid transmission lines and power transformers are over 25 years old, creating vulnerability. Power outages from severe weather have doubled over the past two decades across the United States and the frequency and length of power failures reached their highest levels since reliability tracking began in 2013 — with U.S. customers on average experiencing more than eight hours of outages in 2020.

DOE’s Transmission Facilitation Program

Under the TFP, DOE is authorized to borrow up to $2.5 billion to assist in the construction of new and upgraded high-capacity transmission lines through three financing tools: loans from DOE; DOE participation in public-private partnerships; and capacity contracts with eligible projects in which DOE would serve as an “anchor customer”. These tools represent an innovative approach that can spur valuable new lines that otherwise would not get built. The first solicitation will be limited to applicants seeking capacity contracts for eligible projects that will begin operation no later than December 31, 2027. The initial solicitation will include a deadline for submissions, but the timing of the determination will be based on the time necessary to conduct due diligence on the proposed project.

Through the capacity contracts under this program, DOE will commit to purchasing up to 50% of the maximum capacity of the transmission line for up to 40 years. By buying up to 50% of the planned capacity of a transmission project, DOE can reduce financial challenges often facing new transmission programs or upgrades to existing transmission lines by encouraging and de-risking additional investment. A goal of this program is for DOE to continue buying capacity until customer demand has increased enough to cover those costs. Then DOE will remarket the capacity, thereby replenishing the fund.