DOE’s FY25 Budget Request Remains Committed to the U.S. Transition to Clean Energy
The Biden Administration has prioritized the clean energy transition as a core element of its governing agenda, via massive legislative victories like the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL), and through its ongoing whole-of-government focus on clean innovation. The Administration has continued to push for further investments, but faces a difficult fiscal environment in Congress – which has meant shortfalls for many priority areas like funding for CHIPS and Science. In March, the Administration released the FY 2025 budget request for the Department of Energy (DOE), and with it seeks to extend the gains of the past few years. This blog post highlights a selection of priority proposals in the FY 2025 request.
Scaling Clean Energy Technologies
BIL and IRA gave DOE a new mandate to support the demonstration, deployment, and commercialization of clean energy technologies, and established the Office of Clean Energy Demonstrations (OCED) to achieve this. OCED is tasked with managing a range of large-scale commercial demonstration programs, which provide cost-share funding on the order of $50 to $500 million. OCED’s $30 billion portfolio of BIL- and IRA-funded programs include the Industrial Demonstrations Program, which recently announced selections for award negotiations; the Regional Clean Hydrogen Hubs; the Advanced Reactor Demonstration Projects; and others.
Now that the majority of its BIL and IRA funding has been awarded, OCED is looking to continue building on this momentum, but annual appropriations have not been easy. OCED last year sought to significantly ramp up its annual appropriations to $215 million, but appropriators ended up providing only $50 million in new funding to OCED – nearly 50% less than FY23. Such an outcome hinders OCED’s ability to launch first-of-a-kind demonstration programs in new areas or expand existing programs, particularly since several OCED programs (like most IIJA and IRA initiatives) are vastly oversubscribed. For instance, OCED’s Industrial Demonstrations program provided awards of $6.3 billion, but received 411 concept papers requesting over $60 billion in federal funding with $100 billion in matching private dollars. Other programs at OCED, including the Energy Improvements in Rural and Remote Areas and the Clean Hydrogen Hubs, were similarly oversubscribed.
For FY 2025, OCED is again proposing a funding ramp-up to $180 million. This includes a new extreme heat demonstration program in collaboration with DOE’s Office of State and Community Energy Programs (SCEP). SCEP has requested $35 million to lead the planning and design phases, while OCED’s request of $70 million will fund the federal cost-share for three to six community-scale demonstration projects. The new program will provide much needed funding for solutions to address extreme heat, which is the top weather-related cause of death for Americans and is only expected to worsen with global temperatures increasing each year.
In addition to OCED’s portfolio, BIL funded a $5 billion Grid Innovation Program (GRIP) managed by the Grid Deployment Office (GDO). GRIP focuses on central grid infrastructure, but GDO also has a portfolio of work on microgrids, which improve resiliency by enabling communities to maintain electricity access even when the larger grid goes down. BIL established some programs that can be used to fund certain components of microgrids or to purchase microgrid capacity, but these programs are unable to fund full scale microgrid demonstration projects. For FY 2025, GDO is requesting $30 million for a new Microgrid Generation and Design Deployment Program that will fill that gap.
Complementary to these large-scale demonstration programs are a suite of small-scale pilot demonstration programs managed by offices under the Under Secretary for Science and Innovation (S4), which provide grants that are typically less than $20 million.
Within the Office of Energy Efficiency and Renewable Energy (EERE), the Geothermal Technologies Office (GTO) has been running a rolling funding opportunity for enhanced geothermal systems (EGS) pilot demonstrations, authorized by BIL and funded by annual appropriations. For FY 2025, GTO is requesting continued funding for this program so that they can support additional greenfield demonstration projects.
EGS is important as a future source of clean, firm energy, but it’s not the only promising next-generation geothermal technology, as closed-loop geothermal has also demonstrated the potential to be cost-competitive with EGS. Currently, only EGS projects are eligible in GTO’s program, despite the fact that BIL and prior legislation intended a more inclusive approach. As such, the Federation of American Scientists has joined with the next-generation geothermal community—including organizations representing both EGS and closed-loop geothermal companies—to call on DOE to take a tech agnostic approach and expand the scope of the program to include all next-generation technologies. We also call on Congress to adopt report language directing DOE to include demonstration projects using closed-loop and other next-generation geothermal technologies, and to appropriate at least GTO’s full budget request of $156 million.
Other proposed demonstration activities across the DOE enterprise include:
- Demonstration programs for reservoir thermal energy storage and thermal energy networks within GTO’s low temperature and coproduced resources portfolio ($24 million);
- Demonstration of wind hybrid systems, which use wind energy to produce hydrogen for energy storage or direct industrial usage, by the Wind Energy Technologies Office ($23.5 million);
- Expansion of in-water demonstrations of grid-scale wave energy devices at the Water Power Technologies Office’s testing facility PacWave ($50 million);
- Validation and demonstration of heat pumps and energy efficiency retrofits in commercial and residential buildings by the Building Technologies Office ($27 million and $32.5 million, respectively);
- Demonstration and validation of a new grid technology by the Office of Electricity ($7 million); and
- Support from the Office of Nuclear Energy to help address the technical, operational, and regulatory challenges facing five potential future demonstration projects, as a part of the Advanced Reactor Demonstration Program ($142.5 million).
Tech Transitions and FESI
The Office of Technology Transitions (OTT) was established in 2015 to get the most out of DOE’s RD&D portfolio by better aligning the Department’s science research enterprise with industry and public needs. A core part of OTT’s mission is to expand the commercial impact of DOE’s research investments by developing viable market pathways for technologies coming out of the National Labs. Despite having a relatively small budget, OTT’s mission is crucial for the rapid acceleration of the energy transition.
In FY 2024, however, OTT’s budget was cut by 10% which put a damper on the Office’s ability to carry out its mission. In response, in FY25, OTT is seeking $7.1 million more than its $20 million budget from the previous fiscal year in an attempt to ramp up funding for its programs. This increase also includes a separate funding line item of $3 million for the Foundation of Energy Security and Innovation (FESI), the DOE-affiliated 501(c)3 nonprofit organization established in the CHIPS and Science Act. FESI has significant potential to complement DOE’s mission by being a flexible tool to accelerate clean energy innovation and commercialization. Since the Foundation is a non-federal entity, it can catalyze public-private collaboration and raise private and philanthropic capital to put towards specific projects like funding pilot wells for next-generation geothermal power or filling funding gaps for pilot-scale technologies along the innovation pipeline, for example.
In addition to overseeing the standing up of FESI, OTT facilitates five main programs including the Technology Commercialization Fund, the Energy I-Corps Program, the Lab Partnering Service, the EnergyTech University Prize, and the Technology Commercialization Internship Program. Each of these programs is designed to increase industry and innovator access to the Labs while also bolstering the commercial pathway for emerging energy technologies, and together they’re vital to the success of clean energy technology commercialization.
Opportunities for Support Through Congressional Control Points
The FY 2025 DOE request also looks to support the vital work of several new offices by establishing Congressional control points – meaning they’d be treated as standalone entities in appropriations, rather than subaccounts of other offices. Last year’s request sought new control points for the Office of State and Community Energy Programs, Federal Energy Management Program, and Manufacturing and Energy Supply Chains, but Congress has yet to act.
It’s an incredibly wonky topic, but it’s actually pretty important: establishing control points for these offices can help create a baseline for future funding and maintain institutional consistency. Becoming standalone offices can also help them carry out their missions, by giving them the authority to engage with other partners including federal agencies, creating more pathways for collaboration with energy-intensive agencies like the Defense Department.
Do you have ideas that could inform an ambitious project that FESI has a comparative advantage pursuing? We want to hear it.
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