The U.S. Department of Energy is making $1.2 billion available to help build or upgrade large-scale transmission lines that would not be developed without strong financial support.
The DOE has issued a request for proposals (RFP) through its Transmission Facilitation Program (TFP) to use “capacity contracts” that will commit the department to purchase up to 50% of the maximum capacity of a transmission line.
The contracts will establish the DOE as an “anchor customer” to late-state and “shovel ready” projects for up to 40 years, the department said. DOE will sell its capacity rights to other customers to recover costs when the contract expires.
“By offering capacity contracts, DOE increases the confidence of additional investors, encourages additional customers to purchase transmission line capacity, and reduces the overall risk for project developers,” the department said in a statement.
The application and review process will be split into two parts. The submission deadline for Part 1 of the application is March 11, 2024.
As part of the Bipartisan Infrastructure Law, the DOE is authorized to borrow up to $2.5 billion total through direct loans and public-private partnerships (P3s). The DOE’s Grid Deployment Office plans to release a separate RFP focused on P3s to connect isolated microgrids to the grid in Alaska, Hawaii and territories.
This is the second round of funding to be announced under the TFP. In 2023, the DOE committed $1.3 billion to underwrite three large-scale transmission lines that crossed six states.
DOE in October released a National Transmission Needs Study that says the country must more than double the existing regional transmission capacity and expand existing interregional transmission, five times over, to meet long-term clean energy goals.