By Mike Julian, Chief Revenue Officer, Tantalus
Public power utilities face pressures that require wholesale transformation. Extreme weather events occur with increasing frequency, stressing grids and causing destructive power outages. Consumers are transitioning to low-carbon, disruptive technologies such as renewables and electric vehicles. New regulatory requirements are charging utilities with reducing their environmental footprints, forcing the transition to smart grid solutions and fiber-to-the-home (FTTH) communications programs.
It’s an expansive—and expensive—transformation. But budgets are tight throughout the U.S. - where will the money for these long-term investments come from?
Federal Programs - New and Old
The recently passed Infrastructure Investment and Jobs Act is top of mind for many people in the utility industry, and it will invest billions in the sector. But even in a typical year, 1,000 federal grant programs, working through 26 federal agencies, provide a total of more than $400 billion to public agencies for investment in a wide variety of initiatives. Much of this annual funding can support smart grid solution projects, through programs such as:
- Federal Emergency Management Agency’s Building Resilient Infrastructure and Communities (BRIC) Grants ($1 billion)
- USDA Rural Utility Services Electric Program ($5.5 billion)
- HUD Community Development Block Grant Mitigation Program (variable)
And in the past 18 months alone, three major pieces of legislation passed, providing $4.8 trillion in extraordinary funding for COVID response and economic stimulus, including:
- $288 million in Broadband Infrastructure Deployment grants through last December’s COVID Relief and Omnibus Spending bill
- $350 billion in American Rescue Plan Act direct allocations to states, cities, and counties for flexible infrastructure investments, including sustainable technology and smart grid solutions; $10 billion of this was for states, territories, and Tribes to cover the costs of capital projects like broadband infrastructure
- $175 billion in the Infrastructure Investment and Jobs Act to implement smart grid solutions that improve grid resiliency and expand broadband access, as well as an additional $7.5 billion towards EV infrastructure
To give you a sense of scale, the American Recovery and Reinvestment Act of 2009 was a $787 billion package that provided $7 billion for broadband deployment and $4.5 billion in smart grid investments. This new legislation surpasses the 2009 Act by an exponential factor.
How the Funds Are Distributed
For those utilities that want to access the federal resources available to them, it’s important to understand how these funds flow.
- Formula funds are distributed by the federal government to state and local governments based on population and other statistics. One example you may be familiar with is the Community Development Block Grant
- Competitive funds require the completion of an application in order to receive them, for example FEMA’s BRIC grant.
Many of these programs address a broad scope of grid infrastructure projects, but there are some that focus on increasing the availability of broadband services. Many utilities are developing broadband fiber networks to offer internet, phone and video directly to homes and businesses. They can then also leverage the network to improve their grid operations. These efforts often qualify for federal funding—utilities just need to know how to access it!
In order to access federal funding for a project, a utility must apply through the proper channels for the respective fund. Although the process for each available fund and their managing departments can be different, successful applicants for federal funding have some common characteristics:
- A use case that aligns with federal funding streams
- A local commitment to this effort
- The support of local government and non-government partners
- Data to support the request
- A history of solid stewardship of grant funding
- Engage the support of federal elected officials to advance the funding application
An understanding of the steps and requirements needed to secure funds is critical to a successful application.
The Bottom Line
There are federal funds available for many of the projects and investments that utilities are evaluating today. Many of these funds have deadlines for applications—now is the time to begin the process!
There are several organizations to help you identify and access federal funds:
- APPA has two related virtual courses:
- Tantalus’ Funding Solutions Page provides information on various opportunities and reviews utilities’ most frequently asked questions
We encourage everyone in the public power and electric cooperative utility space to explore the many ways federal funding can enable a transition towards a smarter, more resilient energy sector.