The U.S. Department of Energy on Feb. 6 announced a request for proposals for the second round of the Transmission Facilitation Program, a revolving fund supported by the Bipartisan Infrastructure Law to help overcome financial hurdles facing large-scale new and upgraded transmission lines.
Through the RFP, DOE anticipates deploying up to $1.2 billion in federal support to accelerate transmission buildout through capacity contracts, “an innovative approach that increases the confidence of investors and potential customers while reducing risk for projects,” DOE said.
DOE’s National Transmission Needs Study, released October 30, 2023, estimates that by 2035 the United States must more than double existing regional transmission capacity and expand existing interregional transmission capacity by more than fivefold to maintain reliability, improve resilience to extreme weather and other disruptive events, relieve congestion, and provide access to low-cost clean energy.
“These regional and interregional transmission needs must increase significantly by 2050 to meet evolving demand, increasingly extreme weather, and the needs of the clean energy transformation,” DOE said.
Administered by the Grid Deployment Office, the Transmission Facilitation Program authorizes DOE to borrow up to $2.5 billion to assist in the construction of valuable high-capacity transmission lines that otherwise would not be built or to encourage increased capacity of already planned lines.
The RFP released Feb. 6 will use capacity contracts to commit DOE to purchase up to 50% of the maximum capacity of a transmission line.
“Transmission infrastructure financing relies on demonstrating to potential investors that the line has committed customers. But customers often can’t commit until they are sure a project will be developed and available when needed,” DOE said.
DOE’s capacity contract establishes the agency as an anchor customer that can provide certainty for potential financers and other customers.
“By offering capacity contracts to late-stage and ‘shovel ready’ projects, DOE will continue to increase the confidence of investors and potential customers and reduce the risk of project developers under-building or under-sizing needed transmission capacity projects. DOE will sell its capacity rights in these projects to other customers to recover its costs,” it said.
The RFP builds on the first solicitation issued in 2022. On October 20, 2023, DOE announced it entered into the first round of capacity contract negotiations for up to a total of $1.3 billion with three transmission lines crossing six states that will add 3.5 gigawatts of additional grid capacity throughout the United States.
The selected projects are Cross-Tie 500kV Transmission Line (Nevada, Utah), Southline Transmission Project (Arizona, New Mexico), and Twin States Clean Energy Link (New Hampshire, Vermont).
In response to industry comments, the application and review process for the RFP released on Feb. 6 is split into two parts to help better manage the administrative burden on applicants.
The submission deadline for Part 1 of the application is March 11, 2024.
A public webinar to provide additional information will be held at 3 p.m. Eastern time on February 21, 2024. Registration is required.
In the near future, DOE’s Grid Deployment Office expects to release a separate RFP focused on public-private partnerships to build transmission infrastructure that connects isolated microgrids to the grid in Alaska, Hawaii, and U.S. territories.
The Grid and Transmission Programs Conductor provides more information on programs administered by DOE, as well as questions concerning the ability to pair different funding opportunities offered across the Department.
Learn more about the Grid Deployment Office.
