RFP alert: DOE to provide $1.2 billion for transmission buildout

The RFP will use capacity contracts to commit DOE to purchase up to 50% of the maximum capacity of a transmission line.

February 7, 2024 Anne Fischer

Image: BLM

The U.S. Department of Energy (DOE) announced a request for proposals (RFP) for the second round of the Transmission Facilitation Program.

The DOE plans to deploy up to $1.2 billion to accelerate transmission buildout through capacity contracts. The goal is to help unlock billions of dollars of state and private sector capital to build projects to modernize the power grid and increase its reliability.

DOE’s National Transmission Needs Study, released October 30, 2023, estimates that the U.S. must more than double existing regional transmission capacity by 2035 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. In addition, the study found that 54,500 GW-miles of within-region transmission must be added for a clean grid under “the most likely power sector future.” Interregional transfer capacities to transmit electricity between regions would also need to increase by nearly 125 GW, the study said.

“There’s no way around it: to realize the full benefit of the nation’s goal of 100% clean electricity by 2035, we need to more than double our grid capacity,” said U.S. Secretary of Energy Jennifer M. Granholm. “President Biden’s historic clean energy legislation is helping modernize the nation’s transmission to deliver reliable, more affordable energy to every American community in turn driving down costs for American families and generating good paying jobs for American workers.”

The RFP 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; however, customers often can’t commit until they are sure a project will be developed and available when needed. To increase the confidence of investors and potential customers, the capacity contract establishes the agency as an anchor customer who can provide certainty and reduce the risk of project developers under-sizing needed transmission capacity projects. DOE will sell its capacity rights in these projects to other customers to recover its costs.

The RFP builds on the first solicitation issued in 2022. DOE announced it entered into the first round of capacity contract negotiations in October 2023 for up to a total of $1.3 billion with three transmission lines crossing six states that will add 3.5 GW of additional grid capacity throughout the U.S., equivalent to powering approximately 3 million homes, and creating more than 13,000 direct and indirect jobs. The selected projects include the Cross-Tie 500kV Transmission Line in Nevada and Utah, Southline Transmission Project in Arizona and New Mexico, and Twin States Clean Energy Link in New Hampshire and Vermont.

A public webinar will be held at 3 p.m. Eastern on February 21, 2024. 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.

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.
Learn more about the Grid Deployment Office.

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