U.S. Department of Energy Issues Second Transmission Facilitation Program Solicitation

On February 6, 2024, the U.S. Department of Energy (“DOE”) issued its second solicitation for eligible transmission project applicants seeking DOE support under the Transmission Facilitation Program (“TFP”) through capacity contracts. DOE states that it anticipates deploying up to $1.2 billion in capacity contracts in response to its solicitation. The deadline for initial applications is March 11, 2024, with some applicants invited to submit more detailed proposals, and DOE’s selection notifications expected in October 2024.

DOE’s TFP was established in the Infrastructure Investment and Jobs Act, with the goal of facilitating the development and construction of much-needed transmission infrastructure. Such new transmission infrastructure is intended to support, among other things, the reliability and resilience of the nation’s electric transmission system. The expectation is that the TFP will drive investment in transmission and reduce the financing challenges faced by transmission project developers. 

Under the TFP, DOE can support certain eligible transmission projects in three ways: loans, public-private partnerships and capacity contracts. 

Capacity contracts would provide projects with a commercial source of revenue that can help the project developer to secure financing from other sources and encourage additional customers to contract for capacity.

The application process begins with a Part 1 response, in which applicants provide initial information summarizing the project, its key characteristics and its eligibility for the TFP. DOE may then invite applicants to submit more detailed project proposals in the Part 2 application. 

The solicitation specifies that the TFP is a revolving fund, not a grant program, and one of the factors DOE will evaluate in selecting projects is a demonstration that DOE is reasonably likely to recover its capacity contract costs (i.e., the project needs to show it is commercially viable). Other factors DOE will evaluate include the project’s potential to benefit from a capacity contract award, the project’s potential to facilitate new renewable generation and/or increased interregional transfer capacity and contribute to the goal that 40% of the overall benefits of certain federal investments flow to disadvantaged communities.

The first solicitation under DOE’s TFP was issued in November 2022, and on October 30, 2023, DOE announced three selected projects for capacity contract negotiations under which DOE would contract for a portion of the total proposed capacity of the selected transmission projects: (a) the Cross-Tie 500kV Transmission Line Project (to be located in Nevada and Utah), (b) the Southline Transmission Project (to be located in Arizona and New Mexico), and (c) the Twin States Clean Energy Link (to be located in New Hampshire and Vermont). Although previously awarded applicants are not eligible to apply for the same project in this current solicitation, DOE states that it will consider applications for a different project, including an additional phase of a previously awarded project.

An informational webinar is expected to be held on February 21, 2024 (further information and registration details are currently available).