Microgrids Win Funding Boost in US Pandemic Relief Bill

Dec. 22, 2020
The US Congress passed a pandemic relief bill late Monday night that includes funds for microgrids, energy storage and renewable energy.

The US Congress passed a pandemic relief bill late Monday night that includes funding for microgrids, energy storage and renewable energy.

The spending package includes the Energy Act of 2020, which contains consensus provisions from Senate and House energy legislation, Sens. Lisa Murkowski, R-Alaska, and Joe Manchin, D-W.Va., said Dec. 21.

Update: President Trump signed the legislation into law on December 27

The Energy Act focuses on research, development, and demonstration of next-generation technologies that will reduce greenhouse gas emissions, according to the senators.

“This bipartisan package will foster innovation across the board on a range of technologies that are critical to our energy and national security, our long-term economic competitiveness, and the protection of our environment,” Murkowski, Senate Committee on Energy and Natural Resources chairman, said, noting it was the first major energy policy update in 13 years.

The bill was put together by Senate and House members by selecting provisions found in the American Energy Innovation Act (S. 2657), which stalled on the Senate floor in March over a dispute on limiting hydrofluorocarbons, and the Clean Economy Innovation and Jobs Act (H.R. 4447), which passed the House.

Funding for microgrids

The legislation establishes an energy storage and microgrid grant and technical assistance program at the Department of Energy for rural electric cooperatives and public utilities to help them design energy storage and microgrid projects that use renewable energy, according to a summary of the bill.

The package authorizes $15 million a year for five years for the program, which requires cost sharing for the projects.

The bill also directs the DOE to establish a program to promote microgrid systems for isolated communities and to increase critical infrastructure resiliency. It authorizes $15 million a year in grants for microgrid pilot projects for isolated communities, rural electric cooperatives and municipalities.

Energy storage

In a win for energy storage, the bill sets up a $1 billion, five year research and development program that includes energy storage demonstration projects and a competitive pilot project grant program. 

The bill also establishes a joint long-term energy storage demonstration initiative with the Defense Department as well as an energy storage materials recycling research and development program. 

Smart buildings

Under the legislation, the DOE will set up a program to speed the development of smart building technology, partly through pilot projects at federal sites.

As part of the effort, the DOE is required to establish a 10-year research and development program focused on building-to-grid integration so that residential and commercial buildings can serve as dynamic energy loads on and resources for the electric grid.

Technology transfer

The bill creates the Office of Technology Transitions within the DOE to improve the commercial effects of the department’s research investments and help bring to market technologies that advance the DOE’s missions, including reducing greenhouse gas emissions.

The legislation directs the DOE to set up additional technology transfer programs, including supporting regional energy innovation and clean energy incubators. 

Tax credits

In a change that could indirectly affect microgrids, the spending package extends the investment tax credit for solar by two years at its current 26% rate before phasing down to 22%. The ITC was set to fall in 2022 to 10% for commercial projects and to zero for residential projects.

The bill extends the federal production tax credit for onshore wind at its 60% level for a year before continuing the tax credit’s phaseout. It also provides a new 30% ITC for offshore wind projects that start construction through 2025.

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About the Author

Ethan Howland

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