2021 Clean Energy Outlook – Lexology

Highlights

• Congressional help for clear vitality analysis and growth (R&D) stays robust, as evidenced by rising budgets for many of the related packages at federal businesses, particularly the U.S. Division of Vitality (DOE).
• Each DOE program devoted to scrub vitality analysis, growth and deployment acquired a rise for Fiscal Yr 2021, making billions of {dollars} out there via grants, cooperative agreements, loans and mortgage ensures, and different federal help.
• This Holland & Knight alert gives an summary of DOE funding ranges this 12 months and appears forward to future alternatives that firms can attempt to assist form over the approaching months.

The tip-of-the 12 months omnibus (H.R. 133) is an enormous $2.three trillion spending invoice containing appropriations for Fiscal Yr (FY) 2021, COVID-19 relief funds, the first energy authorization in over a decade and extensions of plenty of tax incentives additionally vital to the vitality sector. The bipartisan package deal will foster innovation throughout a broad vary of applied sciences which are important to U.S. vitality and nationwide safety, long-term financial competitiveness and the safety of the atmosphere.

Congressional help for clear vitality analysis and growth (R&D) stays robust, as evidenced by rising budgets for many of the related packages at federal businesses, particularly the U.S. Division of Vitality (DOE) – which means that billions of {dollars} will proceed to be out there via grants, cooperative agreements, mortgage procurements and different forms of federal help. In complete, vitality packages at DOE will obtain almost $40 billion in funding, a rise of greater than $1 billion above the FY 2020 enacted stage.

Towards the backdrop of the evolving political local weather and the implications for vitality innovation, drivers embrace rising company internet zero carbon commitments, nationwide safety considerations, know-how innovation want, market participation, schooling and competitors from overseas governments, all of which ought to solely improve throughout the incoming Biden Administration.

This Holland & Knight alert gives an summary of DOE funding ranges this 12 months and appears forward to future alternatives that firms can attempt to assist form over the approaching months.

Funding Overview

• DOE acquired $39.625 billion in funding, a rise of $1.039 billion above the FY 2020 enacted stage.
• The Workplace of Vitality Effectivity and Renewable Vitality (EERE) acquired $2.86 billion, a $72 million improve above the FY 2020 enacted stage and $2.1 billion above President Donald Trump’s finances request. This funding gives for clear, reasonably priced and safe vitality, in addition to ensures American management within the transition to a world clear vitality economic system.
• The Superior Analysis Tasks Company-Vitality (ARPA-E) acquired $427 million, a $2 million improve above FY 2020 ranges and a rejection of Trump’s proposal to remove this system. This funding helps analysis aimed toward quickly creating vitality applied sciences which are able to considerably altering the vitality sector to deal with important financial, environmental and vitality U.S. safety challenges.
• Regardless of the Workplace of Fossil Vitality’s total finances remaining stage in FY 2021, the carbon seize packages acquired $126.three million, almost $10 million above final 12 months’s funding ranges.
• The Workplace of Electrical energy acquired $211.7 million, a rise of $21.7 million in comparison with FY 2020 and $16.7 million above Trump’s finances request.

As illustrated by the abstract desk above, an amazing variety of DOE packages devoted to scrub vitality R&D remained stage or acquired a rise for FY 2021, a few of which had been extra substantial.

The incoming Biden Administration will doubtless make its appropriations request for FY 2022 in February, which would be the early define of the incoming administration’s intent for the aforementioned packages.

Superior Manufacturing Workplace (AMO): $396 Million

The AMO helps R&D initiatives, R&D consortia and early-stage technical partnerships with nationwide laboratories, firms (for-profit and not-for revenue), state and native governments, and universities via aggressive, advantage reviewed funding alternatives designed to analyze new manufacturing applied sciences.

The rise in funding for AMO through the years is a transparent indication that Congress acknowledges the necessity for the federal authorities to play an energetic position in guaranteeing that america stays a pacesetter within the manufacturing of next-generation supplies and gear. As a result of AMO’s purview overlaps with lots of the different packages right here – for instance, AMO could make awards for the manufacture of light-weight automobile elements, photo voltaic modules, wind turbine blades, and many others. – firms ought to pay shut consideration to AMO’s annual multi-topic solicitation.

Constructing Applied sciences Workplace (BTO): $290 Million

Given its mandate, solicitations from BTO may be broad, creating alternatives for a big selection of firms with purposes that can be utilized to extend vitality effectivity. BTO can also be dedicated to bringing modern applied sciences from the DOE’s Nationwide Laboratories to {the marketplace} via funding, strategic partnerships and coverage initiatives that align with cities and states. Firms of every kind and sizes searching for authorities collaboration ought to look not only for direct funding from DOE, however must also look to DOE as a possible companion in forging key strategic relationships in any respect ranges of presidency and with strategic companions.

Car Applied sciences Workplace (VTO): $400 Million

The Car Applied sciences Workplace (VTO) at DOE helps R&D of environment friendly and sustainable transportation applied sciences that enhance gas economic system or in any other case scale back dependence on petroleum. The precise applied sciences embrace, however will not be restricted to, superior batteries, light-weight supplies, high-efficiency engines and various fuels.

The marketplace for the electrification of the vehicular transportation is not considered as a distinct segment market or far-off tipping level. Furthermore, utilities now view electrical automobile (EV) deployment as central to their future enterprise mannequin. The legacy auto producers are churning out increasingly more electrical fashions to be able to not lose market share to EV newcomers. Each policymakers and trade consultants anticipate batteries to be the subsequent frontier within the clear vitality revolution, hopefully following the identical downward value trajectory that has been seen in wind and photo voltaic vitality over the previous decade.

Vitality Storage: $80 Million

Along with funding DOE’s persevering with vitality storage R&D efforts, the Home and Senate Appropriations Committees emphasised the significance of the DOE’s cross-cutting strategy to this know-how sector. Efforts already underway via the Vitality Storage Grand Problem initiative will proceed, and new interagency collaborations with the nationwide labs and NASA will doubtless emerge. As well as, congressional route was given for DOE to focus some R&D on lengthy length vitality storage applied sciences in all of its varieties, given its probably pivotal position in enabling different modern constructing, transportation and electrical energy applied sciences.

Superior Analysis Tasks Company – Vitality (ARPA-E): $427 Million

ARPA-E is exclusive in some ways, together with its give attention to transformational change, its open-ended solicitations, its willingness and talent to situation grants price hundreds of thousands of {dollars} to probably the most promising applied sciences, and its broad (and rising) bipartisan help. ARPA-E advances high-potential, high-impact vitality applied sciences which are too early for private-sector funding. ARPA-E awardees are distinctive as a result of they’re creating totally new methods to generate, retailer and use vitality.

Mortgage Applications Workplace

The Vitality Act of 2020 features improvements to the Title 17 Loan Program. Particularly, the Act permits for future appropriations for use to cowl utility charges, credit score subsidies and different prices to candidates. It additionally adjusts the charge schedule so the upfront prices of program participation are much less burdensome for mission builders. The reforms additionally broaden eligibility classes underneath Title 17 and formalize among the ongoing inside capabilities of this system.

The FY 2021 appropriations did take away $1.9 billion in credit score subsidies from the Superior Expertise Autos Manufacturing mortgage program (ATVM). This decreases the general quantity of lending out there out of this system, which had $17.7 billion remaining to assist finance new automotive and auto element manufacturing within the U.S. The ATVM program might be one to look at underneath the Biden Administration, notably with former Michigan Gov. Jennifer Granholm being nominated as Secretary of Vitality.

Congressional Outlook

Congress has laid a robust basis for the incoming Biden Administration’s vitality and local weather agenda. As mentioned in a earlier Holland & Knight alert, the Vitality Act of 2020 handed within the 2020 year-end legislative package deal is a down cost on a transition towards a future for DOE on innovation, know-how commercialization, emissions reductions, renewables and home manufacturing. (See “Energy Policy Act Signals Inclusive, Innovation-Focused Future for DOE,” Jan. 5, 2020.)

Waiting for the 117th Congress, in gentle of the slim edge that Democrats received within the Senate following the Georgia runoffs, there are renewed hopes for restricted laws to fight local weather change, similar to measures to satisfy President-Elect Joe Biden’s pledge to advertise the usage of clear vitality by spending on renewable energy packages.

Local weather and vitality laws with bipartisan backing nonetheless has the perfect shot at passage with skinny Democratic majorities within the Home and Senate, though Senate management will give the Democratic clear vitality financial agenda a far stronger likelihood of passage, whether or not via tax incentives and spending measures in a finances invoice or broader infrastructure laws. Nonetheless, Democratic leaders will want the help of each member of their caucus.

Last Holland & Knight Insights

In sum, 2021 is shaping as much as be a transformational 12 months for the ahead momentum on clear vitality know-how.

With traditionally excessive funding ranges, Congress has laid a robust basis for the incoming Biden Administration’s clear vitality agenda via the passage of the bipartisan Fiscal Yr 2021 appropriations omnibus. Essential analysis, growth and deployment actions will proceed to be funded all through the rest of the 12 months, with new rounds of funding alternative bulletins anticipated from the Vitality Division.

How the White Home intends to make use of federal businesses similar to DOE, the Division of Transportation and the Basic Providers Administration shifting ahead will grow to be clearer when the brand new president releases his energy-related Govt Orders within the early days of his administration and his first congressional finances request in February or March 2021.