Department Of Energy Outlines Funding For Energy-Efficiency Efforts

Wednesday, August 5, 2009 - 01:00

On June 30, 2009, the Department of Energy ("DOE") announced funding to foster the development of energy efficiency in commercial buildings and in new and remodeled homes. The funding also would develop the U.S. energy efficient lighting industry. This announcement should be of direct interest to all landlords and other real estate owners, builders, remodelers, mortgage lenders, realtors, developers, appraisers, contractors, equipment manufacturers, material suppliers, community planners, architects, engineers, and energy-efficiency experts.

In its announcement, the DOE provided detailed plans to distribute over $186 million to fund energy-efficiency efforts under the American Recovery and Reinvestment Act of 20091(the "Stimulus Package Act"). Specifically, the DOE has earmarked up to $190 million for energy-efficient buildings, $33.5 million for solid-state lighting, and $7.5 million for training program development. The DOE recently issued five Funding Opportunity Announcements ("FOAs") to distribute these funds.

The energy-efficiency efforts are intended to help the U.S. transition to a clean energy economy by providing environmental benefits while creating U.S. jobs and reducing consumer costs. The funds will be used, in part, to expand and accelerate the development, deployment, and use of energy efficient technologies in all major types of commercial buildings, as well as in new and existing homes. This funding also will advance state-of-the-art solid-state lighting technology, which will help position the U.S. to become a leader in the global market for high-energy-efficiency lighting sources.

The DOE issued two FOAs to distribute funding for Energy Efficient Buildings: one for Energy Efficient Building Technologies, and one for DOE Building America Energy Efficient Housing Partnerships. Under these FOAs, the DOE will accept grant applications through August 18, 2009, and August 24, 2009, respectively.

Under this funding announcement, the DOE issued two FOAs to distribute funding for Solid-State Lighting: one for U.S. Manufacturing and one for Product Development. Under the U.S. Manufacturing FOA, the DOE will accept grant applications in rounds, with August 24, 2009, as the Round 1 deadline. Under the Product Development FOA, the DOE will accept grant applications through August 17, 2009.

Under the fifth FOA, the Training Program Development FOA, the DOE will accept grant applications through September 1, 2009.

Summary Of Energy-Efficient Building Investments

The DOE will invest between $95 million and $190 million in energy-efficient buildings as follows: Energy-Efficient Building Technologies, $25-75 million; and DOE Building America Energy-Efficient Housing Partnerships, $70-115 million. For the latter, Building America Teams will receive $5 million/year for up to 5 years, and Building America Retrofit Teams will receive $5 million/year for up to 2 years.

Energy-Efficient Building Technologies

These funds will be invested in advanced research and development in six areas of interest:

• Advanced Building Controls, Communications, and Information Technologies for Net-Zero Energy Buildings;

• Analysis, Design, and Technical Tools;

• Building Envelope and Windows;

• Residential and Commercial Heating, Ventilation, and Air Conditioning ("HVAC") and Crosscutting Air Conditioning and Refrigeration Research;

• Water Heating, Residential and Commercial Appliances, and Miscellaneous Electric Loads ("MELs"); and

• Solar Heating and Cooling ("SHC").

The goal of Area of Interest #1 is to achieve market-ready net-zero energy residential buildings by 2020 and net-zero energy commercial buildings by 2025. Buildings should be designed, built, operated, and maintained as an integrated system to achieve more energy-efficient, and eventually, net-zero energy buildings.

Area of Interest #2 seeks to improve the capability and availability of analysis, design, and technical tools for both residential and commercial buildings, through the development of adequate simulation tools.

The intent of Area of Interest #3 is to improve the energy efficiency of residential and commercial building windows and envelope components, resulting in significantly reduced space heating and cooling energy losses.

Area of Interest #4 aims to dramatically increase the efficiency of HVAC systems and pursue technologies that apply to both air conditioning and refrigeration. DOE is particularly interested in HVAC systems that enable the cost-effective construction of net-zero energy homes or provide a pathway toward net-zero energy commercial buildings.

The goal of Area of Interest #5 is to increase the efficiency of water-heating equipment and appliances and to reduce parasitic miscellaneous electric loads. The DOE is particularly interested in technologies that contribute to and enhance the pathway to net-zero energy homes and commercial buildings.

Area of Interest #6 seeks to develop and deploy the next generation of solar heating, cooling, dehumidification, energy storage, and hot water heating products and installations. DOE particularly encourages concepts that are applicable to both new construction and building retrofits.

The DOE anticipates distributing 45 to 90 awards, each ranging from $250,000 to $2 million. The DOE will fund 50 percent of project costs for demonstration and commercial application projects, and 80 percent of project costs for research and development projects.

DOE Building America Energy-Efficient Housing Partnerships

These funds will be invested in programs in two Areas of Interest as defined by the DOE: (1) Building America Teams; and (2) Building America Retrofit Teams. Both Building America programs encourage applicants to form "Industry Teams" of architects, engineers, developers, builders, remodelers, equipment manufacturers, material suppliers, community planners, mortgage lenders, realtors, appraisers, and contractor trades. Throughout the design and construction/retrofit process, these Industry Teams will evaluate the interaction between the building site, envelope, mechanical systems, and energy-use factors, identifying and implementing energy-saving strategies when possible.

Industry Teams selected as award recipients under the "Building America Teams" Area of Interest will continue the existing partnerships Building America has established to implement the research and technical support program for new and existing homes. Industry Teams will focus approximately 75 percent of their efforts on new homes, and the remaining 25 percent on efforts to increase the efficiency gains and reduce the cost of retrofits. Under the "Building America Retrofit Teams" Area of Interest, the DOE will select Industry Teams to stimulate the existing home retrofit market through research and technical support in order to increase the efficiency gains and reduce the cost of retrofits.

The following chart summarizes the DOE"s estimated award size and expected number of awards for each Area of Interest:

Area of Interest #1:Building America Teams

Est. Award Size: $31.25 million

Expected # of Awards:2-3

Area of Interest #2:Building America Retrofit Teams

Est. Award Size: $6.25 million

Expected # of Awards: 2-4

The DOE will fund 80 percent of selected Industry Teams' project costs under this FOA.

Summary Of Solid-State Lighting Investments

The DOE will invest $33.5 million in solid-state lighting projects as follows: DOE Solid-State Lighting U.S. Manufacturing, $22 million, and DOE Solid-State Lighting Product Development, $11.5 million.

The objective of the solid-state lighting investments is to advance state-of-the-art solid-state lighting technology and to move those advancements more rapidly to market through the coordinated development of advanced manufacturing techniques. This project is intended to aid both the development and cost reduction of high-performance lighting products.

The DOE's ultimate goal is to accelerate progress towards creating a U.S.-led market for high-efficiency light sources that save more energy, reduce costs, and have less environmental impact than other conventional light sources.

U.S. Manufacturing

This funding is aimed at achieving cost reduction of solid-state lighting for general illumination through improvements in manufacturing equipment, processes, and techniques. The DOE anticipates that meeting these goals will lead to more rapid adoption and installation of high-quality solid-state lighting products which will result in a significant reduction of energy use and a corresponding reduction of environmental pollutants. DOE's secondary objective is to establish and maintain a manufacturing and technology base within the U.S. Eligible projects under this FOA and will include:

• Epitaxial Growth Tools and Processes

• LED Chip Manufacturing

• Automated LED Packaging

• LED Luminaire Manufacturing

• Production of OLED Lighting Prototypes

• Paths to High-Volume Manufacturing of OLED Devices

The DOE anticipates selecting approximately five to 10 award recipients and will fund half the project costs for each. The DOE notes that each award will likely not exceed $4 million. The DOE has not indicated how many additional rounds of funding it will offer or what the application deadlines will be for any future rounds.

Product Development

These funds will support product development of general illumination solid-state lighting sources, luminaries, and enabling products. Eligible projects will include:

• LED Luminaire(s) for General Illumination

• OLED Luminaire(s) for General Illumination

• High-Efficiency LEDs or Arrays

• Phosphors

• OLED Substrates

• Stand-alone Off-Grid lighting system applications

For the purposes of this FOA, product development is the systematic use of knowledge gained from basic and applied research to develop or improve commercially viable materials, devices or systems. Technical activities should be focused on a targeted market application with fully defined price efficacy and other performance parameters necessary for success of the proposed product. Product development should encompass the technical activities of product concept modeling through the development of test models and field-ready prototypes.

The DOE will select three to seven award recipients under this FOA.

Summary Of Training Program Development Investments

The DOE will invest $7.5 million in 10 to 30 programs that focus on developing training programs for various building specialists. Training programs designed for three types of commercial building specialists are eligible to receive funding under this FOA: (1) equipment technicians, (2) operators, and (3) energy commissioning agents/auditors. All types of domestic entities are eligible, including companies, non-profits, institutions of higher education, and state and local governments. The DOE anticipates that individual award size will range from $250,000 to $750,000. Cost sharing is encouraged, but not required.

Capitalizing on the energy efficiency funding in the Stimulus Package Act may create critical opportunities for your business. For further information on the application of these rules, please contact any of the attorneys listed below. 1President Obama signed The American Recovery and Reinvestment Act of 2009 (herein, the "Stimulus Package Act") on Tuesday, February 17, 2009. For the text of the Stimulus Package Act, as approved by Congress, and the related Conference Report, see http://www.rules.house.gov/bills_details.aspx? NewsID=4149. The Stimulus Package Act provides more than $34 billion in funding for improving national systems of energy production, distribution, and transmission.

Michael A. Stosser is Of Counsel at the firm. His practice includes project development and finance of renewable and alternative energy projects, state and federal regulatory matters, and legislation. Elizabeth Barton, Partner and Co-chair of the Real Estate, Environmental and Land Use Department, has more than 20 years of experience in environmental and land use consultation, permitting, and litigation at the federal, state, and local levels. Jennifer Galiette is an Associate in the Energy and Utility Law Department.

Please email the authors at mstosster@daypitney.com, ebarton@daypitney.com or jgaliette@daypitney.com with questions about this article.