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Bipartisan Infrastructure Bill Could Revolutionize the Energy Industry

November 15, 2021

President Joseph Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act (the Act) on November 15, 2021, which allocates $550 billion in new spending over the next five years to improve US infrastructure, including critical investments in the energy sector. These investments will cover power grid infrastructure, electric vehicles and charging stations, renewable energy, nuclear power, hydropower, and cybersecurity with the goal to strengthen the energy industry, support emission-free power generation, and bolster emerging technologies.

The top-line appropriations for the energy industry include the following:

  • $65 billion to upgrade power infrastructure by building new, more-resilient transmission lines to facilitate the expansion of renewable energy, investing in research and development for advanced transmission and electricity distribution technologies, promoting smart grid technologies, and investing in demonstration projects and research hubs for next generation technologies such as advanced nuclear reactors, carbon capture, and clean hydrogen
  • $7.5 billion to build a national network for electric vehicle (EV) charging to accelerate the adoption of EVs to reduce transportation emissions, facilitate long-distance travel by EV, and making EV charging more convenient for consumers
  • $550 million for cybersecurity, energy security and emergency response

This Lawflash provides a high-level summary of the legislation and the funding provisions relevant to the energy industry broken down by area.

Grid Infrastructure and Resiliency

  • Authorizes $5 billion for the Department of Energy (DOE) to establish a grant program to support activities, technologies, equipment, and measures that reduce the likelihood and consequence of impacts to the electric grid due to extreme weather, wildfire, and natural disaster
  • Establishes the Upgrading Our Electric Grid Reliability and Resiliency Program with the goal of providing financial assistance to entities for the purposes of coordinating and collaborating with electric sector owners and operators to demonstrate innovative approaches to electric transmission, storage, and distribution infrastructure, enhancing resilience
  • Directs the Secretary of Energy to improve the resilience, safety, and reliability and environmental protection in rural and remote areas and lead the development of a framework to assess the resilience, reliability, safety, and security of energy infrastructure
  • Authorizes $5 billion for the Energy Infrastructure Federal Financial Assistance Program, along with $1 billion for rural or remote areas, which will provide a significant investment in areas of the country that would otherwise have difficulty enhancing their electric infrastructure
  • Amends the Public Utilities Regulatory Policies Act of 1978 by requiring state regulatory authorities to consider establishing rate mechanisms to allow electric utilities to recover the costs of promoting demand response and demand flexibility practices by consumers for the purpose of reducing electricity consumption during periods of unusually high demand
  • Allows FERC to issue permits to construct or modify certain interstate transmission facilities if a state commission withholds or denies an application for approval to site the facilities
  • Establishes a $2.5 billion Transmission Facilitation Program under which the Secretary of Energy will facilitate the construction of electric power transmission lines and be permitted to enter into capacity contracts for a new transmission line or an upgrade of an existing line for up to 50% of the planned capacity
  • Amends the Energy Independence and Security Act of 2007 to include Smart Grid investments that provide flexibility and help quickly rebalance the electrical system, as well as authorizes $3 billion for the Smart Grid Investment Matching Grant Program
  • Authorizes $355 million for Energy Storage Demonstration projects and the Pilot Grant Program authorized by the Energy Act of 2020, as well as $150 million for a Long-duration Demonstration Initiative and Joint Program

Cybersecurity

  • Directs the Secretary of Energy to implement a program to promote and advance the physical security and cybersecurity of electric utilities to develop and provide for voluntary implementation of maturity models, self-assessments, and auditing methods for assessing the physical security and cybersecurity of electric utilities, assist with threat assessment and cybersecurity training for electric utilities, and advance the cybersecurity of third-party vendors that manufacture components of the electric grid
  • Establishes a voluntary Energy Cyber Sense Program to test the cybersecurity of products and technologies intended for use in the energy sector, including the bulk-power system
  • Directs FERC to lead a study to identify incentive-based—including performance-based—rate treatments for the transmission and sale of electric energy subject to FERC’s jurisdiction that could be used to encourage public utilities to invest in advanced cybersecurity technology and participate in cybersecurity threat information sharing programs
  • Directs FERC to initiate a rulemaking to develop incentive-based rate treatments that would encourage public utilities to invest in advanced cybersecurity technology and participate in cybersecurity threat information sharing programs
  • Directs the Secretary of Energy to establish a Rural and Municipal Utility Advanced Cybersecurity Grant and Technical Assistance Program to provide grants and technical assistance for utilities to protect against, detect, respond to, and recover from cybersecurity threats, and authorizes $250 million for this program
  • Creates a Cybersecurity for the Energy Sector research, development, and demonstration program, which will develop advanced cybersecurity applications and technologies for the energy sector, and authorizes $250 million for this program
  • Creates the Energy Sector Operational Support for Cyberresilience Program, which will, among other things, enhance and test the emergency response capabilities of DOE and expand DOE’s cooperation with the intelligence community for energy sector–related threat collection and analysis, and authorizes $50 million for this program
  • Creates the Modeling and Assessing Energy Infrastructure Risk Program, which increases the functional preservation of electric grid operations or natural gas and oil operations in the face of threats and hazards, and authorizes $50 million for this program

Supply Chain for Clean Energy Technologies

  • Establishes several DOE programs to improve the viability of the US battery materials processing industry and provide grants for battery manufacturing and recycling research, development, and demonstration
  • Establishes a grant program focused on small- and medium-sized manufacturers to enable them to build new or retrofit existing manufacturing and industrial facilities to produce or recycle advanced energy products in communities where coal mines or coal power plants have closed
  • Directs the Secretary of Energy to establish a 21st Century Energy Workforce Advisory Board to develop a strategy to support the development of a skilled energy workforce

Carbon Capture

  • Authorizes $937 million for Carbon Capture Large-Scale Pilot Projects and $2.537 billion for Carbon Capture Demonstration Projects
  • Expands DOE’s Carbon Utilization Program objectives to include the development of standards and certifications to facilitate the commercialization of carbon dioxide products
  • Expands DOE’s Carbon Capture Technology Program to include front-end engineering and design for the carbon dioxide transport infrastructure necessary to deploy carbon capture, utilization, and storage technologies
  • Authorizes a $2.1 billion Carbon Dioxide Transportation Infrastructure Finance and Innovation Act Program to provide loans for carbon dioxide transportation infrastructure projects and grants for initial excess capacity on new infrastructure to facilitate future growth
  • Expands DOE’s Carbon Storage Validation and Testing Program to include new or expanded commercial large-scale carbon sequestration projects and associated carbon dioxide transport infrastructure, and authorizes $2.5 billion for this program
  • Provides $50 million in funding for permitting wells for the geologic sequestration of carbon dioxide, and creates a grant program for states to establish their own Class VI permitting programs to ensure rigorous and efficient carbon dioxide geologic storage site permitting
  • Allows the Department of Interior to permit geologic carbon sequestration on the Outer Continental Shelf
  • Directs the Secretary of Energy to establish a program to provide funding for projects that contribute to the development of four regional direct air capture hubs

Hydrogen

  • Allocates $8 billion to establish four regional clean hydrogen hubs, which include a network of clean energy producers, potential consumers, and connective infrastructure in close proximity
  • Establishes a Clean Hydrogen Research and Development Program for research, development, and demonstration projects to advance new clean hydrogen production, and allocates $500 million for this program
  • Creates a Clean Hydrogen Electrolysis Program to increase the production of clean hydrogen at a lower cost, and allocates $1 million for this program

Nuclear

  • Allocates $6 billion to a Civilian Nuclear Credit Program and directs the Secretary of Energy to allocate the credits, which will be awarded for a four-year period, to reactors in competitive energy markets in danger of closing due to economic factors
  • Directs the Secretary of Energy to report on how DOE could enhance energy resilience and reduce carbon emissions by using microreactors and small modular reactors

Hydropower

  • Appropriates $125 million for hydroelectric production incentives under the Energy Policy Act of 2005
  • Appropriates $553.6 million for incentive payments to owners and operators of qualified hydroelectric facilities for capital improvements directly related to improving grid resiliency, dam safety, and reducing environmental impacts. No more than one payment can be made to a facility in any fiscal year and the amount awarded to a facility cannot exceed $5 million per fiscal year
  • Directs the Secretary of Energy to establish a demonstration project for pumped storage hydropower projects, and allocates $10 million for this project

Renewable Energy Projects

  • Authorizes funding for renewable energy demonstration projects, including $84 million for enhanced geothermal systems, $100 million for wind energy, and $80 million for solar energy authorized by the Energy Act of 2020

Electric Vehicles

  • Directs the Secretary of Energy to carry out a program of research, development, and demonstration of second-life applications for electric drive vehicle batteries that have been used to power electric drive vehicles, technologies, and processes for their final recycling and disposal, and authorizes $200 million for this program
  • Directs the Secretary of Energy to establish a demonstration project for second-life applications of EV batteries as aggregated energy storage installations. This will provide services to the electric grid for the purposes of demonstrating power safety and the ability of EV batteries to provide ancillary services for grid stability and management as well as reduce the peak loads of homes and businesses, extending the useful life of EV batteries, and increasing the acceptance of and participation in the use of second-life applications of EV batteries by utilities
  • Establishes a 25-member EV working group, which will be led by the Secretaries of Transportation and Energy, to provide federal guidance and strategy for the development, adoption, and integration of electric vehicles into the US transportation and energy systems
  • Directs states to consider measures to promote greater electrification of the transportation sector, including the establishment of rates that promote affordable and equitable electric vehicle charging options, improve the customer experience associated with EV charging, accelerate third-party investment in public EV charging, and recover the marginal costs of delivering electricity to EV and EV charging infrastructure
  • Directs the Secretary of Energy to conduct a study on the cradle-to-grave environmental impact of EVs
  • Directs the Secretary of Energy, in coordination with the Secretary of State, to study the impact of forced labor in China on the EV supply chain
  • Directs Energy Information Administration to expand data collection on EV integration with the electricity grid

Energy Efficiency

  • Creates a revolving loan fund capitalization grant program in the State Energy Program for recipients to conduct commercial energy audits, residential energy audits, or commercial and residential energy upgrades or retrofits, and allocates $250 million to this program
  • Directs the Office of Energy Efficiency and Renewable Energy to provide technical assessments to identify opportunities for manufacturers to maximize energy efficiency of industrial processes and cross-cutting systems, prevent pollution and minimize waste, improve efficient use of water in manufacturing processes, conserve natural resources, and other goals determined by the Secretary of Energy
  • Directs the Secretary of Energy to award competitive grants for Energy Efficiency Improvements and Renewable Energy Improvements at Public School Facilities to make energy efficiency, renewable energy, and alternative-fueled vehicle upgrades and improvements at public schools, and authorizes $500 million for this program
  • Establishes a pilot program to award grants for the purpose of providing nonprofit buildings with energy-efficiency materials, and authorizes $50 million for this program

Interconnection Service

  • Directs the Secretary of Energy and FERC to review the existing rules and procedures relating to interconnection service and additional services in the US for electric generation with a nameplate capacity of up to 150 MW connecting at either distribution or transmission voltage levels to identify barriers to the deployment of combined heat and power systems as well as waste heat to power systems

Energy Infrastructure Data Collection

  • Directs EIA to create a dashboard relating to the operation of the bulk power system, including hourly operating data and a system to provide data on the operations of load-serving entities
  • Directs EIA to submit a report on the potential use of levelized cost of carbon abatement as a metric to compare system-level costs of technology options to reduce emissions, and a potential process to measure carbon dioxide emission intensity per unit of output production

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Philadelphia
Ken Kulak

Washington, DC
Jane Accomando
Paul Bessette
Lewis Csedrik
Kirstin Gibbs
Ryan Lighty
Tim Matthews
Levi McAllister
Alex Polonsky
Daniel Skees
Stephen Spina
Scott Clausen
Pam Wu