What turns a good DOE application into a great one?

Before the Bipartisan Infrastructure Law (BIL; passed November 2021) and the Inflation Reduction Act (IRA; passed August 2022), the US Department of Energy (DOE) was roughly a $30 billion organization ($35B in FY21). With the passing of the BIL and IRA, DOE received an extra $62 billion, nearly tripling in size in less than one year. This unprecedented federal investment in clean energy has led to a fundamental paradigm shift at DOE. Pivoting their focus away from primarily R&D and applied science, DOE is now prioritizing commercial deployment of clean energy technologies such as hydrogen, carbon capture, industrial decarbonization, and long-duration energy storage.

Even from only two years ago, the playbook for how to apply and receive DOE funding has changed, leaving many potential applicants confused on how to build their narrative. While there is more DOE funding than ever before, there is also more stiff competition. Through our work with many clients during the application process, Ramboll understands that to win the funding you can’t just be good – you have to be great. Here are the top three factors to consider in getting your application to the top of the pile.

The number one mistake prospective applicants often make is focusing too much on the success of their own project, and not enough on the larger commercial theory of change, or what DOE calls “the mission beyond the project.” Applicants are often extremely concerned with convincing the DOE that their individual project will be successful all the way from construction to operations – and they spend a lot of time and resources on the project and risk management portion of their application. However, funding projects that are sure-fire successes is not the point of the “new” DOE funding. Rather the purpose of the new funding is to buy-down commercialization risk for the clean energy economy at scale, across technologies and sectors, not only for a single project. If every single project were successful, then the DOE likely did not take enough risk to enable the private sector in crossing the “commercialization valley of death.”

In other words, it’s okay if your project is risky. In fact, that’s a good thing, especially if you’re on top of identifying and managing the project-level risks. What you must demonstrate however is how the learnings from the project, successful or not, will be transformative for the technology or sector as a whole. Does the commodity you’re producing provide resilience in a downstream value chain for other sectors? Are you building strategic partnerships with companies that dominate other economies of scale, like energy, manufacturing, and mining, to help make your project financeable and replicable? Will you build infrastructure that can be used by others, even if your project becomes a bust? Are you working with regulators, utilities, developers, and communities to streamline permitting processes that will benefit other stakeholders outside of your own project? It’s this kind of “bigger picture” thinking that the government is interested in, not necessarily your proprietary competitive advantage.

When it comes to commercialization strategy, you also have to understand the larger sectoral barriers that DOE is addressing. Many of those can be found in the publicly available DOE Liftoff Reports. As an applicant, it’s not enough to argue that there is a rising demand for your product and that you have potential off takers. You also must argue how your project addresses multiple commercialization barriers, in what DOE refers to as Adoption Readiness Level, including delivered cost, market acceptance, resource maturity, and license to operate. Between DOE literature and your expertise, identify which barriers to commercialization your industry faces and how your project knocks down larger technical and market barriers.

As of this writing, DOE has selected 1000+ projects, representing $48.7 billion of the original $62 billion. This is a sizeable portfolio of projects spurred by BIL/IRA and given the riskier nature of the investments, some projects are bound to “fail fast,” with new opportunities for potential applicants to fill. In order to rise to the top, applicants must argue for how they fit into DOE’s pre-existing portfolio. Applicants can achieve this in three ways:

1. Eliminate perceived redundancies. Applicants should conduct basic due diligence on previous projects that have come before it. Some common dimensions to consider are technology, sector, geography, business model, and value chain.
2. Highlight your unique value proposition. In the same vein, applicants should tout when their project fills a gap in the pre-existing portfolio. How does it diversify or secure DOE’s prior investments across the sector value chain?
3. Partner with previous selectees. One of the most creative and successful moves for DOE applicants is to partner with previous selectees and create synergies within the pre-existing portfolio. (Hint) Look at DOE project award maps – are there potential synergies you can create with DOE-funded commodities, off takers, or infrastructure?

One of the primary complaints we’ve heard from engaging with DOE is that the prospective project plan and technology can be solid, but the community benefits plan (CBP) is lacking. While CBP technical review criteria is only a portion of the larger merit review process, there are ultimately too many good applications with good CBPs to select any applications with CBPs that don’t rise to that higher standard. One mistake that project developers often make is to continue with the historically ineffective “decide and defend” tactic. In other words, by the time project developers reach out to communities, they have already all but decided that a site location is ideal, profitable, and bound to happen. If the decision is all but a foregone conclusion, and the community townhall is just a way to socialize the decision, local communities will likely pushback. As the saying goes, projects move at the speed of trust, and your project’s success hinges on building trust with local communities.

While projects are not always at the engagement stage during the application phase, be sure to layout in detail what the engagement plan is. Reach out to communities and trade associations early and often. If you get the award, hire dedicated personnel who will implement the CBP plan. Utilize labor unions, local labor, and establish long-lasting workforce development in the region such as apprenticeships and training programs. Diversify contractors and suppliers, working with women and minority-owned businesses. When planning the project, think about not only preventing your own pollution but also remediating pre-existing contaminants, if possible. Think down the line of how this project will not only impact the local community, but other communities where similar projects could be deployed and create a blueprint for excellence in community benefits. At the end of the day, it’s important to be a good employer, environmental steward, and neighbor to bring about an equitable energy transition.