DOE Applied Energy Budget: FY22 Outcomes and FY23 Request

The Department of Energy offices that support R&D on renewable energy, nuclear energy, and carbon management technologies are all receiving budget increases of roughly 10% in fiscal year 2022. Though sizeable, the Biden administration had sought significantly larger increases for DOE’s applied energy offices, in some cases exceeding 50%.

DOE is also receiving $62 billion over multiple years outside of the regular appropriations process through last year’s Infrastructure Investment and Jobs Act, mostly for programs supporting the deployment of energy technologies. Around $25 billion of the total, including about $8 billion in fiscal year 2022, will support technology demonstration projects, mostly overseen by the recently launched Office of Clean Energy Demonstrations (OCED).

For fiscal year 2023, the administration is again requesting exceptionally large increases for some programs, especially those in the Office of Energy Efficiency and Renewable Energy (EERE). Unlike last year, the administration also seeks a major expansion of the Advanced Research Projects Agency–Energy and proposes that it house efforts previously envisioned for a separate climate-oriented ARPA, which Congress ultimately declined to create.

Details of Congress’ fiscal year 2022 appropriation can be found in an explanatory statement accompanying the legislation as well as in reports from House and Senate appropriators. Summary figures are collected in FYI’s Federal Science Budget Tracker .

ARPA–E

Congress increased the budget for the Advanced Research Projects Agency–Energy by 5% to $450 million, short of the administration’s $500 million request. The administration had also sought $500 million to establish an ARPA for projects related to climate change, with funds drawn from DOE and other agencies. The idea received little support from appropriators, who ultimately directed DOE to consider pursuing such projects through ARPA–E instead, provided they are consistent with ARPA–E’s mission.

This year, the administration proposes to ramp up ARPA–E’s funding to $700 million and expand its scope to include R&D on “climate adaptation and resilience innovations.” Potential focus topics include greenhouse gas sensors, severe event prediction, infrastructure resilience, and carbon-neutral methods for recycling and agricultural production.

Clean energy demonstrations

DOE reorganized its leadership structure early this year in response to the infrastructure law, creating the new position of under secretary for infrastructure to oversee large-scale projects funded through the law. The under secretary’s office oversees OCED as well as a variety of other new and existing offices.

The infrastructure law is providing OCED with $5.1 billion in fiscal year 2022 and $4.4 billion in fiscal year 2023, far exceeding the $400 million the administration originally sought to launch the office. DOE is seeking an additional $214 million through the regular appropriations process, most of which would support a new “Energy Challenge Demonstrations” competition focused on integrating renewable energy technologies into the U.S. electric grid.

Of the fiscal year 2023 infrastructure act funding, $1.6 billion will go toward launching at least four regional clean hydrogen hubs, $700 million is for carbon capture demonstration projects, and $126 million is for energy storage projects. In addition, $600 million will go to advanced nuclear reactor demonstration projects that previously were funded through the Office of Nuclear Energy. The projects comprise two full-scale power plants that are respectively being designed and built by the companies X-energy and TerraPower, which are slated to complete work later this decade.

Crosscutting initiatives

Hydrogen. Aside from the new hydrogen hub program within OCED, DOE proposes to spend at least $406 million for clean hydrogen R&D and deployment activities across the department in fiscal year 2023, 27% more than in fiscal year 2021. The increase would supplement the $300 million per year the infrastructure law is providing for a new hydrogen electrolysis demonstration program and a clean hydrogen manufacturing and recycling program that will be administered by EERE. All efforts will be informed by the Hydrogen Shot initiative DOE launched last year, which aims to reduce the cost of clean hydrogen to $1 per kilogram within a decade.

Energy storage. Congress directs DOE to spend at least $500 million on energy storage activities in fiscal year 2022. DOE reports having spent $648 million in fiscal year 2021, and the administration is proposing to increase spending to at least $769 million next year. The infrastructure act is providing an additional $126 million each year for energy storage activities. Many of DOE’s efforts will serve its new Long Duration Storage Shot , which set a 10-year goal of reducing by 90% the cost of grid-scale storage that provides more than 10 hours of supply. Congress has also just provided the final $47 million needed to complete construction of a new Grid Storage Launchpad facility at Pacific Northwest National Lab. DOE is now requesting funds for a new fellowship program there that will host “post-graduate level academics, entrepreneurs, or other high-potential innovators with early-stage concepts for new storage technologies.”

Carbon dioxide removal. Congress directs DOE to spend at least $104 million across the department on technologies and methods geared toward removing carbon dioxide from the atmosphere, with at least $75 million allocated to R&D on direct air capture technologies. DOE reports spending $248 million on carbon dioxide removal in fiscal year 2021 and is requesting $262 million for related activities in fiscal year 2023. In addition, the infrastructure act is providing $700 million each year to establish four regional direct air capture hubs , plus over $500 million for other carbon management efforts. These activities will support DOE’s Carbon Negative Shot , which aims to dramatically reduce the cost of atmospheric carbon removal and long-term storage.

Critical minerals. Congress directs DOE to spend at least $167 million on critical minerals R&D, including efforts to improve recycling methods and develop substitute materials. DOE reports spending $217 million across the department on critical minerals and materials in fiscal year 2021, and it proposes an increase to at least $401 million for fiscal year 2023. The infrastructure law is providing nearly $600 million for critical materials activities across fiscal years 2022 and 2023, including $140 million to establish a Rare Earth Elements Demonstration Facility and $75 million to establish a Critical Material Supply Chain Research Facility .

Renewable energy

Congress increased EERE’s budget to $3.2 billion and the administration is now seeking $4 billion, including a near doubling of the budget for renewable energy programs to $1.2 billion. The infrastructure act is providing a $420 million supplement for renewable energy R&D that is to be spread over four years.

Wind energy. Congress increased the Wind Energy program budget by 4% to $114 million this year, rejecting the administration’s request for an 86% boost. This year, the administration is proposing an even larger increase, seeking to more than double the program’s budget to $345 million. The bulk of the increase would be allocated to offshore wind technology, supporting the launch of the Floating Offshore Wind Accelerated Research and Development (FORWARD) program.

Geothermal technologies. Funding for the Geothermal Technologies program increased 3% to $109 million this year, well short of the more than 50% increase the administration sought. The administration proposes an 85% increase to $202 million in fiscal year 2023, in part to support a new effort to transfer technology and expertise from the oil and gas industry into geothermal energy.

Water power. Congress increased the Water Power program budget 8% to $162 million, short of the requested 31% increase. Funding for marine energy is holding mostly steady at $112 million, while funding for hydropower is increasing 15% to $47 million. For fiscal year 2023, the administration is seeking $80 million for hydropower and flat funding for marine energy, similar to last year’s request.

Solar energy. Funding for the Solar Energy program increased by 4% to $290 million for fiscal year 2022, well short of the 38% requested. The administration is now asking for $535 million, of which $225 million would go toward manufacturing and supply chain initiatives, including a new effort to “avoid reliance on foreign supply chains that may use unfair labor practices in current production, including foreign-sourced polysilicon.”

Grid integration. The increases Congress provided to each renewable energy program will go somewhat further than the toplines suggest, because the fiscal year 2022 appropriation also pulls out $40 million from across their budgets into a separate account for efforts focused on integrating renewable energy into the electric grid. The administration seeks $57 million for such efforts next year, focusing on grid requirements of charging stations for heavy-duty electric vehicles.

Nuclear energy

Congress increased the Office of Nuclear Energy budget by 10% to $1.65 billion, and the administration is seeking a 1% increase for next year. These figures do not correct for funding reductions connected to the transfer of the X-energy and TerraPower reactor demonstration projects into OCED.

Advanced reactors. Aside from the two large-scale demonstrations, the Advanced Reactor Demonstration Program also funds a series of smaller-scale activities. Congress is ramping up funding for the National Reactor Innovation Center at Idaho National Lab from $30 million to $55 million, stating that up to $48 million is for early work on a test bed for reactor demonstrations. Funding for R&D to reduce technical risks on potential future demonstration projects is increasing from $40 million to $115 million. The administration is seeking $75 million for the center and $140 million for future demonstrations in fiscal year 2023.

Versatile Test Reactor. Without providing an explanation, Congress zeroed out funding for the Versatile Test Reactor, a proposed user facility that would provide capabilities for exposing fuels and materials to the high-energy neutrons that many proposed advanced reactor projects plan to employ. Congress had previously instructed DOE to explore reformulating the VTR as a public-private partnership due to concerns about its cost, which preliminary estimates placed between $2.6 billion and $5.8 billion. Despite Congress’ decision, the administration proposes to continue preliminary work on the project and seeks $45 million, equal to the fiscal year 2021 level. DOE plans to coordinate work with the TerraPower demonstration, which employs a similar reactor design, and last month it identified Idaho National Lab as the preferred site for the VTR. In justifying the facility, the lab has stated that currently U.S. companies are reliant on a reactor in Russia for high-energy neutron testing.

University research reactor. DOE currently supports a fleet of university-based reactors that support nuclear energy research. The administration seeks $45 million to begin the process of establishing a new research reactor at a U.S. university. The project would be competitively awarded and led by a consortium, and DOE adds it would “potentially” entail buildout of “complementary research infrastructure at additional locations.”

Transformational Challenge Reactor. Last year, the administration stated it had discontinued a project based at Oak Ridge National Lab that aimed to demonstrate the use of additive manufacturing in assembling a small-scale reactor, citing the “tremendous” advances it had made. Nonetheless, Congress provided $25 million for the project, $5 million less than the previous year. The administration now states the project will terminate in fiscal year 2023 and is again seeking no funding for it.

High-assay, low-enriched uranium. Congress is providing $45 million for a program to increase domestic supplies of HALEU, a fuel required by many proposed advanced reactor designs that is currently only commercially available in significant quantities from Russia. In the short run, the program supports the distribution of HALEU from DOE uranium inventories, while also funding the build-out of private-sector production capabilities. A predecessor program had a $40 million budget in fiscal year 2021, and the administration proposes to ramp up funding for the new program’s budget to $95 million next year. In addition, DOE seeks to extend operations from 12 to 24 hours a day at the Experimental Breeder Reactor-II facility, where it recovers HALEU from the decommissioned reactor’s fuel.

Nuclear waste storage. Amid the decades-long deadlock over where to store spent fuel from commercial power plants, the administration is seeking $35 million in new funds to ramp up development of a consent-based siting process for an interim storage facility. Congress directed DOE to move forward with the project in its 2021 appropriation, and the department began soliciting stakeholder input in November.

Carbon management

Congress increased funding for the Office of Fossil Energy and Carbon Management (FECM) by 10% to $825 million and the administration is seeking $893 million for fiscal year 2023, close to its last request.

Carbon management. Not counting the infrastructure law funds, Congress increased DOE’s base budget for accounts dedicated to carbon capture, removal, storage, and conversion by 20% to $274 million. The administration now requests $400 million for these four accounts as part of a broader, reconfigured portfolio dedicated to carbon management technologies.

Fossil fuel impacts. The administration requests $183 million for a new Office of Resource Sustainability that focuses on “reducing the environmental impacts of the historical and continued use of fossil fuels.” The office would consolidate various existing efforts, including support for methane mitigation, sustainable production of critical minerals, and decarbonization of the production of hydrogen from natural gas. Among these programs, the administration seeks a large boost for methane mitigation, requesting a five-fold increase to $100 million.

Fossil fuel programs. Congress has complied with the administration’s proposal to terminate funding for coal power and petroleum technology programs that respectively received $10 million and $46 million in fiscal year 2021. However, it provided $15 million to an experimental fossil energy power plant in San Antonio, Texas, rejecting the administration’s proposal to zero out the project. The administration again requests no funds for the project, stating it will complete its scope of work this fiscal year.