Opportunities for Smart Grid Technologies Under the American Recovery and
Reinvestment Act (ARRA)
The nation’s infrastructure for delivering electricity suffers in two major respects: it is
overburdened to support existing demand, and it lacks the reach and digital “intelligence”
needed to integrate variable energy inputs from distributed and new “green” sources such
as wind and solar.
The American Recovery and Reinvestment Act (ARRA) provides $4.5 billion to the Office
of Electricity Delivery and Energy Reliability that can be used for grid modernization,
demand-responsive equipment, and energy storage research, development,
demonstration, and deployment. Most significant for smart grid businesses, it provides
funding for a wide array of smart grid technologies under Title XIII of the Energy
Independence and Security Act of 2007.
Everyone seems to understand what the “smart grid” is -- until asked to explain it. The
2007 Act spells it out. Under that law, a “smart grid” may include:
CONTACT
If you would like more
information, please contact
any of the following McKenna
Long & Aldridge LLP
attorneys:
Frederick R. Anderson
202.496.7370
fanderson@mckennalong.com
Geraldeine E. Edens
202.496.7371
gedens@mckennalong.com

increased use of digital information and control technology to manage and
optimize the transmission and distribution infrastructure;

deployment and integration of distributed generation, including renewable
energy;

development and incorporation of demand-response, demand-side, and energyefficiency resources;

deployment and integration of “smart” technologies for metering, communications concerning grid operations and
status, and automation of distribution;

integration of “smart” appliances and consumer devices;

deployment and integration of advanced electricity storage and peak-shaving technologies, including plug-in
electric vehicles and thermal-storage air conditioning;

provision to consumers of timely information and control options;

development of standards for grid communication and inter-operability; and

identifying and lowering barriers to adoption of smart grid technologies, practices, and services.
John S. Harris
518.492.1800
john.harris@mckennalong.com
The DOE has the discretion to spend most of the $4.5 billion by funding smart-grid programs such as the Smart Grid
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Regional Demonstration Initiative and the Smart Grid Investment Matching Grant Program.
The Smart Grid Regional Demonstration Initiative
ARRA modifies the 2007 Act and provides funds for smart grid demonstration projects specifically focused on advanced
technologies across the nation. It provides funds for public and privately owned transmission systems, as well as private
project developers. This structure allows utilities and others to receive grants for up to half the cost of qualifying advanced
grid technology investments made to support a demonstration project. Before ARRA, only utility companies were eligible
for such grants. All participants in the program are required to provide data to a new smart grid information clearinghouse
that will be open to the public.
The Smart Grid Investment Matching Grant Program
The 2007 energy law established the Smart Grid Investment Matching Grant Program to provide grants for qualifying
smart grid investments. ARRA raises the federal matching fund requirement for smart grid investments from only 20
percent in 2007 to 50 percent. Businesses may now receive grants for up to one half of their qualified smart grid
investments. Procedures for the Smart Grid Investment Matching Grant Program must be established by mid-April.
Innovative Technology Loan Guarantee Program
Companies whose smart grid technologies focus on modernization of the transmission infrastructure may also take
advantage of the $6 billion that Congress appropriated for the DOE’s Innovative Loan Guarantee Program. The program
is specifically targeted for transmission projects that promote system reliability and help meet state and regional
environmental goals, such as addressing climate change.
Energy Efficiency and Conservation Block Grants
ARRA provides $3.3 billion for Energy Efficiency and Conservation Block Grants that include projects to improve energy
efficiency in transportation, building, and other appropriate sectors. Smarter grids constitute such an “appropriate” sector.
Smart grid projects related to electric vehicles or building automation may also qualify.
Qualifying Advanced Energy Project Credit
Smart grid project developers may be eligible for the new Qualifying Advanced Energy Project Credit. This credit provides
a 30 percent tax credit for the costs of establishing, expanding, or re-equipping certain eligible manufacturing facilities.
Eligible manufacturing facilities include those that support the transmission and storage of energy from intermittent
renewable resources, as well as property designed to produce energy conservation technologies (including energyconserving lighting and smart grid technologies).
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Of the $4.5 billion in funding, $100 million is for workforce training activities, $80 million to perform a resource assessment and
determine future demand and transmission needs, and $10 million is for the Smart Grid Interoperability Framework.
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