The Department of Energy announces funding opportunity for the electric heat pump industry

The funding, which comes from the Inflation Reduction Act (IRA), will create new manufacturing opportunities, build a cleaner economy, and shift away from fossil fuels to meet the global energy demand.

Click here for the DOE announcement and here for the DPA of 1950 (50 U.S.C. 4501 et seq.).

What is the purpose?

The Department of Energy (DOE) Office of Manufacturing and Energy Supply Chains (MESC) outlines four main pillars of the program in the FOA:

• Expand United States electric heat pump manufacturing to reduce the amount of energy needed in our buildings, leading to less reliance by the U.S. and allies on adversaries, such as Russia, for oil and gas.

• Strengthen heat pump system, components, and material supply chains.

• Create economic prosperity for communities, especially underserved communities, by ensuring access to federal resources.

• Support the creation of good-paying jobs.

What are the funding opportunities?

The DOE MESC foresees executing up to 20 awards under this program. The awards are anticipated to range between $10,000,000 and $50,000,000.

The DOE MESC is seeking applications for projects involving:

• Construction of new or expanded commercial-scale facilities to create additional domestic production capability for electric heat pump materials, heat pump components, and heat pump systems (air- or ground-source heat pump, heat pump water heaters) to respond to clear supply-chain vulnerabilities.

• Retooling or retrofitting existing commercial-scale facilities to transition manufacturing from non-heat pump HVAC systems and/or water heating equipment to produce electric heat pump materials, heat pump components, and heat pump systems.

What is the timeline?

Applicants may submit a concept paper to the online portal by May 19, 2023, at 5 p.m. ET. DOE will notify applicants whether they are encouraged to or discouraged from proceeding, and applicants will then have approximately 30 days to prepare and submit a Full Application. 

The submission deadline for full applications is August 1, 2023, at 5 p.m. ET.

The selection of awardees will occur in October 2023. The award negotiation process will take place between October 2023 and February 2024.

Please refer to the FOA for a comprehensive description of the funding process.

What are the conditions for applicants and recipients?

To be considered for substantive evaluation, an applicant‘s submission must meet detailed criteria set forth in the FOA. Some of the key requirements for an award under this DPA program include:

• The proposed prime recipient and any subrecipient(s) must be domestic entities, majority-owned by U.S. entities, and the work under the award must be performed in the U.S., although DOE indicates it will consider waiver requests for foreign owners and foreign work.

• Awards will be limited to a maximum of 50% of total project costs.

• Applicants must include a community benefits plan and demonstrate how their projects will strengthen the U.S. supply chain for electric heat pumps and contribute quality jobs.

Looking ahead

Applying for funding under the DPA program is a detailed and intensive process. The Hogan Lovells team is happy to answer any questions and assist you in evaluating eligibility and navigating the application process.

Authored by Mary Anne Sullivan and Stacy Hadeka.