The DOE is one of the largest climate tech investors in the world, and an increasingly important layer of the evolving climate capital stack as the agency provides crucial public funding to help more climate tech companies and projects move from demo-scale to FOAK and beyond.
As the climate tech ecosystem evolves from R&D to deployment, other investors want to get in the game, too. It’s important for them to get to know the players, the teams, the goals, and the rules — how the agency picks the best shots on goal, via its investment decisions and due diligence.
Previously, we’ve laid out what’s behind the doors of the DOE, in terms of the funding and resources available across the RDD&D value chain for early-stage companies, in our founder’s guide to the DOE. But to help understand how to unlock those doors, we’re bringing you a second edition: an updated guide to the DOE for founders, companies and investors focused on the big stuff — federally-funded commercial scale projects.
We spoke with decision-makers at commercial-focused DOE offices to understand their approach to investment decisions, and learned that it isn’t dissimilar from the private sector investment process. Companies must prove technical viability, meet investment theses, build confidence in their commercial strategies and teams, aim to meet profitability expectations, and negotiate deal terms & conditions. There’s no one-size-fits-all approach, as varying offices within the DOE have slightly different focuses and criteria. Here’s how the “private” in “public-private-partnerships” can understand what gets publicly awarded, funded, and loaned, and from who.
Disclaimer: There is variability across DOE and, for many awards, the only definitive source is the specific funding guidance like the Funding Opportunity Announcement. This guide isn’t legal advice, but rather a synthesis of common themes.
DOE’s double click on Demonstration and Deployment
It’s been a busy few years at the DOE, as the agency under current Secretary of Energy Jennifer Granholm has expanded towards demonstration and deployment (D&D). DOE is one of the largest funders of clean energy R&D in the world. Historically, funding was primarily awarded based on a project’s technical merits and project execution plan, with the goal of de-risking specific technologies. Under its new mandate from the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA), DOE has expanded the scope and scale of its government funding for deploying climate technology with a range of financial instruments.
With billions in federal investments from BIL and IRA, the agency’s in deploy mode, too. The DOE is on track, having launched 100% of all BIL and IRA programs — already announcing over $80 billion in funding opportunities and almost $50 billion for 1,000+ selected projects and 4,000+ formula funding awards, plus nearly $25 billion in closed or conditionally committed loans. Now, the Department is laser-focused on getting selections out of the purse, into big projects, and putting these investments to work.
Companies, depending on factors like their sector, technology readiness level, etc., can plug in where appropriate across DOE’s offices.
The (updated) DOE RDD&D program value chain
Source: Sightline Climate
R&D | Pre-commercialization stages, proving out technology
However, as the DOE’s mandate expanded beyond R&D, the Office of Technology Transitions brought an additional dimension to DOE’s selection processes, Adoption Readiness Levels (ARLs), focused on the commercial ecosystem. In the R&D stages, adoption readiness is typically low, thanks to many market barriers. As technologies mature, they can overcome these barriers — and new funding helps target the key challenges to demonstration and deployment.
Source: Sightline Climate.
The offices under the Under Secretary for Infrastructure are focused on funding commercial projects that push past TRL 6. Here, the underlying technology is ready, but the market and/or the financing hasn’t caught up, creating a demonstration-stage “Valley of Death” for companies to cross. We’ve said it before, and we’ll say it again: Public funding helps bridge that valley for companies and projects.
DOE leaders prioritize many of the same things as private investors (technological and commercial viability, team and partners, project management plan, and community support), plus some program-specific ones (emissions reduction, impact on national and global climate goals). And similar to VCs, they’re looking out for any hint of risk, but they accept that there might be some failures.
As Ashley Zumwalt-Forbes, Deputy Director of Batteries and Critical Minerals in the Office of Manufacturing and Energy Supply Chains, told us, “We need to have late TRLs ready to scale real businesses. We need to see post-pilot facility results, real offtake traction, real input traction. Do they know where they're going to get the raw materials? Do they have the agreements? How are they structured — a flat price or a floating price? What index are they using? We must ensure that these businesses can truly compete on a head to head basis.”
As Jeffery Dennis, Deputy Director for Transmission at the Grid Deployment Office, told us, “We have to do a full-scale analysis of the risks to the project. That involves looking at the project's engineering risks — can it be integrated into the grid, will it be reliable and resilient, does the project sponsor have the right management team in place to actually execute on the project. We also look at what the market for that transmission capacity is going to be, understand the delivered cost of electricity that the project will provide when it's operational, and how competitive that price is? And permitting and siting — where are they in the permitting process? Are they impacting endangered species? Are they running through communities where siting is going to be difficult?”
Here are four of the DOE offices offering funding support for market adoption — each has their own slightly different focus within U.S. energy technology.
Demo stage | De-risked underlying technology, next step: market adoption
[TRL: 6-8+ ≈ ARL: 4-6 ≈ Series B/C]
Office of Clean Energy Demonstrations (OCED): OCED, established in 2021, has more than $25bn in its purse for projects across industrial demonstrations, clean hydrogen, carbon management, advanced nuclear reactors, grid-scale energy storage, distributed energy resources, and clean energy projects on mine lands and in rural and remote areas. Many opportunities focus on pushing a technology across the gap to market pull or as they like to say, “commercially viable demonstration projects.”
Office’s mandate (AKA Investment Thesis): De-risking and scaling energy technologies and markets, with maximum potential for continued replicability and expansion across more geographies and industries. “We are not looking for technology risk - we consult technology experts in our diligence and project management. We are willing to take some market risk to de-risk and scale these new technologies.” said Rachel Gould, Senior Project Finance Specialist with OCED.
Funding mechanisms: Non-dilutive equity, similar to grants but with more government partnership, liftoff enabling programs like National Lab consortia, and other transaction authorities like Hydrogen Demand Side. Almost all awards have a cost-share requirement whereby the government is maximum 50% of capital cost, but there is no return of or on DOE capital. The single award range is ~$10m-1bn+ (for $20m-$2bn+ in total project cost).
Diligence processes: The office is looking for organizations with clean energy demonstration projects — including tech developers, EPC firms, utilities, local governments, and often joint partnership projects from these groups — to accelerate market adoption. Internal and external consultants come on board to assess applicants and their proposals. In applications, they generally weigh commercial viability 50-60%, technology/impact 20-30%, and community benefits 20%.
Form Energy, which makes a rechargeable iron-air battery capable of storing electricity for 100 hours.
Project Cyprus, a Direct Air Capture Hub, in Louisiana where Battelle, Climeworks Corporation and Heirloom Carbon are working to capture and store more than 1 million metric tons of CO₂ each year.
Deployment | De-risked, commercially viable technology, crossing the bridge to project finance bankability
[TRL: 7-9 ≈ ARL: 5-9+ ≈ Series C/Growth+/Project Finance]
Office of Manufacturing and Energy Supply Chains (MESC): MESC, established in 2022, is laser focused on reshoring manufacturing, skilling up the workforce, and scaling up production for clean energy infrastructure. The office mapped out key energy supply chain vulnerabilities and has $20bn to fund projects that will fill in these gaps domestically.
Office’s mandate (AKA Investment Thesis): Securing clean energy supply chains, by funding impactful post-pilot projects across key gaps like raw materials, processing, and manufacturing, as well as creating community benefits like jobs and training.
Funding mechanisms: Also awards non-dilutive equity and runs the selection process for the Qualifying Advanced Energy Project tax credit (48C). There’s no minimum for a single award, but they tend to range between ~$5-500m+, for projects that cost ~$10m-$1bn+ in total.
Diligence processes: The office is looking for rock-solid execution plans for projects, including experienced teams, supportive communities and investors, and commercial readiness. In applications, they also weigh commercial viability, technology/impact, and community benefits.
Grid Deployment Office: All things grid deployment related falls under GDO’s remit, and with clean energy capacity under the microscope due to power-hungry AI and manufacturing, the office is charging ahead with $22bn for new grid projects and technologies.
Office’s mandate (AKA Investment Thesis): Catalyze the development of new and upgraded electric infrastructure across the country, via critical generation facilities, high-capacity electric transmission lines, and new transmission and distribution tech.
Funding mechanisms: Competitive grants (cost-share), credits, and loans. Usually ~$10m-1bn+ for $20m-$2bn+ total project cost. You can use the office’s “Conductor tool” to find the right program for you.
Diligence processes: Funds projects focused on resource adequacy and resilience for the U.S. grid. For transmission, GDO funds projects with reasonable assurance of being paid back — but paid back on a transmission capacity contract, by unloading that contract to another customer (like generation developers, utilities) before the project is energized. For other projects, provides impact-based grants to catalyze grid capacity and resilience. Similar to OCED and MESC, in applications, they generally weigh commercial viability 30-60%, technology/impact 20-30%, and community benefits 20-40%.
The Southline Transmission Project, a 278-mile transmission line from El Paso, TX, to Tucson, AZ, to enable bi-directional power transport of wind and solar energy and to improve grid reliability.
Loan Programs Office: Once the technology has been nearly completely de-risked and a market has been established, it's time for developers to build a large-scale commercial project. However, operators often face the chicken and egg dilemma where no financiers are willing to fund the first commercial-scale project— Solugen CEO Gaurab Chakrabarti, described the situation before they received an LPO loan, “We were in that weird, awkward ‘in between,’ where we've proven out that this thing works and that it's scalable, but the risk was still too high for a lot of private banks to come in.”
Office’s mandate (AKA Investment Thesis): Ensuring that climate technologies reach successful commercialization and market adoption. Technologies poised to benefit from this structured approach include hydrogen, long-duration storage, carbon capture, advanced nuclear power, biofuels, transmission lines, offshore wind projects, energy efficiency, virtual power plants, and EV and battery manufacturing.
Diligence processes: Because of the similarity to project finance, “The intensity of the questions being asked is the most intense at our level,” Rich Matsui, Senior Advisor at LPO told us. “It's because the loan is meant to be paid back.”
Solugen, which has a chemienzymatic platform that makes the building blocks of the chemicals industry cheaper, faster, and more sustainably than petrochemistry.
Monolith, which would be the first-ever commercial-scale project to deploy methane pyrolysis technology, which converts natural gas into carbon black and hydrogen — two products that are frequently used in difficult to decarbonize industrial sectors like tire and ammonia fertilizer production.
Li-Cycle and Redwood Materials, which would support EV battery recycling and closed-loop lithium-ion battery manufacturing.
If you see an investment from the different offices, here’s a decoder for what went into it.
Source: Sightline Climate
The FOA diligence process in action: Case study
While each DOE selection process is a little different, there are a few common steps in the process. This case study illustrates a selection process for an OCED cost share opportunity, but some opportunities in MESC and GDO follow a similar process.
Concept paper submission. Applicants applying to a Funding Opportunity Announcement (FOA, “foe-a”), sometimes called a Notice of Funding Opportunity (NOFO, “no-foe”), must first submit a 5-10 page concept paper, to determine the potential relevance of the proposed project to the FOA.
Initial review process. A DOE review board determines if the applicant is relevant. A team of subject matter experts read the short papers, provide feedback, and encourage or discourage applicants to submit a full application. The process remains open for all applicants, but it is essential to submit the concept paper to stay in the running. Approximately 30-50% applications earn an “encourage” at this stage.
Full application submission. Applicants who submitted concept papers can then submit full applications, typically 40+ pages of information including technical volume, letters of support, and various techno-economic, lifecycle assessment, and budget worksheets.
Expert review: FOA applicants are reviewed by a panel of experts who evaluate the entire application based on Technical Review Criteria (TRCs). Each application is typically rated on a scale of 0-10, with scores above 5 considered good. General reviewers review the entire application, while super reviewers focus on specific sections (technical, commercial, work plan). For some opportunities, a National Lab Team conducts a Technical Readiness Level (TRL) assessment to check TRLs and ensure all criteria match the FOA requirements. Company self-analysis is compared with expert opinions to ensure accuracy.
Initial federal panel review.Scores from the expert review and independent assessments are summarized. A federal panel, essentially an “investment committee,” comprising approximately five decision-makers and advisory board members convenes to select applicants for interviews. These review panels typically comprise at least one or more people with the following expertise – finance/market/commercialization, community engagement and technical.
Interview process. The panel selects a set of FOA applicants to interview based on questions or gaps in their application. This process is equivalent to a due diligence question set an investor would provide in a Q&A log. In addition to the written responses, the federal panel meets the management team during a live interview with a presentation and further questions. (For smaller dollar amounts (~$30-50m), there can be 2-hour virtual interviews, but above that, they’re longer in-person interviews.)
Final federal merit panel. The panel takes in all additional information from interviews and potentially changes the scores based on the new insights. The program policy factors written in the funding call can also be considered to balance the portfolio. Then, they make a decision on selections. They also reserve alternative spots for applications that may still have potential if more funding becomes available.
Setting up for success
Investors, founders, companies, and communities can find opportunities for LPO here, OCED here, MESC here, and GDO here. Pro tip: Hear about opportunities first by signing up for office newsletters. Finally, some tips from the DOE:
This might seem obvious, but fit the FOA criteria: Read the FOA or other funding-specific documents closely and ensure that your project aligns with the DOE’s common criteria and the specific funding opportunity criteria. These documents are where DOE puts exactly what they are looking for.
Showcase current investment and partnerships: Emphasize how your project will raise private capital for cost share as well as benefit local communities, including job creation and environmental improvements. You should include letters of support from community partners, previous investors, and other important partners like offtakers.
Be persistent. There are several rounds during the application process in which DOE reviewers provide feedback, and even if you get an early neutral or negative response, you can still improve your application and continue through.
Huge thank you to Katheryn Scott from OTT and the Office of the Undersecretary for Infrastructure for her help “decoding” the DOE! As well as the engagement of team members across OCED, MESC, GDO, and LPO to understand how they think about investments.
Disclosure: CTVC and DOE have worked closely to create resources to better fulfill their mission (and ours) of accelerating climate innovation. This piece is published without cost, just thanks to folks in the DOE who helped with background and reporting.
