Department of Energy FY2017 Budget Request

Secretary Ernest Moniz’s Summary of the U.S. Depart of Energy’s FY2017 Budget Request

The FY2017 DOE budget request is for $32.5 billion in discretionary spending, which is $747 million more from the enacted 2016 budget. Unlike previous budgets, the FY2017 budget contains three major components.

First, the $32.5 billion is a 10 percent increase from the FY16 enacted appropriation. Both the enacted request and the total domestic appropriations request would each be a 2 percent increase in appropriated funds. It is supplemented by a $2.3 billion request for mandatory spending. DOE’s second mission area is ensuring nuclear mission security.

Second, the budget includes 12.9 billion for the National Nuclear Security Administration (NNSA) with three broad program objectives:

Maintain a safe and effective nuclear arms deterrent program without nuclear testing now and well into the future.
Reduce the threat of nuclear proliferation, including support for implementation of a joint comprehensive plan of action and proposing a major shift in the plutonium disposition strategy.
Support the safe and reliable operation of the nuclear U.S. Navy.

DOE’s third major mission area is organizing, managing, and modernizing its operations in order to better achieve ongoing missions. The FY16 request provides $6.8 billion for these activities, including $6.1 billion for the Office of Environmental Management, which is $300 million above the FY2015 enacted and FY2016 requested, but below the FY2016 enacted. It includes $5.45 billion in new appropriations, and a proposal to authorize $674 million in new mandatory spending authority from the U.S. Enrichment (USEC) fund.

Sec. Moniz highlighted the cross cutting R&D initiatives in the budget. The budget increase is for grid modernization, which was increased by $83 million.

The second largest cross cut increase is for the energy water NEXUS initiative, increased by $68 million.

Turning to Mission Innovation (MI) and why it merits the support of the Congress, Sec. Moniz said MI has been identified as a subset of clean energy research and development within the Science & Energy Budget. The budget request includes $5.86 million in appropriations funding that support the U.S. MI pledge, made along with 19 other countries, to seek to double public support for clean energy research over a five-year period.

In 2010 the American Energy Innovation Council (AEIC) recommended that the government triple its investment in R&D. The council made three points:

Innovation is the essence of America’s strength.
Public investment is critical to generating the discoveries and inventions that perform the basis of disruptive energy technologies. Private companies cannot capture the full economy-wide value of new knowledge, and thus systematically under-invest in R&D relative to the benefits it produces.
The cost of RD&D is tiny compared to the benefits. Today’s investments are too small to offer an expanded range of economic security and environmental options in the future.

The MI objective is to greatly expand the suite of investable opportunities and clean energy technologies needed to support economic growth and competitiveness, strength and energy security, increased access to clean and affordable energy, and enable the global community to meet environmental goals.

The scope of MI spans the entire innovation cycle – from the earliest stage of invention through the initial demonstration, with an emphasis on growth in early stage R&D. Mission Innovation also includes all clean technologies, renewables, energy efficiency, and nuclear and coal with carbon capture.

MI is complemented by the Breakthrough Energy Coalition, an initiative launched simultaneously with the same objective. The coalition is committed to providing new opportunities for innovation pipelines in the MI country, with the intent of taking these R&D opportunities through ultimate market deployment. The investors are committed to higher risk tolerance and patience for return on their capital investment.

The coalition is not governmental in any sense. It is private investors looking at technologies that are coming out of DOE’s national laboratories and other sources. DOE may work with the coalition on some joint road mapping exercises.

When the Senate Energy & Natural Resources held a hearing on the FY2017 budget, Sen. Lisa Murkowski (R-AK) said she was excited about the public-private partnerships (P3s).

Sec. Moniz highlighted the $110 million requested to establish regional clean energy partnerships. Up to 10 non-profit regional partnerships could be established. All will be competitively selected to manage regional R&D programs focused on the energy needs, programs, resources, and markets. The program design of each partnership will be based on regional priorities. As resource portfolio managers, not performers, they will connect capabilities across universities, industry, investors, and other regional leaders to accelerate the innovation process within each region.

This approach tracks recommendations from the National Research Council (NRC), rising to the challenge which noted that “until very recently, U.S. federal agencies have done little to support state and regional innovation cluster initiatives. This is not the case abroad. Clusters have been embraced globally as effective vehicles, mobilizing and coordinating public and private activities to spur economic growth.”

The NRC recommended that regional cluster initiatives be assessed, and where appropriate, provided with funding and expanded geographically, as DOE has now propose.

The FY2017 budget also supports increased investments in successful ongoing innovation programs, including initiatives in the national laboratories supported in previous innovation acts. These include RPE, energy research centers, advanced manufacturing centers, bioenergy centers, advanced transportation technologies, and more.

Sec. Moniz also highlighted the DOE Budget for the Office of Science, which is largest federal supporter of research in the basic sciences. The request includes $5.67 billion for science with $5.57 million for appropriations funding, and $100 million for new mandatory spending authority to support a competitive grant program for university researchers to open up new directions. Some of the use-inspired programs in the office of science are counted in the MI pledge.

Comments and questions from House and Senate Committee members

Subcommittee Ranking Member Kaptur (D-OH)

Ranking Member Kaptur (“K): It is increasingly clear that electricity grid requires transformation. Why is investment so important?

Secretary Moniz (“SM”): We have emphasized an increase in grid funding. In the QER published last April – which looked at all energy infrastructures – it noted that the grid had a special role because most of the other infrastructures require the operation of the grid for their operation.

There are several challenges.

Modernizing the grid to include advanced technologies. There are many energy infrastructures, and the grid is one piece of that, but without the grid it would not be able to function.
1. For example, a manufacturing institute in North Carolina that was competitively awarded for wide-band semiconductors – another technology that is critical for the kinds of power and electronics that we need.
2. We need to do a better job integrating IT into the grid from the distribution systems – which includes going behind the emitter into people’s homes – all the way to the big grid system. To succeed ultimately, we need to interface that with the private sector and the state regulatory authorities.
Beyond individual technologies, it’s a big systems issue. It all has to work together, especially the electric grid. This is because it is real-time nature, and to succeed there ultimately we are developing in our proposal tool development as well, but then interfacing that with the private sector and with the state regulatory authorities.
We also need to harden the grid against many risks:
1. Weather, and
2. Cyber where there is an extensive interaction with the private sector utilities in terms of advancing private protection.
The last main challenge is installing in large microgrids to protect public safety in key transportation corridors while having that integrated into the larger grid.

K: What about sewage and water treatment facilities – they are mammoth energy users. How can we link the energy-water theme to helping cities save millions of dollars of savings?

SM: Wastewater issues are an important part of what we are doing. Energy water discussion at DOE has from the beginning been a multiagency discussion. The energy efficiency opportunities you raise in the urban water context is a good example of what a regional partnership could focus on.

K: What is the conceptual idea about how regions or topics would be divided on the topic of regional energy innovation partnerships?

SM: The partnerships are not restricted on how the regions would shape their portfolios. We hope to go forward with this and look at what the R&D resources are in each of the states.

K: In terms of national labs, is the Clean Energy Investment Center’s only purpose to serve investors, or are others going to be engaged in this?

SM: The Clean Energy Investment Center is intended to provide transparency into the DOE’s national lab programs for all investors. It would be included in the Office of Technology Transitions (OTT). We have listened to the Congress for the formation of technology commercialization fund that will be run out of the OTT competitively for the labs to commercialize technologies. Two years ago we formed a job strategy council, and in the budget the DOE is asking to formalize that into a small office. The focus would be on energy jobs in the country and what we would do to support them.

Rep. Valadao (R-CA)

Rep. Valadao (“V”): There have been historical water and energy challenges. Research could be helpful in coming up with some solutions. Why should we fund an increase and how will the research impact my state and the nation?

SM: Some of the research projects that would be funded include:

New hub for desalination.
System studies for minimizing water use.
Looking at advanced dry cooling for power plants.
A small 10 million-biome project that would be looking at the microbial communities associated with plants. The DOE has been discussing this topic with Israel’s minister, given Israel’s tremendously advanced water management approach. They are currently looking into a joint energy-water-food program. That could be very interesting, and they have tremendous experience and develop some great technologies.

V: The budget also proposes funding for the Exascale Initiative. What is the current timeline for developing an exascale system, and where does the U.S. stand in relation to exascale systems, and what role do they play in protecting the grid?

SM: The target for deploying an exascale system is mid-next decade. Right now the joint Collaboration of Oak Ridge, Argonne, and Lawrence Livermore (CORAL) is being implemented. CORAL was established in early 2014 to leverage supercomputing investments, streamline procurement processes and reduce costs to develop supercomputers that will be five to seven times more powerful when fully deployed than today’s fastest systems in the U.S.

Rep. Honda (D-CA)

Rep. Honda (“H”) asked a question about solar panels.

SM: Job growth of solar is twelve times the growth of the economy as a whole, and we are doing what we can to advance this initiative. An important factor is the continued driving down of the fixed costs of solar panels. It is also very important to work with the communities and cities on the soft costs. Those can dominate the costs of a system for the consumer. In DOE’s Sunshot Initiative, that is a key element. We don’t have the regulatory capacity, but we do technical assistance and try to share best practices and are seeing those costs come down.

H: The Weatherization Assistance Program reduces the costs of energy through insulation. How can we add solar to this program?

SM: To do this, you need to first look in a systems-way at how you can decrease the amount of energy needed, and then look at how you incorporate solar or LEDs. Integrating solar-efficient appliances and addressing the building efficiency makes a lot of sense. That would be a great program to put forward.

H: Energy storage technology can increase grid’s capacity, reliability, and flexibility. What is the status of energy storage technology? What are the barriers?

SM: The role of storage in the grid is extremely important. In California there is an initiative to require storage. One thing that is not a technology issue is that we have not developed the regulatory structures of the value of energy storage in the grid. We are focusing on that. There has been a tremendous advance in the last 7-8 years, but we still have a ways to go. We will be there within a decade.

Vice Chair Fleischmann (R-TN)

Rep. Fleischmann (“F”): Sec. Moniz has been involved with the Iranian nuclear processing facility. This committee has been clear about the need for Uranium Processing Facility (UPF).

SM: The first part of the project has been completed. The first phase – on- site readiness – is completed, and the second is well underway. Stage 3 will go through in the Q4 of 2016. By Q4 of 2017, there will be a baseline for last 2 segments of the project. Frankly a superior approach to the initial design.

F: It calls for a fiscal ramp up for addition funds. What are the funding challenges?

SM: we need to keep the discipline of not base lining until we have 90% design completion of a project. We go into so much trouble before putting out numbers for a project that does not have a basis. We think that we need to adopt more of the philosophy of the Office of Science.

Full Committee Chairman Rogers (R-ID) – Opening statement as prepared

Chairman Rogers (“R”): The DOE has been involved with negotiations with Iran. Those negotiations have concluded. Is the DOE expected to play a role in implementing the agreement? Is there funding in the request for the DOE’s role in the implementation of this agreement?

SM: We supply some technical experts, but we have no major expenditure. A lot of it is normal what we do supporting the IAEA.

R: What does Iran have to disclose about its past activities.

SM: IAEA investigation into previous military interventions was closed out, but they are not proscribed from looking into that should new information come up. The measures are extraordinary, for the first time, the IAEA is monitoring the entire uranium lifecycle.

Sen. Murkowski (R-AK) during Sec. Moniz’s testimony before the Senate Energy & Natural Resources committee.

Sen. Murkowski (M) referenced when Secretary Moniz testified during the Senate Energy & Natural Resources hearing in Bethel, Alaska that the DOE’s Office of Indian Energy in Alaska is understaffed. She asked what was being done to address this.

SM: This budget request includes funding to add new staff members to the Alaska office. The job application has been posted, and they are looking to have two positions filled within the next six months. Indigenous knowledge would be a good trait for this position.

M: The definition of microgrids does not allow for the independent islanded microgrids in Alaska to qualify as a microgrid that the DOE recognizes it under its definition. This means that Alaska’s microgrids will not qualify for potential microgrid funding through the DOE.

SM: I am not sure if the definition includes the microgrids that are found in Alaska, but the DOE is looking at both islanded and microgrids that are connected to a larger, more centralized grid. Additionally, the DOE is forming an Alaska Microgrid partnership with three remote communities in Alaska. Lastly, the DOE is working on a support tool for microgrids