US battery and carbon capture projects slated for cuts on DOE list

By Valerie Volcovici and Nichola Groom

WASHINGTON (Reuters) -The U.S. Department of Energy is weighing cuts to billions of dollars in funding for projects meant to demonstrate nascent energy storage and carbon capture, according to a list seen by Reuters.

Rescinding funding for the projects would represent a major blow to promising new carbon-emission cutting technologies that rely heavily on government support because most traditional private sector investors consider them too risky.

Among the projects marked "cut" on the list of over two dozen funded by the DOE's Office of Clean Energy Demonstrations are four carbon capture pilot projects that were awarded a total of $309 million last year, and three later-stage demonstration projects in California, Texas and North Dakota that received $890 million for integrated carbon capture, transport, and storage technologies.    

"All of our members are making the case that these are critically important projects so to pull back at this moment in time is catastrophic," Jessie Stolark, executive director of the Carbon Capture Coalition trade group, said in an interview.

Some projects are beginning to run test wells or start construction, Stolark added.

The list also showed planned funding cuts for six of nine long-duration battery storage projects. The companies involved were awarded $350 million to develop technology that would help utilities and grid operators integrate renewable energy sources like solar and wind by storing the power they produce for longer periods of time.   

They include projects by power sector giants including NextEra, which was granted up to $49 million to put zinc-bromide batteries at solar and wind facilities in three states, and Westinghouse, which was awarded up to $50 million for a pumped thermal storage system in Alaska. 

Others affected include startups like Smartville and ReJoule, which repurpose used electric vehicle batteries, and New York-based Urban Electric Power, which has developed a zinc manganese dioxide battery.

"We are actively working to communicate the importance of our work to Energy Secretary Chris Wright and are engaging with our congressional representatives to ensure continued support for energy innovation," Zora Chung, co-founder of California-based ReJoule, said in an email.

"Given the broad importance of domestic energy resilience and advanced battery technology, we believe this is an issue of national interest that transcends party lines." 

The Department of Energy did not immediately respond to a request for comment. NextEra and Westinghouse also did not respond to requests for comment. Urban Electric Power declined to comment.

Long-duration energy storage is widely regarded as critical to deploying the large amounts of intermittent wind and solar resources needed to decarbonize the global electricity supply. Grid-scale batteries now in the market, mainly lithium-ion, can typically only store up to four hours of power.

Smartville, based in Carlsbad, California, let go of eight of its 16 employees earlier this year due to uncertainty regarding the federal funding, according to Scott Packard, the company's vice president of business development.

"We are transitioning to commercial focus and getting off of federal grants," Packard said. 

"We will either make it or we won't."

Washington has been slashing funding for clean energy projects since President Donald Trump, a climate change skeptic, took office in January. His administration is prioritizing fossil fuel production as part of its "energy dominance" agenda.

Energy Secretary Chris Wright has been reviewing lists of projects funded through the 2022 Inflation Reduction Act and 2021 Infrastructure Investment and Jobs Act to weigh which of the congressionally-appropriated projects should cease receiving federal funding.

A group of House Democrats on Thursday sent a letter to the DOE Inspector General criticizing the cuts.

"It appears that some projects previously deemed worthy of funding are being cancelled without adequate justification, and in some cases, with no clear rationale other than administrative convenience," the letter said.

Last week, Reuters reported that two Direct Air Capture hubs in Texas and Louisiana aimed at demonstrating technology to capture carbon from the atmosphere at commercial scale were marked to be cut on a different list that had been circulating. It also reported that four hydrogen hubs intended to jumpstart the production of "clean hydrogen" were slated for cuts.

(Reporting by Valerie Volcovici and Nichola Groom; Editing by Nia Williams)