The U.S. Department of Energy says it will invest roughly $967 million in additional funding to modernize critical energy infrastructure and lower surging electricity costs across the country. The money flows through the Grid Resilience State and Tribal Formula Grant program, which channels federal dollars to states, territories and tribal nations so they can fund infrastructure improvements aimed at delivering more affordable and dependable power.
According to Reuters, the announcement was reported by correspondent Arathy Somasekhar from Houston. The formula grant program itself traces back to Section 40101(d) of the 2021 Bipartisan Infrastructure Law, which authorized roughly $2.3 billion in non-competitive funding over five years for states, territories and federally recognized tribes, according to the Department of Energy. Unlike competitive programs, this formula money is distributed directly by DOE using a calculation based on population size, land area, severe weather risk and historical mitigation spending, with states and tribes then running their own sub-grant competitions for local utilities and grid operators.
Nearly $1.3 Billion Already Out the Door
This latest round builds on a program that has already moved serious money. Between Fiscal Year 2022 and October 2024, DOE awarded nearly $1.3 billion in formula grant funding across 49 states, five U.S. territories, 254 Tribal Nations, and the District of Columbia, per figures highlighted by EnergyFundsForAll. Prime recipients such as state energy offices act as pass-through administrators, allocating sub-awards down to local grid operators and electric utilities rather than spending the money directly themselves.
Those sub-awards come with strings attached. Under federal formula grant guidelines, state and tribal prime recipients must provide a 15% non-federal cost match, while large utility subrecipients selling over 4 million megawatt-hours annually must match 100% of their sub-award funds, according to the Puerto Rico Central Office for Recovery, Reconstruction and Resiliency. Smaller utilities selling under that threshold face a reduced 33.3% match requirement, easing the burden on smaller players asked to help foot the bill.
What the Money Can and Cannot Buy
The program is specific about what counts as an eligible project. Funds can go toward power line undergrounding, fire-resistant equipment, vegetation management, adaptive monitoring sensors and battery microgrids, per guidance cited by the Puerto Rico recovery office. Ohio's experience shows how that plays out on the ground: in 2023, the state received a $14.2 million award that included its first two years of formula-allocated funds, and the state described undergrounding and pole replacement as eligible project types, as the Office of the Governor of Ohio detailed, with the commission prioritizing sub-awards aimed at cutting outage frequency in disadvantaged communities.
The formula program is distinct from DOE's other major grid initiative, the Grid Resilience and Innovation Partnerships program, known as GRIP, a competitive effort authorized under separate statutory sections that offered up to $10.5 billion across two funding rounds, the Department of Energy notes. GRIP tends to focus on smart grid deployments and large interregional transmission projects, while the formula grants are built around steady, population- and risk-based allocations to every eligible state and tribe.
Storms and AI Data Centers Strain an Aging System
The timing reflects mounting pressure on the nation's power infrastructure from two directions at once. U.S. electricity customers experienced an average of 11 hours of power interruptions in 2024, nearly double the annual average of the prior decade, with major storms including Hurricanes Beryl, Helene, and Milton accounting for 80% of total outage duration, according to the U.S. Energy Information Administration. Non-storm service interruptions, by contrast, routinely average only about two hours a year nationwide, underscoring how much severe weather now drives the outage numbers.
At the same time, demand is climbing fast. The North American Electric Reliability Corporation reported in its 2025 assessment that 10-year summer peak electricity demand across North America is projected to grow by 224 gigawatts, a 69% increase over its 2024 forecast, driven primarily by artificial intelligence data centers and broader electrification, per the organization's findings. NERC warned that 13 of 23 regional reliability zones face potential resource adequacy challenges over the next decade.
States Are Pairing Federal Dollars With Their Own Plans
In September 2026, New York Governor Kathy Hochul launched the state's CHARGE agenda and Energy Infrastructure Development Plan, backed by nearly $1 billion in state funds, with plans for renewable expansion and transmission planning amid rising demand from AI data centers, according to the Office of Governor Kathy Hochul.
The USDA has moved on a parallel track for rural utilities that don't fit the investor-owned utility mold. On October 19, 2026, the agency began accepting Letters of Interest for its $175 million Affordable Rural Cooperative program, funded under the Inflation Reduction Act to support transmission efficiency and nuclear integration for rural electric co-ops. Individual ARC awards are capped at $20 million and require a 25% non-federal cost match, a smaller lift than the matches utilities face under DOE's formula program.
Taken together, the federal grid-funding landscape now spans formula grants, GRIP's competitive billions, state-level plans like New York's CHARGE agenda, and USDA's rural co-op program, each with its own rules on match requirements and eligible projects. The common thread, reflected across these efforts, is a push to get federal dollars to high-risk, underserved communities rather than simply subsidizing routine capital spending that large investor-owned utilities would have made anyway.
