DOE grant terminations hit $12.5bn as grid projects stall and labs face cuts
Federal research and grid funding is being pulled at a pace that threatens to slow US energy innovation, with $12.5bn in DOE awards already terminated.
The Department of Energy has terminated 356 awards worth $12.5 billion since January 2025 and threatened to cancel 303 more, according to an April report from the DOE Alumni Network, a group of former agency employees.6 The scale of the pullback is now showing up in concrete project cancellations, not just budget line items.
In Wisconsin, utility Alliant Energy has called off a project meant to reduce power outages in disadvantaged and tribal communities after the Trump administration terminated the federal grant that would have funded it.6 In California, the Sacramento Municipal Utility District has deployed and upgraded hundreds of thousands of advanced smart meters but has received no reimbursement from DOE since October.6
Those are early casualties of a broader funding squeeze. The administration has put all federal outgoings under the microscope, including the roughly $160 billion spent annually on basic and applied research.1 The National Science Foundation and NOAA have been told to prepare for budget reductions and staff cuts of up to 50%.1
The deepest proposed slashes target the $44 billion in NIH grants, though those affect biomedical research rather than energy directly.1 Still, the indirect cost cap the administration wants to impose on NIH grants — limiting institutional overhead to 15% of the grant total, down from the 50-70% many universities routinely recover — signals how the White House is thinking about all federal research funding.1
That matters for energy because much of the basic science underpinning grid modernisation, battery technology and advanced materials flows through the same university and national laboratory system. Private foundations cap indirect costs at similar levels, which is the administration's argument.1 But researchers and university administrators say a 15% cap would force institutions to either scale back lab capacity or shed support staff.
Michael McGehee's laboratory at the University of Colorado in Boulder illustrates what is at stake. With a four-year $8 million grant from the Department of Energy, the lab has been working on advanced solar materials — exactly the kind of applied research that has kept US universities at the frontier of clean energy innovation.2 Whether that grant survives the current review is an open question.
House appropriators are not fully backing the administration's approach. Their Interior-EPA spending bill, unveiled Wednesday (2026-05-20), leans heavily into oil, gas and mining development on public lands while tamping down the administration's calls to eviscerate the EPA.3 The bill cuts deep into science and research programs but pushes back on the most aggressive agency cuts.4
The grid funding freeze has a direct market consequence. Utilities that had planned distribution upgrades on the assumption of federal reimbursement now face a choice between raising rates, deferring work, or scrapping projects entirely. Alliant's decision shows what happens when the math stops working.6
SMUD's situation is more complicated. The utility has already done the work. It is now effectively carrying the federal share of the cost on its own balance sheet while waiting for a reimbursement that may never come.6 For other utilities weighing similar applications, that uncertainty is itself a disincentive to start.
There is a counterargument. Federal R&D spending on AI has levelled out at around $3.3 billion annually over the past four years even as private sector investment has surged, suggesting commercial capital can sometimes compensate for government pullback.5 But grid infrastructure is not software. The private sector cannot easily replace federal grants for distribution upgrades in rural or tribal communities where the economics are marginal.
The next signal to watch is the DOE review of the 303 additional awards it has threatened to terminate.6 If those cancellations go through, the total forked over since January 2025 would approach $25 billion, and the list of shelved grid projects would grow well beyond Wisconsin and California.6 Traders and utilities alike will be watching which projects get cut and whether any of the threatened terminations are reversed on appeal.