By Ruth McCormick, Vice President, Federal and State Programs, BCSE

As much of the United States faced a severe winter storm and subfreezing temperatures last week, the need to unlock new energy resources was made abundantly clear. America needs more energy now to keep the lights on for homes and businesses and to keep energy costs down amid rising energy demand and extreme weather conditions.

Federal support for the U.S. Department of Energy (DOE) and other energy programs is essential to achieving this energy expansion. The most recent funding for energy programs was passed in the fiscal 2026 “minibus” package (H.R.6938), which was signed into law on January 23, 2026.

The 2026 spending package preserved funding for many DOE programs (albeit at reduced levels) and avoided the elimination of critical programs such as weatherization assistance.

Here’s what you need to know about the changes to federal energy spending in the 2026 appropriations law:

What are the spending allocations for energy efficiency and renewable energy programs?

The final package provides $3.1 billion for the DOE Office of Energy Efficiency and Renewable Energy (EERE). EERE is now part of the newly minted Office of Critical Minerals and Energy Innovation due to DOE’s November 2025 reorganization. After transfers of the 2021 Infrastructure Investment and Jobs Act (IIJA) balances, the net new appropriated budget authority is about $1.95 billion.

• Office allocations: Most offices within EERE are being cut by 15% or less from last year’s levels. Nevertheless, these levels avoid the much deeper cuts for clean energy programs that had been contemplated.
• Wind and solar: Funding for EERE’s wind and solar offices are slated to decrease by 27% and 31%, respectively, from last year’s funding levels. The solar program will receive $220 million, and the Wind Technologies Office will receive $100 million. These programs had originally been slated for elimination under the president’s budget request. Despite the political volatility, market demand for solar, wind, and battery storage remains high, driven largely by the power needs of data centers and artificial intelligence.
• Geothermal: Funding for geothermal energy is slated to increase by 27%.
• Hydropower: The Water Technology Office within EERE, which supports hydroelectric technologies, will increase by 10%. This represents strong, historic investments to speed up the development of marine energy and enhance existing hydropower projects.
• Clean fuels: The package includes $5 million to support research and development of technologies that advance renewable natural gas (RNG) and clean hydrogen. The report accompanying the bill encourages research and development efforts in sustainable aviation fuel technologies and related advanced fuels.

What are the spending allocations for grid modernization technologies?

The Grid Deployment Office is slated to receive $375 million to enhance the domestic supply chain for the manufacture of distribution and power transformers, components, materials, and electric grid components.

That allocation is 3x more than the most recent annual funding level. Energy companies have been expressing concerns about shortages of grid equipment as electricity demand surges from the artificial intelligence boom and aging grid infrastructure, which is a chief driver of rising electricity costs.

What are the spending allocations for ENERGY STAR?

In addition to DOE programs, the funding package provided almost $33 million in funding for the ENERGY STAR program at the U.S. Environmental Protection Agency (EPA) – a voluntary program allowing companies to display energy efficiency labels on products. This funding provides a lifeline to ENERGY STAR and ends a battle over the program’s survival – for now, at least.

Unlike in previous years, ENERGY STAR was funded with a separate line item. This is a move that could help protect the program in the future and provide more predictability.

The spending bill, however, cuts overall funding for the EPA by $320 million, and deeper reductions were made at the U.S. Department of the Interior.

What DOE offices and programs are being shut down?

The spending package slashes funding for offices such as the Office of Clean Energy Demonstrations, which is not slated to receive any appropriations this year. The Loan Programs Office faces uncertainty with the Trump Administration’s plans to revise or eliminate over $83 billion in clean energy loans.

The bill also repurposes funds previously intended for electric vehicle charging programs.

The appropriations law made changes to how the Executive Branch can spend taxpayer funds. What does this mean?

The Energy and Water funding package reasserts Congress’ power of the purse and will prevent the Administration from deciding on its own how to spend taxpayer funds.

This is already appearing in DOE policy. Shortly after enactment of the Energy and Water funding bill, the DOE said it would reverse its indirect cost rates at the law’s direction, ending a plan from last year that would have cut overhead costs for grants to colleges, universities and other grantees. The pace of funding opportunity announcements at DOE continues to be a concern, however.

What programs still need to be funded?

The nation still awaits Senate action on the final minibus appropriating funds for FY2026, which will include funding for the Low-Income Heating Assistance (LIHEAP) Program in the Labor and Health and Human Services (Labor-HHS) Bill (S.2587).

If enacted, the Labor-HHS bill will include $4.045 billion for LIHEAP — an increase of about $20 million over the FY2025 level.

The LIHEAP program is a federal initiative that helps eligible low-income households manage energy costs with heating and cooling bills and assists with energy-efficient, low-cost home repairs or weatherization. The program operates through state, territory, and tribal agencies, often offering one-time, income-based grants to prevent unsafe heating or cooling situations.

The temperatures facing the nation this week are another reminder of the importance of this critical energy program and a reminder that America needs to use its energy resources wisely and efficiently.