August 12, 2022
Special Report on Prospective Considerations for Clean Energy Demonstration Projects
The Infrastructure Investment and Jobs Act (IIJA) was signed into law on November 15, 2021. In December 2021, the Department of Energy established the new Office of Clean Energy Demonstrations (OCED) to oversee the $21.5 billion in IIJA funding for clean energy demonstration projects for innovative technologies like clean hydrogen, carbon capture, grid-scale energy storage, and advanced nuclear reactors. Demonstration projects test the effectiveness of innovative technologies in real-world conditions at scale, often leveraging public-private partnerships to pave the way towards commercialization and widespread deployment.
After reviewing prior reports and casework related to the Department’s management of financial assistance awards for demonstration projects, the Office of Inspector General identified five broad areas that warrant additional attention from senior Department leadership as it moves forward with IIJA funded demonstration projects under the OCED.
Prior audit reports show that insufficient Federal staffing adversely affected the Department’s ability to administer clean energy demonstration projects funded through financial assistance awards. We identified prior Office of Inspector General and Government Accountability Office reports demonstrating instances when the Department bypassed project controls such as performance milestones, budget phases, and cost share requirements put in place to mitigate technical and financial risks. We identified audit reports highlighting insufficient oversight of demonstration projects. Prior audit reports show inadequate internal controls related to oversight of financial aspects of clean energy projects. Prior audit reports show that the Department had not ensured that recipient procurement practices were adequate to fully protect the Government’s interests and complied with applicable policies, procedures, and best practices.
As the Department moves forward with its IIJA and other appropriation projects, this report identified several prospective considerations that OCED leadership should consider to enhance internal controls to help prevent fraud, waste, and abuse. In particular, we suggest that the OCED take steps to set aside sufficient resources for Federal staffing, as well as sufficient resources to build robust internal controls and independent oversight systems to prevent and detect foreseeable problems to ensure that the Government and taxpayers are adequately protected.
We made no formal recommendations in this report.