DOE Announces New $500 Million Funding Opportunity for Advanced Battery Supply Chain Projects

Below we discuss key topic areas of interest under the NOFO, projects that may be prioritized by DOE, eligibility for submitting NOFOs, next steps and considerations for entities seeking to apply as a recipient or be included as subrecipients.

According to DOE, the NOFO seeks to increase U.S. supply chain resilience and reduce reliance on foreign supply chains by up to 15% by 2030 for key critical materials and battery components. The NOFO provides a total of $500 million in cooperative agreements for the following topic areas, with a minimum private cost share of 50% (which cannot use federal financing) for demonstration of commercial projects:

• Topic Area 1: Domestic Critical Materials Processing from Raw Feedstocks
• Topic Area 2: Domestic Critical Materials Recycling
• Topic Area 3: Domestic Battery Materials and Component Manufacturing

Topic Area 1: Domestic Critical Materials Processing from Raw Feedstocks 
The first topic area is intended to create domestic processing capacity for minerals critical to the advanced battery supply chain including lithium, nickel and cobalt. Details include:

• The total available funding is approximately $200 million and will be distributed amongst 2-4 project awards ranging from $50 million to $100 million.
• At the end of the performance period, awardees are expected to be able to produce in the United States 10,000–25,000 tons/year of lithium, 5,000–15,000 tons/year of nickel and 2,000–3,000 tons/year of cobalt in the form of mineral concentrates, hydroxides, sulphate or other relevant forms for advanced battery applications.
• Feedstocks can be derived from domestic and international sources to include primary sources as well as recovery through waste.

Topic Area 2: Domestic Critical Materials Recycling
The second topic area is intended to establish domestic recycling capacity for critical battery materials derived from manufacturing scrap, off-specification or rejected batteries, and end-of-life batteries. Details include:

• The total available funding is approximately $100 million and will be distributed across 1–2 awards ranging from $50 million to $100 million each.
• At the end of the performance period, awardees are expected to be able to produce domestically: 45,000–90,000 tons/year of black mass, 5,000–10,000 tons/year of graphite, 10,000–40,000 tons/year of nickel, cobalt or mixed precursor cathode active materials (pCAM), 5,000–10,000 tons/year of copper and 2,000–5,000 tons/year of rare earth elements.

Topic Area 3: Domestic Battery Materials and Component Manufacturing
The third topic area is intended to establish and expand domestic manufacturing capacity for advanced battery materials, components and cells, including those used in both energy and specialized applications such as defense. Details include:

• The total available funding is approximately $200 million and will be distributed across 1–4 awards.
• Funding will support the construction of new commercial-scale facilities, with awards for such facilities being at least $100 million. Funding will also support the retrofit, retooling or expansion of existing facilities, with awards for such facilities being at least $50 million.
• At the end of the performance period, awardees are expected to be able to produce domestically 10,000–20,000 tons/year of aluminum components, 5,000–10,000 tons/year of copper components, 10,000–20,000 tons/year of synthetic graphite anodes, 5,000–10,000 tons/year of nickel-based cathodes, 8,000–15,000 tons/year of iron phosphate-based cathodes and approximately 2 GWh per year of battery cells. Relevant manufactured forms may include, among others, active material powders, coated electrodes, thin film metal current collectors and battery cells.

As noted above, DOE anticipates awarding cooperative agreements under the NOFO. Such agreements include a statement of DOE’s “substantial involvement” in work performed under resulting awards. This may include DOE sharing responsibility for certain aspects of a project, intervening including by interrupting or modifying the conduct or performance of work under the award, participating in major decision-making processes, and redirecting or discontinuing funding under certain circumstances.

Prioritization
As a general matter, DOE-advised considerations for prioritizing projects include:

• Projects that:

- have feedstock supply and offtake agreements.

- produce or, as relevant, recycle the materials and minerals identified above. produce multiple critical minerals or materials.

- focus on innovations that reduce production costs or improve yield rates.

- have a higher likelihood of completion within a 36-month expected timeframe.

• Entities that:

- deploy North American-owned intellectual property and content.

- represent consortia or industry partnerships.

- Will not use battery material supplied by or originating from a foreign entity of concern (FEOCs).

DOE also advised that it will consider, among other things, the degree to which a proposed project includes prime and subrecipients that are not FEOCs, involves offtake agreements with entities that are not FEOCs, is not controlled or influenced by FEOCs, and will reduce or minimize control of certain markets by FEOCs. Section 40207(a)(5) of IIJA identifies as FEOCs all entities “owned by, controlled by, or subject to the jurisdiction or direction of the government of a covered nation” (defined in 10 USC § 2533c(d)(2) as North Korea, the People’s Republic of China (PRC), Russia and Iran). DOE’s Final Interpretive Guidance on FEOCs provides further clarity on how to identify and categorize entities “owned by, controlled by, or subject to the jurisdiction or direction of a government” of a covered nation that may be present in battery supply chains. Note this definition is separate and apart from the FEOC guidance issued through the U.S. Treasury to receive tax credits, which we discuss here.

Eligibility
Eligibility to be a recipient or subrecipient is restricted to domestic entities. To qualify as a domestic entity, the entity must be formed under the laws of a particular state or territory of the United States or of the United States; have majority domestic ownership and control; and have a physical place of business in the United States. Domestic entities eligible to apply include institutions of higher education, nonprofit organizations and for-profit private entities, state and local governments, and consortia of the aforementioned entities.

While foreign entities are generally not eligible to apply, DOE may approve a waiver for foreign entities. Applications by foreign entities must be submitted with a waiver request. Domestic applicants that seek to include one or more foreign entities as subrecipient(s) must also submit a waiver request in their application for each such entity.

Equity
The NOFO provides that DOE may be interested in taking direct equity stakes as part of this funding opportunity, and applicants may indicate in their applications an interest in offering equity stakes or similar derivatives. In the Trump administration, the Departments of War and Commerce have taken equity stakes in companies, and under the Biden administration, DOE also took an equity stake in a company that it had previously funded. In practice, DOE equity participation is likely to be highly negotiated. Recent federal government investments in strategic industries have utilized a range of participation structures, including equity stakes of 5 to 15 percent, warrants, options and revenue-sharing arrangements.

Next Steps
The deadline to submit applications is April 24, 2026. DOE expects to notify selected companies in the second quarter of 2026 and award negotiations in the third quarter of 2026.

DOE is compiling a Teaming Partner List to facilitate the formation of project teams for this NOFO. The Teaming Partner List allows organizations that may wish to participate on a project to express their interest to other Applicants and explore potential partnerships.

Entities seeking to apply for the NOFO or be part of a NOFO application as subrecipients should consider:

• Reviewing the Teaming Partner List to identify potential partners.
• Reviewing DOE’s application requirements and merit review criteria.
• Reviewing exposure to FEOC entities including for feedstock and offtake partners.
• Identifying partners for feedstock and offtake.
• Leveraging innovative technologies that reduce costs and increase efficiencies. DOE is playing a leading role in supporting new technologies through the Critical Minerals Innovation Hub and the METALLIC initiative.
• Assessing the potential to produce multiple critical minerals identified in the above topic areas.
• Partnering with other entities to facilitate meeting the prioritized 36-month timeframe and phases to meet expected performance goals, which include initial planning; permitting and preparation; construction and installation; and commissioning, qualification, and validation.  
• Assessing the value of equity stakes and type of equity stakes.

The authors would like to thank Xavier Gillett and Christian Martinazzo for their contributions to this article.