Budget Breakdowns
U.S. Department of Energy’s Enacted FY26 Budget
By Paul Donohoo-Vallet, OP alum and Policy Strategy Lead for the U.S. Department of Energy Alumni Network
January 26, 2026
On January 15, 2026, Congress passed the Fiscal Year (FY) 2026 budget for the U.S. Department of Energy (DOE), sending the bill to the President’s desk to be signed into law. It largely aligns with the proposed Senate budget from December 2025 in rejecting the significant cuts proposed in the President’s Budget Request, but many offices still face double-digit percent reductions in funding. Key changes and notable updates from the final budget are reviewed here.
Final appropriations avoids major cuts to most technology offices
The funding levels for FY26 generally reject the substantial cuts to clean energy program offices proposed by in the President’s Budget Request, but still result in double-digit decreases from recent funding levels
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Within Energy Efficiency and Renewable Energy, the Wind and Solar technology offices avoid elimination but still face 31% and 27% budget cuts respectively. Similar substantial cuts to Vehicles and Fuels offices were avoided, with budget reductions of 6% to 12%. Industrial, manufacturing, and building technology-focused offices also will see cuts of ~14%. Of the EERE programs, geothermal and water power offices see substantial increases of 10% and 27% respectively. Overall these final levels represent a slight decrease from the original Senate proposal, with a 10% reduction in overall Energy Efficiency and Renewable Energy funding compared to a 5% reduction in the Senate proposal.
Other offices with significant cuts include the Federal Energy Management Program with a 56% cut, the Grid Deployment Office with a 58% cut, and ARPA-E with a 24% cut. Other offices generally saw cuts in the 10% range with only the office of Nuclear Energy receiving a significant increase of 10%. As anticipated, the Office of Clean Energy Demonstrations (OCED) is the only office to not receive any appropriations this year.
Note that the structure and offices passed in the final bill here align with the prior DOE organizational structure and does not reflect any of the recent reorganizations or office name changes implemented by the Department last year. This does not necessarily mean that Congress has rejected the reorganization put forward by the Administration; it simply reflects the control points that Committee Members and staff had already been negotiating within across 2025, prior to the reorg.
Over $5 billion in unobligated Infrastructure Investment and Jobs Act (IIJA) funds reprogrammed; mostly used to support new nuclear deployment
The final budget largely rejects the $15.2 billion recissions of IIJA funds proposed in the Presidents Request. The final appropriations keeps all the IIJA funds at DOE, but reprograms $5.2 billion fund to other existing and new DOE programs. About half of the reprogrammed dollars will come from carbon management projects (including the Carbon Dioxide Transportation Infrastructure and Financing (CIFIA) program, the Regional Direct Air Capture Hubs program, and the Carbon Capture Demonstration Projects program). Another $1.281 billion is reprogrammed from the Civil Nuclear Credit Program (CNC), which supports existing nuclear reactors at risk of retirement.
The biggest recipient of these funds are programs supporting advanced nuclear reactor deployment, with $3.1 billion going towards the existing Advanced Reactor Demonstration Projects (ARDP) and to expanding the existing Generation 3+ small modular reactor competitive awards. An additional $150 million is being transferred to the Energy Dominance Financing Office (nee the Loan Programs Office) specifically to support credit subsidy for loans to deploy new small modular reactors. Based on the way credit subsidies work, this amount would enable DOE to provide loans likely in the range of billions of dollars.
The Grid Deployment Office (likely now part of the Office of Electricity after the recent reorg) is set to receive an additional $375 million to develop a new program supporting the domestic manufacturing of critical electricity grid components including transformers. The program is authorized to use “financial assistance, technical assistance, and competitive awards for procurement and acquisition” so it will be worth tracking how the Department develops this program.
Finally, $1.5 billion of the reprogrammed funds is used to simply offset FY26 appropriations to the offices of Energy Efficiency and Renewable Energy, the Fossil Office, the Nuclear Office, and the Office of Science. This provides no new direction to these offices but is simply a budget procedure that lowers the total new appropriation to fund the Department.
Report language provides some process guardrails on DOE award terminations.
In response to the actions DOE has taken this year to cancel significant amounts of already-awarded projects, the report language for the authorizations package says that the Department cannot terminate a federal award on the grounds that it no longer effectuates ‘program goals or agency priorities’, unless it follows the termination procedures already published by the Department in its published Guide to Financial Assistance.
This is weaker than the original language in the Senate appropriations and does not prevent future possible terminations, but still requires concrete process steps that must be taken before a termination can proceed including at least a 10 day notification period, reporting on reasonings for termination, and potential corrective actions to prevent termination. The location of this language in the report likely means it applies to all existing and future DOE awards, not just the subset of IIJA or IRA funded projects.
What’s Next
With a final FY26 budget in hand it will be important to track how the Department executes with a focus on the offices that were proposed to be eliminated. Under the FY25 Continuing Resolution, offices like Wind and Solar saw funds transferred and spent in other offices. If the FY26 funds are not spent, there would likely be impacts on long-term research projects, priorities, and staffing within the National Laboratory system.
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This piece was drafted by trusted and vetted alumni of the U.S. Department of Energy. Any views and opinions expressed are that of the author(s) and do not reflect those of the DOE Alumni Network.