Key Takeaways from the U.S. Department of Energy's FY 2027 Budget Hearings

Throughout April 2026, U.S. Department of Energy (DOE) Secretary Chris Wright testified before four U.S. House of Representatives and U.S. Senate committees as Congress began reviewing the Trump Administration's fiscal year (FY) 2027 DOE budget request. The hearings reflected sharp partisan divides, a focused concern on rising gas prices amid the ongoing conflict with Iran and consistent themes shaping DOE's priorities. The hearings also provided resolution to a long period of uncertainty for many DOE grantees and the possibility of bipartisanship as the agency's appropriations bills are developed in the months ahead.

Thousands of Prior DOE Grants Advancing

Across all hearings, Democrats (and a few Republicans) criticized Secretary Wright for DOE's sweeping review of all grants and loans awarded by the Biden Administration, which resulted in several hundred grant terminations and thousands of grants left in a state of uncertainty since early 2025. Secretary Wright defended what he characterized as a necessary review of all grants, along with the restructuring or cancellation of tens of billions of dollars in loan commitments from the DOE's Office of Energy Dominance Financing (EDF), formerly the Loan Programs Office, as EDF prioritizes projects that reduce energy costs and increase baseload power supply.

During these conversations, Secretary Wright made a significant announcement: DOE's review of more than 20,000 grants was almost complete. DOE shared a list with Congress on April 15, 2026, highlighting that the vast majority of grantees, more than 80 percent, had received notice to "retain" or "modify" their award. The list also includes over a dozen awards that had previously been terminated but were reinstated. Most previously terminated awards remain canceled. Secretary Wright committed in the hearings to continued engagement with grantees, especially those where the agency might have erred in its termination of a project.

For all grants that continue to progress, it is essential that grantees continue to meet milestones as set out in their original terms and conditions. Holland & Knight is available to support grantees with questions about next steps, including those who remain in a place of uncertainty. See Holland & Knight's previous alert for more on what comes next.

Grid Reliability and Dispatchable Power as DOE's Central Priority

Secretary Wright consistently presented grid reliability as the primary driver of the agency's FY 2027 budget request. In the face of growing electricity demand from artificial intelligence (AI) and data centers, domestic manufacturing and electrification, Secretary Wright emphasized the importance of dispatchable, reliable energy sources on the grid, drawing contrast to the Biden Administration's prioritization of intermittent wind and solar energy sources.

This priority is reflected in the budget request, which allocates $3.5 billion to a new section titled "Baseload Power" to fund:

• coal, oil and gas, and geothermal power activities
• nuclear power activities
• cybersecurity activities
• grid and electric power activities
• hydropower activities

This funding is drawn from offices across DOE, along with a proposed reallocation of $3.5 billion in unobligated Infrastructure Investment and Jobs Act (IIJA) funding.

Energy Affordability, Gas Prices and National Security

Energy affordability emerged as a shared concern for Congress, but one with fundamentally different diagnoses. Secretary Wright and Republican committee members agreed that subsidies for intermittent generation, premature retirement of firm power and market distortions have contributed to rising energy costs. Democrats countered that grant terminations, permitting backlogs for renewable energy, and cuts to weatherization and consumer assistance programs were raising costs. Democrats also targeted DOE's proposed funding reductions to ARPA‑E and other science programs, arguing that such cuts would ultimately increase costs by weakening efficiency, innovation and long‑term supply.

However, Democrats and Republicans agreed on one major cause of higher prices, particularly at the gas pump: the U.S.-Israel conflict with Iran and subsequent closure of the Strait of Hormuz. Members of both parties questioned Secretary Wright for solutions to higher costs caused by the supply chain shock and timelines for the conflict's resolution. Some Republicans discussed with Wright the importance of deterring Iran from acquiring nuclear weapons, depicting the conflict as necessary overall despite higher costs in the short-term.

In addition to the situation with Iran, DOE tied its budget priorities to other national security issues, such as competition with China and supply chain vulnerability for uranium, critical minerals and advanced technologies. Liquefied natural gas (LNG) exports, domestic hydrocarbon production and nuclear deterrence were framed as essential tools of energy dominance and global stability.

Secretary Wright also presented the Genesis Mission, a national strategy to bolster American leadership in AI, quantum computing, fusion and advanced science, as a long‑term competitiveness and national security strategy. He highlighted that the budget request proposes a reallocation of an additional $1.2 billion in unobligated IIJA funding to a new Office of Artificial Intelligence and Quantum to support AI supercomputers and execution of the Genesis Mission.

Nuclear Energy Provides Glimpses of Bipartisan Convergence

Unlike many issues, nuclear energy drew broad bipartisan support as central to reliability, AI‑driven load growth and national security. Members across parties expressed support for:

• advanced reactors and small modular reactors (SMRs)
• nuclear fuel cycle and domestic supply chains
• national laboratory infrastructure
• National Nuclear Security Administration and nuclear deterrence modernization

Disagreements focused on execution rather than direction, such as in discussions of cost overruns, regulatory transparency, and nuclear waste management and statutory reform.

Similarly, members expressed bipartisan support for EDF and adequate staffing to execute on its goals to finance essential energy infrastructure, innovative technology, and critical minerals and materials supply chains. This consensus is critical as the Trump Administration requests an additional $200 million in credit subsidy for EDF and positions the office to play a pivotal role in its energy strategy.

Next Steps

Among partisan disagreements, members of both parties conveyed their intention to craft their respective appropriations bills in a bipartisan fashion. Friction will likely continue over grant cancellations, the specific scope of EDF loans and oversight, and clean energy funding levels. But the hearings also highlighted clear bipartisan momentum for nuclear energy, grid reliability investments and permitting reform.

The House Subcommittee on Energy and Water Development is slated to mark up its version of the DOE funding bill on May 20, 2026, and the Senate will likely follow shortly thereafter. Holland & Knight will continue to track the appropriations process closely and stands ready to support clients who seek to understand and provide input on the FY 2027 appropriations bills.