Like many small businesses that were awarded Department of Energy grants during the Biden administration, ReJoule has been stuck in limbo for over a month now by the DOE funding freeze.
In the fall of 2023, the California-based company was awarded a $10 million grant from the Office of Clean Energy Demonstrations to demonstrate the feasibility of repurposing electric vehicle batteries into long-duration energy storage — a “massive step” for ReJoule, as CEO and co-founder Steven Chung noted in a LinkedIn post at the time. But ever since President Donald Trump put a pause on disbursing funds from the Inflation Reduction Act and Bipartisan Infrastructure Law in January, the company hasn’t been able to access its grant money.
Zora Chung, ReJoule’s CFO and co-founder, told Latitude Media that the startup has received no guidance from their contacts at the DOE on how to handle the funding pause and that two invoices for over $50,000, submitted in December and January, remain unpaid.
“There’s basically no way for them to issue disbursements, so they can’t fund anything, so we’re not sure how long it might take for them to reimburse us for all our invoices,” she said. “We’ve already spent the money at least 30 days ago, and at this point, we’re just not sure what will happen.”
For major industry players, a pause on the disbursement of DOE grants can be annoying but manageable. But for smaller businesses like ReJoule, even a few unpaid invoices can be severely disruptive, affecting not only day-to-day operations, but potentially employee paychecks and relationships with subcontractors as well.
The executive of another startup active in the battery space told Latitude Media that it is laying off the majority of its staff because of over $50,000 dollars in unpaid invoices. (The executive spoke on the condition of anonymity, fearing repercussions from the Trump administration.) The startup relies heavily on federal grants, and the only reason it hasn’t “shuttered its doors” yet is because it withdrew a few hundred thousand dollars it had available from a separate fixed-price project grant before the freeze took effect, the executive said; that foresight bought it some payroll time.
“I have subcontractors that I am also not paying,” the executive added. “Some of those are small businesses, which also rely on other federal grants, and they’re under duress as well.”
Jacqueline Ewens, a project manager in charge of ReJoule’s main federal grant, has seen the same dynamic play out in the industry — though Rejoule itself hasn’t run into trouble yet.
“The subrecipients invoice us, and then we invoice the DOE to reimburse the subrecipients,” she explained. “So you could end up in a situation, where sub-recipients have performed work, submitted invoices, and then the prime recipient can’t pay them. It’s not only a financial burden on the prime recipient, but it’s also destroying [its] relationships with the sub-recipients because it can’t pay them.”
Both ReJoule and the unnamed startup are currently trying to substitute the grant money with other sources of income.
“We’re scaling back [on the projects tied to the DOE grant] not only because we can’t be expected to work for free for an undetermined period of time,” Chung said. “We also need to refocus our efforts to bring in other sources of income, since we’re a small business.”
But, the other executive noted, no matter how “aggressively” one fundraises, the process of finding new investors “is not a light switch”; it can take months.
The importance of grants
For startups, overreliance on grants has always been potentially dangerous, even without the Trump administration’s unprecedented federal funding freezes. But it’s a tricky balance, because the importance of federal funding for the development of new technologies is fundamental.
Charlie Murray, CEO and co-founder of Switched Source, a developer of medium voltage devices for utilities’ operations, says “early-stage government grants were critical” in the company’s development.
They allowed the company “to bridge the gap between technology validation and full-scale deployment,” he told Latitude Media in an email. “Unlike software startups, our commercialization pathway requires longer development cycles, rigorous pilot testing, and close collaboration with utilities before achieving widespread adoption.” That timeline doesn’t jibe with the goals of many venture capital firms, who tend to expect swift returns.
“Government support has given us resources to navigate these early stages of company and technology development, enabling us to reach a stage where private capital can be used to help accelerate the growth of our company,” Murray added.
Switched Source, which was founded in November 2016, is waiting on a Grid Resilience and Innovation Partnerships grant it was awarded last October — and acknowledged that the administration change could cause some funding delays. However, “our day-to-day operations remain unaffected, and our scaling plans continue as expected,” Murray said.
Urban Mining Industries, a company that uses waste glass to produce high performance low-carbon concrete, is also waiting to see what happens with a matching grant it was awarded late in 2024. In the meantime, Patrick Grasso, a partner at the company, said it is proceeding cautiously with the development of two plants in Florida and Maryland, given that “everything’s a little bit on hold right now.”
“But we’re hopeful,” he added. “We’ll just have to wait and see.”
The consequences of limbo
Of course, uncertainty is only making business worse. Rejoule CFO Chung attended a recent conference where the consensus seemed to be that knowing for sure that the funding was not available anymore would almost be preferable to an extended period of uncertainty.
“Limbo is terrible for business,” she said. “It puts us in this position where you can’t really plan anything. You almost have to plan for everything and nothing at the same time.”
At the very least, Ewens added, it would be a relief to have some clarity over whether the DOE expected the projects’ work to continue during the funding pause or not.
“It would almost be easier if there was a stop-work order that aligned with the timing of the funding pause,” she said. “That would have its own issues, of course, but what’s most difficult about this situation is that we have not been told to stop work, but we can’t get paid, so there’s this expectation that we keep working without the pay.”
As the executive of the second battery startup said, limbo is entirely at odds with the professed priorities of the new president. “For an administration that came in talking about strong support of capitalism, small businesses, and getting out of the way, they sure have shown a funny way of doing it,” they said.
