The Sacramento Municipal Utility District\u2019s long-planned Iowa Hill pumped-storage project received a boost this week, as the muni officially accepted a grant award from, and a contract with, the U.S. Department of Energy for geotechnical evaluation and analysis. The contract provides almost $5 million in DOE funding and obligates the utility to expend at least an equivalent amount. The grant\u2019s term is for three years, from 2012 to 2014. The Iowa Hill project would be an addition to the existing 688 MW Upper American River Project, a hydroelectric facility primarily located within the Eldorado National Forest within Sacramento and El Dorado counties. The storage project\u2019s been contemplated by the utility since the 1970s. The Iowa Hill component would consist of a new 400 MW hydro plant in El Dorado County. The project \u201cwould firm generation from variable resources such as wind and solar, and provide additional capacity to meet low growth in a carbon-constrained future,\u201d board member Howard Posner said. Although Iowa Hill has been in the planning phase since 2003, with an Environmental Impact Report that was completed in 2008, the project has yet to get off the ground due to uncertainty partially over cost and value. \u201cAlthough the board was in favor of approving the necessary testing, we have not approved the project in full,\u201d Posner said. \u201cWe will continue to be updated by staff before making additional commitments.\u201d The project also awaits licensing by the Federal Energy Regulatory Commission, according to Scott Flake, utility manager of power generation. A major component of the project\u2019s construction cost is underground excavation needed to house the powerhouse and water conveyance systems. The next step in determining its feasibility is conducting additional geotechnical studies, with the grant funds covering about half the cost. Preliminary studies indicated the underlying geology wouldn\u2019t pose significant barriers to project construction, but SMUD says that more detailed geotechnical investigations and follow on design engineering are needed to develop a greater level of certainty regarding construction costs. The DOE grant is set to focus primarily on geotechnical investigations of the mountain where underground and underwater facilities would be located. The utility estimates it will cost about $30 million to develop an engineering plan.