The federal government is forking over roughly $300 million to local governments and their industry partners to buy plug-in hybrid electric and other alternative fuel fleet vehicles and set up fueling stations.

The U.S. Department of Energy announced the funding to 25 projects under the Clean Cities program Wednesday (see list of winners).

The projects, which come with matching funds from project developers, would add about 9,000 fuel-efficient, light- to heavy-duty cars to the fleets and create 542 fueling stations, the DOE said. Many of these projects involve natural gas-powered cars and fueling facilities.

The announcement came only three weeks after the DOE said it would give a whopping $2.4 billion in grants to 48 projects primarily for electric car battery research and manufacturing, and for fleet vehicle and charging network demonstrations.

The $2.4 billion is mainly going to car and battery manufacturers including General Motors, Johnson Controls and A123 Systems, with some funds heading to universities. 

The Electric Transportation Engineering Corp. (eTec), a subsidiary of Ecotality, is getting $99.8 million from the $2.4 billion piggy bank to set up a car charging network. The company is partnering with Nissan to carry out the project in five states: Arizona, California, Oregon, Tennessee, and Washington. The project will make use of Nissan's all-electric Leaf; the automaker unveiled the commercial version of the car earlier this month.

Money for the manufacturing grants and the Clean Cities program funding announced Wednesday is coming from the American Recovery and Reinvestment Act, the stimulus package passed by Congress earlier this year mainly to create jobs and resuscitate the faltering economy.

Lawmakers took the opportunity to fund a slew of green technologies, from renewable power generation and storage to smart grid deployment.

On Wednesday, Pacific Gas and Electric Co. said it would apply for $25 million from the stimulus package to fund energy storage by pumping compressed air underground and release it when there is a need to generate more electricity (see PG&E Wants DOE Dollars for Underground Air Energy Storage).

The funding for the Clean Cities program would enable local governments and businesses to more quickly replace the gasoline powered vehicles in their fleets. Government agencies, including schools, are often some of the largest fleet owners in their regions.

Those who are getting the near $300 million would have a choice of buying a wide range of fuel-efficient cars, from regular hybrids to all-electric cars. Compressed natural gas cars also qualify, the DOE said.

Local governments could use their money to build fueling stations, which could include those dispensing ethanol and biodiesel.

Natural gas-powered cars are popular among grant applicants. The South Coast Air Quality Management District in Southern California is receiving nearly $5.6 million to complete a network of liquid natural gas (LNG) stations that runs along heavily traveled truck routes from California to Utah. UPS will use the money to build one fuel station off Interstate 15 in Las Vegas and buy 48 heavy-duty LNG vehicles. The station will be open to other fleet operators.

The Air District is getting another $9.4 million to replace 180 diesel trucks at the Los Angeles and Long Beach ports with LNG trucks.

Utah's Clean Cities Coalition is getting nearly $15 million to build 16 compressed natural gas (CNG) stations, three liquid and compressed natural gas stations, and three biodiesel stations. The money also will be used to renovate 24 existing CNG facilities and buy 678 natural gas powered cars.