In a highly competitive grant process, a research consortium led by Penn State won up to $129 million in federal funding to develop a "energy innovation hub" at the Philadelphia Navy Yard aimed at saving energy and cutting pollution.

"This will have a huge impact on Philadelphia and the region, just in the amount of job creation that should come from this alone," said Henry C. Foley, vice president for Research and Dean of the Graduate School at Penn State.

Foley, who will lead the Penn State research team also including researchers from Princeton, Rutgers, the University of Pennsylvania, Drexel and other institutions, said the project will focus on creating more energy efficient buildings and training workers to both retrofit and do new construction in the efficient ways.

"It's really a technological game changer," Foley said this afternoon in a brief telephone interview, before going into a meeting with Mayor Nutter and Penn State President Graham Spanier.

The grant, to be paid out over the next five years, is the largest in Penn State's history. It largely comes from the Department of Energy with $7 million from three other federal agencies.

The state of Pennsylvania through Gov. Rendell also will kick in $30 million, which state officials believe may have helped Penn State win the grant.

The Department of Energy could not be reached for comment today on how many other groups applied, but Crain's New York Business reported that the project beat out a "consortium of more than 100 education, nonprofit, government and industry groups," which had claimed the project would create 76,000 jobs at Syracuse University.

It becomes the second major energy hub project to be funded by the federal government. A project focused on solar energy will be based in California.

Foley said he was thrilled with the Navy Yard location because it includes more than 200 buildings and operates an independent electric microgrid as a "virtual municipality" where the new technologies can be tested and validated.

"It's a little city within a city... with very old buildings we can experiment on," he said.

Researchers from academia, U.S. National Laboratories and the private sector will use the funding to develop energy efficient building designs, officials said.

The project is expected to begin by Oct. 30.

"This funding is great news for the Commonwealth and is a crucial step towards creating a more sustainable and environmentally friendly America," Sen. Casey, (D-Pa) said in a prepared statement. "With this support, the consortium can focus on energy efficiency and innovation and assist communities in reducing their energy use and creating good jobs for Pennsylvanians."

Penn State officials, who were readying an announcement of their own about the project this afternoon, also said they were pleased.

"It's a great partnership among a number of researchers from academia, the private sector and national laboratories. It's a great collaboration for a solid project that will help the environment," said Penn State spokeswoman Annemarie Mountz.

Foley said the project "will spur real innovation and job growth for Philadelphia, the region and the nation. We have a world class team of universities, corporations, and economic development entities that made this proposal come to life. There is no better place to do this work than in the Philadelphia Navy Yard."

Buildings account for nearly 40 percent of U.S. energy consumption and carbon emissions. The research could lead to reduced energy use and bills, less pollution and more jobs in the building efficiency industry, officials said.

Gov. Rendell and Sen. Arlen Specter also praised the project in statements yesterday.

DOE Secretary underscored the importance of the energy hubs in a press release.

"The Energy Innovation Hubs are a key part of our effort to harness the power of American ingenuity to achieve transformative energy breakthroughs," said Secretary Chu. "By bringing together some of our brightest minds, we can develop cutting-edge building energy efficiency technologies that will reduce energy bills, cut carbon pollution, and create jobs. This important investment will help Philadelphia become a leader in the global clean energy economy."

Contact staff writer Susan Snyder at 215-854-4693 or ssnyder@phillynews.com.