Industrial equipment manufacturer Eaton is one of the companies that will benefit from the grants distributed by the US Department of Energy to organizations working to improve energy efficiency in data centers.

Eaton is part of the multi-million-dollar project lead by HP, developing an enclosed row of IT equipment, complete with an energy efficient cooling infrastructure and electrical systems that can interface with renewable energy sources. The modular solution will be geared toward small and mid-size enterprises.

“With this grant, Eaton and HP’s combined expertise will enable us to create an innovative technology solution that increases energy efficiency and meets government mandates to reduce carbon emissions while diminishing the need to build new power plants to support data centers,” HP’s VP of Converged Infrastructure Doug Oathout said in a statement.

The solution will include a high-voltage AC electrical supply, a distributed DC electrical system and a chilled-water cooling system. According to a project description provided by the DOE, new power distribution and cooling technology will reduce energy losses and the amount of heat the system generates.

It also aims to integrate intermittent renewable energy sources, such as wind and solar.

The $7.4 million grant was part of $47 million in funding DOE awarded last week to 14 projects that explore solutions that increase data center energy efficiency. Other recipients include IBM, Yahoo!, and Alcatel-Lucent.

Grants were distributed to companies focusing on projects in one of three areas: equipment and software, power supply chain and cooling. The HP and Eaton project received the largest grant in the power-supply-chain category.

Source of funding for the projects was money set aside by the American Recovery and Reinvestment Act of 2009.