Colleague's grant application resembles my PhD thesis
I suggest three things. First remind him of your dissertation and send a link to it, noting that there is similar wording that might become an issue. Second, I would, under the stated circumstances, offer to help in the application. It seems like it might be an attempt to extend your work, rather than to plagiarize it. That is always appropriate. And you could also assure that you aren't plagiarized if you are in the loop throughout. 

But, if you have the time and energy, I suggest that you offer to be a consultant on the grant as it progresses. This would get you named specifically in the application, at least. Your actual participation could be minimal, or not, but you could at least see how the work progressed and get more involved as time went on. It might not be impossible to be paid a bit for consulting work, depending on the agency and its rules. Consultant on a grant is a CV line, if nothing else.