; and (B) a retail service provider of electricity. (2) Program The term program means the demonstration program established under subsection (b)(1). (b) Demonstration program (1) Establishment Not later than 1 year after the date of enactment of this Act, the Secretary, in consultation with the Director of the National Science Foundation, shall establish a demonstration program under which the Secretary shall provide grants to eligible entities to carry out projects for the design and production of smart water heater optimization programs. (2) Program goals The goals of the program are— (A) to demonstrate large-scale implementation of smart water heaters as an energy storage resource used on a regular basis as part of grid operation to improve the operational efficiency of the electric grid; (B) to demonstrate control of water heaters to compensate for the intermittent nature of renewable energy resources; (C) to diminish the market barriers to the broad adoption of smart water heaters; (D) to provide funding to address nonrecurring engineering costs; and (E) to demonstrate best practices for— (i) customer participation and satisfaction; and (ii) maximizing customer benefits. (3) Applications (A) In general To be eligible to receive a grant under the program, an eligible entity shall submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require, including a proposal described in subparagraph (B). (B) Proposal requirements (i) In general An eligible entity shall submit as part of the application under subparagraph (A) a proposal that— (I) demonstrates that the eligible entity will closely collaborate with one or more manufacturers of water heaters or water heater control equipment to coordinate sales and marketing across distribution channels