Allison Transmission Inc. said Monday that it has begun renovating a vacant manufacturing space to work on hybrid systems for commercial vehicles.

The work is the result of a $62.8 million Department of Energy stimulus grant, announced last August. Allison, which was required to match the grant, said it will spend $67.2 million of its own, for a total investment of $130 million at its Speedway headquarters and manufacturing complex.

The space that's being renovated has been vacant for the past 10 years, spokesman Eric Dickerson said. About 100 new and retained jobs will be associated with the project.

Allison is working on the hybrid systems with electronics-maker Delphi Corp. in Kokomo and motor manufacturer Remy International in Anderson. All three companies received stimulus grants last August.

“Allison Transmission and the Department of Energy have worked together for many years in programs which have pushed transportation technology and resulted in the production of real products which benefit us all,” Chairman and CEO Lawrence E. Dewey said in a prepared statement. "We will deliver a new generation of hybrid propulsion solutions to the transportation industry.”

The DOE grant allows Allison to speed up its plans to bring commercial-duty truck hybrid products to market in 2013. The company has been making hybrid propulsion systems for city buses since 2003. About 3,000 buses around the world are operating on its hybrid systems.

Allison said Monday that the newly renovated plant would produce 20,000 hybrid propulsion systems a year. The company says its system captures kinetic energy otherwise wasted as a vehicle decelerates and later reuses the energy to propel or reaccelerate the vehicle. The recovered energy also can be used to power vehicle accessories.