Clean Energy Jobs Focus of New Manufacturing Solicitation Issued by the DOE
On August 12, 2010, Energy Secretary Steven Chu announced a new loan guarantee solicitation for renewable energy manufacturing projects. The Commercial Technology Renewable Energy Manufacturing Projects solicitation (the "Solicitation") is supported by the American Recovery and Reinvestment Act (the "Recovery Act") through Section 1705 of the Loan Guarantee Program and is focused primarily on providing new green energy jobs and the deployment of renewable energy technologies that reduce greenhouse gas emissions.
The solicitation specifically identified "Eligible Projects" to include renewable energy manufacturing projects or facilities located in the United States that:
- Manufactures Commercial Technology products that support the generation of electricity or thermal energy from renewable resources;
- Has Project Costs greater than seventy-five million dollars ($75,000,000);
- Is able to obtain a credit rating equivalent of "BB" or better from Standard & Poor's or Fitch, or "Ba2" or better from Moody's, as evaluated without the benefit of any DOE guarantee or any other credit support;
- Will create or retain jobs in the United States; and
- Otherwise meets all applicable requirements of Title XVII, including Section 1705, the Solicitation, including all attachments and all applicable requirements of the Recovery Act.
The Solicitation also provided, for illustrative purposes, examples of the types of Eligible Projects that may qualify, which include the following:
- wind energy component or systems manufacturing facilities;
- solar photovoltaic (PV) component or system manufacturing facilities;
- concentrated solar power component or system manufacturing facilities;
- hydropower component or system manufacturing facilities;
- geothermal component or system manufacturing facilities;
- other geothermal power cycle component or system manufacturing facilities; or
- ocean wave, tidal, and river current (e.g. hydrokinetic) component or system manufacturing facilities
Of primary importance for any potential applicants under this Solicitation is the timeline for making application and the requirement that projects commence construction no later than September 30, 2011. Specifically, the Solicitation consists of a two-step process with rolling deadlines. The first Part I deadline is September 30, 2010, and the first Part II deadline is November 30, 2010. Final Part I applications are due November 30, 2010 and final Part II applications are due January 31, 2011. Applicants are strongly encouraged to get their applications in early -- particularly in light of the commence construction deadline. In addition, the DOE will make available up to $750 million to pay the credit subsidy costs of loan guarantees issued through this solicitation.
It should be noted that the DOE recently implemented a number of improvements to its loan guarantee program that will help facilitate a more efficient application process through the launch of a "user-friendly" online application portal. The application portal can be accessed directly from the DOE's loan guarantee program website. According to the DOE, this on-line application system is designed to:
- guide the applicant through the development and submission of a loan or loan guarantee application;
- assist the applicant in determining basic program eligibility;
- assist the applicant in preparing an application suitable for DOE review;
- highlight areas of the applicant’s proposal that may require additional information; and
- provide the applicant with guidance on how to prepare a stronger application.
Minnesota Renewable Energy Projects RFP
The State of Minnesota’s Office of Energy Security (OES) is requesting proposals from organizations that are engaged in or will engage in the manufacture of renewable energy systems or fuels, energy storage systems, geothermal energy systems for heating and cooling, components of these systems, or equipment for the manufacture of these systems or components.
The maximum award is $1 million. Up to a total of $2 million is available to all recipients. OES anticipates that two to six projects will be selected for awards under this solicitation.
All work to be performed within a proposed scope of work must be completed no later than June 30, 2011. An applicant must provide at least 40 percent of the total cost of the proposed scope of work. Applicant’s match may be cash or in-kind.
Each applicant must submit a notice of intent no later than December 4, 2009 to be eligible. Final proposals are due on December 18, 2009. OES anticipates provisional notification of successful applicants no later than January 29, 2010. Final selection will be contingent on determination by U.S. Department of Energy of compliance with the National Environmental Policy Act.
For more information and to download a copy of the RFP, please visit www.energy.mn.gov and click on Active Request for Proposal (RFP).
New tax credit for "qualifying advanced energy project"
Although this blog is focused on renewable energy, manufacturers in the renewable space should be aware of a new tax credit included in the stimulus bill. The provisions is complicated and unlike most tax credits. Nevertheless, its benefits, especially for manufacturers on the cutting edge, may be too great to ignore.
Taxpayers who qualify are entitled to a 30 percent tax credit for investment in a “qualifying advanced energy project." A "QAEP" is defined as one that reequips, expands or establishes a manufacturing facility that produces:
1. property designed to produce energy from the sun, wind, geothermal, and other renewable resources,
2. fuel cells, microturbines, or an energy storage system for use with electric or hybrid-electric motor vehicles
3. electric grids to support the transmission of intermittent sources of renewable energy, including storage of such energy,
4. property designed to capture and sequester carbon dioxide emissions,
5. property designed to refine or blend renewable fuels or to produce energy conservation technologies, and
6. new qualified plug-in electric drive motor vehicles (and components),
The program is to be established by IRS, in consultation with Energy Department, on or before August 26, 2009.
Once the program is established, the Secretary of Treasury is to award certifications for tax credit. Applications must be submitted within 2 years, and applicants will have one year from the date their application is accepted to provide evidence that requirements for certification have been met. After certification awarded, an applicant has 3 years to place project in service.
The following are the criteria for certification:
-- Reasonable expectation of commercial viability
-- Greatest domestic job creation (both direct and indirect)
-- Greatest net impact in reducing air pollutants, greenhouse gases, etc.
-- Greatest potential for technical innovation and commercial deployment
-- Lowest levelized cost of energy generated or stored or of measured reduction in energy consumption or greenhouse gas emissions
-- Shortest project time from certification to completion.
The credit generally applies only to construction, etc. after February 17, 2009.
The credit is new and unlike anything IRS has ever administered before. Therefore, it is reasonable to expect that IRS will take some time to get the program fully functional. Nevertheless, it makes considerable sense to begin assembling materials that explain the company’s project and address the criteria for selection. In addition, it would be advisable to submit any applications as soon as possible after the program is established.
Stoel Rives would be pleased to assist in planning for and submitting applications for the credit.
