SECTION 13. PAPERWORK

REDUCTION ACT

The collection of information contained in this notice has been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act (44 U.S.C. § 3507) under control number 1545–2151.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

September 14, 2009 329 2009–37 I.R.B.

APPENDIX A

AGREEMENT

[Insert taxpayer’s name, address, and identifying number] (“Taxpayer”) and the Commissioner of Internal Revenue (“Commissioner”) make the following agreement:

WHEREAS:

1. On or before [insert date and year], Taxpayer submitted to the Internal Revenue Service (“IRS”), an application for certification under the qualifying advanced energy project program described in Notice 2009–72 (“Application for § 48C Certification”);

2. Taxpayer’s Application for § 48C Certification is for the qualifying advanced energy project (the “Project”) described below— (1) The Project will be located at [insert address or other identifying designation]; (2) The Project [insert either: “re-equips”; “expands”; or “establishes”] a manufacturing facility for the production of [insert type of property as described in § 48C(c)(1)(A)(i)(I) — (VII)].

(3) On [insert date of acceptance letter issued under section 5.02(8) of Notice 2009–72, the IRS accepted Taxpayer’s Application for § 48C Certification for the Project and allocated a qualifying advanced energy project credit under § 48C in the amount of $[insert number] to the Project.

NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL INCOME TAX PURPOSES THAT:

1. The total amount of the qualifying advanced energy project credit to be claimed for the Project under § 48C(a) must not exceed $[insert the number in WHEREAS clause #3].

2. If Taxpayer fails to satisfy the certification requirements under section 7.02 of Notice 2009–72 within the time specified in § 48C(d)(2)(B) (1 year from [insert the date in WHEREAS clause #3]), or if the IRS does not issue a certification for the Project under Notice 2009–72, the qualifying advanced energy project credit in the amount of $[insert the number in WHEREAS clause

#3] allocated to the Project is fully forfeited.

3. Taxpayer will notify the IRS in writing to the address listed in section 6.04 of Notice 2009–72 when the Project is placed in service.

4. If the Project is not placed in service by Taxpayer within 3 years of the date of issuance of the certification as determined under section 7.03 of Notice 2009–72, the qualifying advanced energy project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited.

5. If the plans for the Project change in any significant respect from the plans set forth in the application for DOE recommendation (as defined in section 5.01 of Notice 2009–72) and the Application for § 48C Certification (as defined in section 5.01 of Notice 2009–72) and, under section 8.03 of Notice 2009–72, the acceptance of Taxpayer’s Application for § 48C Certification on [insert the date in WHEREAS clause #3] is void, the qualifying advanced energy project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited.

6. Taxpayer will not claim the qualifying advanced energy project credit under § 48C for any qualified investment for which a credit is allowed under §§ 48, 48A, or 48B or for which a payment is received under § 1603 of the American Recovery and Reinvestment Act of 2009, Division B of Pub. L. 111–5, 123 Stat 115.

7. If Taxpayer elects to claim the qualifying advanced energy project credit on the qualified progress expenditures paid or incurred by Taxpayer during the taxable year(s) during which the Project is under construction and the Project ceases to be a qualifying advanced energy project (whether before, at the time, or after the Project is placed in service), rules similar to the recapture rules in § 50(a)(2)(A) through (D) apply.

8. Taxpayer reasserts that the following information is trade secret or proprietary information: [Insert “All information identified as trade secret or proprietary in Taxpayer’s application for DOE recommendation” or list the specific information in Taxpayer’s application for DOE recommendation to which the reassertion applies.]

9. This agreement applies only to Taxpayer. Any successor in interest must execute a new agreement with the IRS. If the interest is acquired at or before the time the Project is placed in service and the successor in interest fails to execute a new agreement, the qualifying advanced energy project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited. If the interest is acquired after the time the Project is placed in service and the successor in interest fails to execute a new agreement, the Project ceases to be investment credit property and the recapture rules of § 50(a) apply.

THIS AGREEMENT IS FINAL AND CONCLUSIVE EXCEPT:

1. The matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of a material fact;

2. It is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions notwithstanding any law or rule of law; and

3. If it relates to a tax period ending after the date of this Agreement, it is subject to any law enacted after such date, which applies to the tax period.

By signing, the parties certify that they have read and agreed to the terms of this Agreement.

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Taxpayer: [insert name and identifying number]

By: Date Signed:

[insert name]

Title: [insert title]

[insert taxpayer’s name]

Commissioner of Internal Revenue

By: Date Signed:

[insert name]

Title: [insert title]

I have examined the specific matters involved and recommend the acceptance of the proposed agreement. (Receiving Officer) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Title) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Date Signed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I have reviewed the specific matters involved and recommend the acceptance of the proposed agreement. (Receiving Officer) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Title) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Date Signed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

September 14, 2009 331 2009–37 I.R.B.

APPENDIX B

REQUEST FOR APPLICATIONS FOR DOE RECOMMENDATION

The Internal Revenue Service (“IRS”) with the assistance of the Department of Energy (“DOE”) seeks to select for certification applications that demonstrate a reasonable expectation of commercial viability and is eligible for consideration based on the selection criteria in § 48C(d)(3)(B). To be eligible, applications must be for qualifying advanced energy projects and projects must be commercially feasible.

This Request for Applications for DOE Recommendation:

1. Describes the information to be provided by the applicant to allow DOE to review and recommend projects, and

2. Identifies the merit review criteria and Program Policy Factors to be used by DOE in the review of applications.

In conducting this review, the DOE may utilize assistance and advice from qualified personnel from other Federal agencies and/or contractors that do not have a personal or organizational conflict of interest. DOE will obtain assurances in the form of a non-disclosure acknowledgement/agreement in advance from all reviewers that application information shall be kept confidential and used only for reviewing purposes.

DOE reserves the right to request clarifications and/or supplemental information from some or all applicants through written submissions and/or oral presentations.

DOE may determine whether to recommend an application to the IRS at any time after the application has been received, without further exchanges or discussions. Therefore, all applicants are advised to submit their most complete and responsive application.

Applications will not be returned.

Neither a procurement action (under Title 48 of the Code of Federal Regulations) nor a financial assistance award (under 10 CFR Part 600) is contemplated based on an application.

SUBMISSION INFORMATION FOR DOE RECOMMENDATION PROCESS

A. General

An application for DOE recommendation and ranking must include a Project Information Memorandum as described below, together with the information required by sections 6.02, 8.01, and 8.02 of Notice 2009–72 (Notice.) All applications shall be prepared in accordance with this request for applications for DOE recommendation in order to provide a standard basis for review and to ensure that each application will be uniform as to format and sequence.

Each application should clearly address each merit review criterion and program policy factor to demonstrate the applicant’s capability, knowledge, and experience regarding the requirements described herein.

Applicants should fully address the requirements of the Notice and this request and not rely on the presumed background knowledge of reviewers. DOE may reject an application that does not follow the instructions regarding the organization and content of the application when the nature of the deviation and/or omission precludes meaningful review of the application.

B. Unnecessarily Elaborate Applications

Unnecessarily elaborate brochures or other presentations beyond those sufficient to present a complete and effective application are not desired. Elaborate art work, graphics and pictures are neither required nor encouraged.

C. Application Submission for DOE Recommendation

The application to DOE must include the information and documentation required by sections 8.01 and 8.02 of the Notice.

An application to DOE will not be considered in the allocation conducted in 2009–2010 unless the preliminary application is received by September 16, 2009 and the final application is received by October 16, 2009. Two electronic copies (on a compact disc) of both the preliminary application and final application should be sent to DOE: one original with full text and one copy with confidential information redacted.

If elements of and/or attachments to an application contain information the applicant considers to be trade secret, confidential, privileged or otherwise exempt from disclosure under the Freedom of Information Act (FOIA, 5 U.S.C. 552), the applicant shall assert a claim of exemption at the time of application by placing the following text on the first page of the application, and specify the page or pages of the application to be restricted:

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“The data contained in pages [ ] of this document which hereby forms a part of the application have been submitted in confidence and contain trade secrets or proprietary information, and such data shall be used or disclosed only for review purposes, provided that, if this applicant is issued a tax credit under Section 1302 of the American Recovery and Reinvestment Act of 2009 as a result of or in connection with the submission of this application, DOE shall have the right to use or disclose the data herein, other than such data that have been properly reasserted as being trade secret or proprietary in the agreement required under section 5.02 of Notice 2009–72. This restriction does not limit the government’s right to use or disclose data obtained without restriction from any source, including the applicant.”

To further protect trade secret, confidential, privileged or otherwise exempt information, each line or paragraph on the page or pages containing such data must be specifically identified and marked with text that is similar to the following:

“The following contains proprietary information that [name of applicant] requests not be released to persons outside the Government, except for purposes of review.”

Applications may be submitted electronically to 48Capplications@hq.doe.gov . Alternatively, applications may be submitted to the physical address which will be posted on www.energy.gov/recovery/48C.htm .

THE INFORMATION REQUIRED BY THIS REQUEST FOR APPLICATIONS FOR DOE RECOMMENDATION MUST BE SUBMITTED USING THE FORMAT AND THE HEADINGS OF THE “PROJECT INFORMATION MEMORANDUM” AS DESCRIBED BELOW.

To aid in review, applications shall be clearly and concisely written and logically assembled. All pages of each part shall be appropriately numbered and identified with the name of the applicant and the date.

The application, including the Project Information Memorandum, MUST be formatted in one of the following software applications:

Microsoft Word ^tm 2002 or later edition Microsoft Excel ^tm 2002 or later edition Adobe Acrobat ^tm PDF 6.0 or later edition

Financial models should be submitted using the Excel ^tm spreadsheet and must include calculation formulas and assumptions.

The applicant is responsible for the integrity and structure of the electronic files. The DOE will not be responsible for reformatting, restructuring or converting any files submitted in response to this request.

The Project Information Memorandum, excluding Appendices, shall not exceed thirty (30) pages for the final application. Pages in excess of the page limitation will not be considered for review. All text shall be typed, single spaced, using 12 point font, 1 inch margins, and unreduced 8–1/2-inch by 11-inch pages. Illustrations and charts shall be legible with all text in legible font. Pages shall be sequentially numbered. Except as otherwise noted herein, the page guidelines previously set forth constitute a limitation on the total amount of material that may be submitted for review. No material may be incorporated in any application by reference as a means to circumvent the page limitation.

Application sections shall be saved as separate files and named as described below:

APPLICATION SECTION FILE NAME

Preliminary Application Preliminary Application applicant name.doc (or .pdf) Project Information Memorandum Project Information Memorandum applicant name.doc (or .pdf)

Chapter 1. Executive Summary Chapter 2. Advanced Energy Project Qualification Chapter 3. Emissions and Pollution Impact Chapter 4. Technological Innovation Chapter 5. Project Schedule

Applicant Data Input Spreadsheet Applicant Data Input Spreadsheet applicant name.xls Appendices Appendix 1 applicant name.doc (or .pdf), and as needed Appendices 2, 3, 4 etc.

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D. Application Process for DOE Recommendation and Due Dates

DOE requires a short summary of the project in the form of a preliminary application as well as a final application. Please read carefully the Notice and the statute to determine if your project is eligible for the manufacturing tax credit. The tax credits are for manufacturing facilities; they are not for renewables or energy efficiency installation projects.

DOE plans to review applications and recommend for tax credits through the following specific steps:

E. Preliminary Application Content and Format

The applicant should fill out the preliminary application in Section I, which is for the DOE to preview the types of forthcoming final applications in order to establish the relevant resources for an efficient and effective review process.

In part 2 of the preliminary application, “Narrative Describing the Scope of the Project”, the applicant should provide a brief description of the project, including such details as:

the case of a project producing property that, after further manufacture, will become SAEP, the applicant should describe both the property produced at the facility and the SAEP for which the produced property will be used.

F. Final Application Process

DOE will review and recommend projects based on the following eligibility and evaluation criteria and Program Policy Factors:

Eligibility Criteria

ruary 17, 2009, through February 17, 2013);

(i) the production of new or significantly improved technologies, (ii) improvements in levelized costs and performance, and (iii) manufacturing significance and value; and

These four Evaluation Criteria are all equally weighted.

Program Policy Factors

2009–37 I.R.B. 334 September 14, 2009

In an effort to make the application process suitable to a diverse set of projects and streamline the DOE review, applicants must input the data necessary to address the merit review criteria into the Applicant Data Input Spreadsheet, shown in Section J ¹ .

Each proposed project will be reviewed based on the SAEP produced at the manufacturing facility. In the case of a project producing property that, after further manufacture, will become SAEP, the DOE will review the project based on the SAEP for which the property produced at the facility will be used. For example, the review under the emissions criterion for a project that manufactures wind turbine blades will be in the context of the emissions profile of wind turbines, rather than the more narrow characteristics of blade production alone. In this example, the wind turbine blade will be assigned a portion of the overall emissions profile of a wind turbine based on the percentage of the wind turbine’s cost that is attributable to the wind turbine blade, as discussed in Section G below.

The applicant must calculate the incremental energy produced, saved or stored due to the project. The applicant will be required to provide and show the work used to produce derived numeric values specific to its manufacturing facility. In addition, it is critical that the applicant show and support all necessary calculation steps in the project’s narrative.

The DOE review and recommendation process generally requires the use of the United States (U.S.) national averages ( e.g., national grid mix, national fleet fuel efficiency) as a baseline for certain comparisons ² .

G. Final Application Content and Format

This section outlines the format of the final application to be submitted by the applicant to the DOE for project recommendation. Guidelines and suggestions for specific content are included below.

Outline for Final Application

I. EXECUTIVE SUMMARY AND INTRODUCTION

Provide an overall summary of the project to manufacture qualifying advanced energy property, covering things such as:

property that, after further manufacture, will become SAEP, the applicant should describe both the property produced at the facility and the SAEP for which the produced property will be used.

cant must request a credit equal to 30 percent of the estimated amount that will be treated as a qualified investment (as determined under § 48C) if the project is certified as a qualified advanced energy project. The applicant may use any reasonable methodology and assumptions in determining such estimated amount.)

rience of the technical partners providing key components to the project.

II. DEMONSTRATION OF ELIGIBILITY

A. ADVANCED ENERGY PROJECT QUALIFICATION

To facilitate a determination of eligibility that the project qualifies as an advanced energy project, the applicant should submit a description of the proposed project, including such details as:

1. Whether the project will re-equip, expand or establish a manufacturing facility.

2. The SAEP the re-equipped, expanded or new manufacturing facility will produce. In the case of a project producing property that, after further manufacture, will become SAEP, the applicant should (a) describe both the property produced at the facility and the SAEP for which the produced property will be used, and (b) state the percentage of the property produced at the facility that will be used for the production of SAEP.

1 If an applicant can justify that it has a value that better represents its project than the values referenced in the Applicant Data Input Spreadsheet, the applicant may 1) select a value reported in the open literature, justify the use of this value as opposed to one supplied by DOE, and perform any necessary unit conversions, or 2) develop an independent estimate analogous to ones supplied in the Section H. Any customized calculations should be done according to commonly accepted industry standards and be sufficiently transparent to be reproducible by the merit review panel.

2 An applicant may provide a different baseline for comparison if the applicant can justify that the specified advanced energy property attributable to the project will be put in service in a more narrowly-defined geographic region. Any customized calculations should be done according to commonly accepted industry standards and be sufficiently transparent to be reproducible by the merit review panel.

September 14, 2009 335 2009–37 I.R.B.

B. COMMERCIAL VIABILIITY

To describe the project economics and present evidence of commercial viability, the applicant should provide as appendices:

1. A business plan which provides a description of the proposed project, containing such information as:

a. A list of the key management team members who will design, construct, permit, and operate the facility.

b. A description of the capabilities and experience of the applicant, contractor, and suppliers of major subsystems or equipment. The applicant should demonstrate that the management team members have a corporate history of successful completion of similar projects, including, if applicable, similar projects completed outside the U.S.

c. The financing and ownership structure, including all beneficiaries. The applicant must be a U.S. taxpayer.

d. The financial strength of owners, investors and technical partners.

e. Overview of intellectual property arrangements with respect to the property produced.

f. The estimated amount that will be treated as a qualified investment (as determined under § 48C) if the project is certified as a qualified advanced energy project. The applicant may use any reasonable methodology and assumptions in determining such estimated amount ³ .

g. The estimated amount, together with a description of the methodology and assumptions used in determining such costs, of the following expenses, if applicable:

i. Costs of acquisition, lease, or rental of real property, including engineering fees, surveys, title insurance, recording fees, and legal fees incurred in connection with land acquisition, lease or rental, site improvements, site restoration, access roads, and fencing;

ii. Costs of engineering, design, architectural, legal and bond fees, and insurance paid in connection with construction of the facility; and materials, labor, services, travel and transportation for facility design, construction, startup, commissioning and shakedown;

iii. Costs to provide equipment, facilities, and services related to safety and environmental protection;

iv. Financial and legal services costs, including other professional services and fees necessary to obtain required licenses and permits and to prepare environmental reports and data;

v. Costs of issuing project debt, such as fees, transaction and legal costs and other normal charges imposed by lenders;

vi. Costs of necessary and appropriate insurance and bonds of all types;

vii. Costs of obtaining licenses to intellectual property necessary to design, construct, and operate the project;

viii. A reasonable contingency reserve for cost overruns during construction;

ix. Capitalized interest necessary to meet market requirements, reasonably required reserve funds and other carrying costs during construction; and

x. Other necessary and reasonable costs.

h. The timeframe, with milestones, required for construction and commissioning of the project.

i. Confirmed or potential customers who will purchase, lease or use the property produced.

j. A description of the amount and timing of off-take agreements to be entered into prior to commercial operation and the financial strength of off-takers.

k. A discussion of current competing products and competitors likely to enter the target market.

l. If applicable, any infrastructure improvements necessary for target markets, the concurrent capital needed, and other factors necessary for deployment of the SAEP attributable to the project.

2. A financial plan for the proposed project, containing such information as:

a. The amount of equity to be invested and the sources of such equity. Include as a separate appendix copies of any existing equity funding commitments or expressions of interest from equity funding sources for the project.

3 The applicant should note that eligible property does not include a building or its structural components.

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b. The amount of the total debt obligations to be incurred and the funding sources of all such debt. Include as a separate appendix copies of any existing debt funding commitments or expressions of interest from debt funding sources for the project.

c. Any other Federal, State or local government funding assistance.

d. A financial model detailing the investments in and the cash flows generated and anticipated from the project over the project’s expected lifecycle, including a complete explanation of the facts, assumptions, and methodologies in the financial model.

III. EVALUATION CRITERIA

A. DOMESTIC JOB CREATION

The DOE will primarily focus on direct job creation for this evaluation criterion. In addition, DOE will take into consideration indirect job creation. For both direct and indirect jobs, DOE will emphasize those jobs that are created during the credit period (February 17, 2009, through February 17, 2013).

Please fill out the “Direct Jobs” tab in the Applicant Data Input Spreadsheet and list the direct jobs in terms of full-time equivalents (FTEs) that will be created during both construction and operation of your facility. ⁴ Please be as specific as possible, as reviewers will assess the reasonableness of applicants’ assertions. Direct Jobs are jobs of people whose work is directly billed to the project.

Do not list Indirect Jobs. Indirect Jobs are employees in the supply chain who are not included as direct jobs. Examples include those working for producers of materials, equipment, and services that are used on the project, such as steel producers, accounting services or end use installers. The review team will calculate the indirect jobs using a consistent methodology based on nationwide input/output economic models for advanced manufacturing.

B. IMPACT ON AIR POLLUTION AND ANTHROPOGENIC EMISSIONS OF GREENHOUSE GASES

Describe the direct impact that the SAEP will have on air pollution and anthropogenic emissions of greenhouse gases (GHG). Annual pollution and GHG emissions from the manufacture, deployment, and operation of the manufactured product should be quantified and discussed. This description includes:

1. Total emissions reduced as derived by the project’s Attributable Annual Manufacturing Capacity (AAMC) and the output of the Applicant Data Input Spreadsheet, as shown in Section J, for the re-equipped, expanded or new manufacturing facility. Emissions reduction will be divided by the amount of tax credit requested to determine a normalized value for comparing different project proposals. ⁵

2. A discussion of additional emissions considerations beyond the calculation in part 1, above. This should include such details as the emissions of the manufacturing facility relative to the emissions of comparable manufacturing facilities.

3. A discussion of GHG emissions and air pollutants generated, along the full supply chain, for the manufacture, installation, operation, and decommissioning of the SAEP to which the project will contribute. If this is unknown, the applicant should make an estimate based on the SAEP, using cited numbers.

C. TECHNOLOGICAL INNOVATION AND COST REDUCTION

To present evidence of the potential for technological innovation and commercial deployment, as indicated by (i) the production of new or significantly improved technologies, (ii) improvements in levelized costs and performance, and (iii) manufacturing significance and value, the applicant should provide:

1. A discussion of whether the project will produce a new or significantly improved technology as compared to commercial technologies currently in service in the U.S. ^6,7

4 Full-time equivalent (FTE) is a way to measure a worker’s involvement in a project. An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that the worker is only half-time. FTE is defined by the Government Accountability Office (GAO) as the number of total hours worked divided by the maximum number of compensable hours in a work year as defined by law. For example, if the work year is defined as 2,080 hours, then one worker occupying a paid full time job all year would consume one FTE. Two employees working for 1,040 hours each would consume one FTE between the two of them.

5 If the applicant believes that the total emissions reduced from the specified advanced energy property attributable to the project is not accurately represented by the values provided in the Applicant Data Input Spreadsheet, the applicant may, in addition to completing the respective sections of the Applicant Data Input Spreadsheet, provide a transparent justification of a different calculation and should employ cited numbers wherever assumptions are made.

6 A new or significantly improved technology means a technology that is concerned with the production, consumption or transportation of energy is not a commercial technology currently in use in the U.S., and either (i) has only recently been developed, discovered or learned; or (ii) involves or constitutes one or more meaningful and important improvements in productivity or value in comparison to commercial technologies currently in use in the U.S.

7 A commercial technology currently in use in the U.S. means a technology currently in general use in the commercial marketplace in the U.S. A technology is in general use if it has been installed in and is being used in three or more commercial projects in the U.S. in the same general application as in the proposed project, and has been in operation in each such commercial project for a period of at least five years. The five-year period shall be measured, for each project, starting on the in-service date of the project or facility employing that particular technology and ending on October 16, 2009.

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2. Calculations of incremental cost improvements for the SAEP attributable to the facility, relative to comparable existing energy solutions. This information is captured with the related metrics of cost advantage over competitors, levelized cost, and the cost of CO Section G(IV) below explains these metrics and their quantification in 2 abatement. greater detail.

a. In addition to cost improvements, the applicant should describe other technological improvements for the SAEP attributable to the facility, as compared to the respective baseline energy solution.

3. A calculation of the AAMC in the “Attributable Manufacturing” tab of the Applicant Data Input Spreadsheet. The AAMC will be divided by the amount of tax credit requested to determine a normalized value for comparing different project proposals.

D. PROJECT SCHEDULE AND TIME TO COMPLETION

1. To quantify the time from certification to completion, the applicant should fill out the respective sections of the “Applicant Data Sheet” tab of the Applicant Data Input Spreadsheet. The dates required are: date of receiving all permits; date of construction; date of commencement of production.

2. In addition, the applicant should provide a narrative supporting the applicant’s capability to accomplish the technical objectives of the proposed project and demonstrating the overall feasibility of implementing the project at the proposed site. This includes, but is not limited to:

a. A project schedule that (1) is comprehensive and provides sufficient detail to demonstrate how applicant will meet the certification requirements, and (2) demonstrates that the project is on track to be placed in service within 3 years of such certification. The schedule should demonstrate that the applicant understands the required tasks and has allowed realistic times for accomplishing the technical and financial tasks. The schedule should include the milestones.

b. A description of the applicant’s plan to obtain and complete all necessary permits, and environmental authorizations and reviews.

c. A description of the current infrastructure at the site available to meet the needs of the project.

3. This section requires the following documentation, as is applicable to the project, to be included as appendices:

a. A complete list of all Federal, State, and local permits, including environmental authorizations (if applicable) or reviews, necessary to commence construction of the project. Explain what actions have been taken to date to satisfy the required authorizations and reviews, and the status of each.

b. Documentation supporting applicant’s conclusion that the proposed site can fully meet all environmental, water supply, transmission interconnect (if applicable), and other applicable requirements. Such documentation may include signed agreements, letters of intent, or term sheets, such as for supply and product transportation, and regulatory approvals (if applicable) supporting the key claims.

c. Documentation demonstrating the applicant’s ownership or control of the project site, such as a deed, a signed option to purchase the site from the site owner, or a letter of intent to sell or lease.

d. Copies of the contracts or summaries of the key provisions of the following agreements:

i. Operations & Maintenance Agreement: include a summary of the terms and conditions of the contract and a copy of the contract.

ii. Shareholders Agreement: summarize key terms and include the agreement as an appendix.

iii. Engineering, Procurement and Construction Agreement: describe the key terms of the existing or expected contract arrangement, including firm price, liquidated damages, hold-backs, performance guarantees, etc.

IV. INSTRUCTIONS REGARDING QUANTITATIVE FACTORS INFORMATION SUBMISSION

Applicants should fill out the Applicant Data Input Spreadsheet with the relevant data and include it with the application. This is intended to capture information in a consistent manner to allow a quantitative comparison to be made across all eligible projects. It is essential that applicants conform to this process in order to ensure a competitive review of all proposals. Additionally, applicants should substantiate in their narrative any data which is inputted into the Applicant Data Input Spreadsheet. Specifically, applicants should cite or justify their stated assumptions and show any calculations which are not performed by the Applicant Data Input Spreadsheet. The information below provides instructions for inputting data, examples specific to each type of SAEP, and guidance on how to use the reference data listed in Section H.

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AAMC

In order to assess the significance of an applicant’s proposed project, the following formulas (or their equivalent) must be used to quantify the AAMC. AAMC measures the total impact over the lifetime of deployed property which is attributable to one year of manufacturing. The AAMC will be divided by the qualified investment to determine the relative value, per dollar of tax credit, of different project proposals. Finally, the AAMC will be used to assess production significance and emissions abatement on a per-dollar-of-tax-credit basis.

General AAMC Instructions: The AAMC is calculated with four terms, annual production, fractional system contribution, annual performance of the SAEP, and expected lifetime of the deployed property. For annual production, applicants are required to justify the claimed production by providing yield loss (both manufacturing and downstream) and throughput data wherever possible. In particular, applicants should discuss previous manufacturing experience on similar or identical manufacturing equipment. If the applicant’s annual production is not measured in terms of kWh, gallons of gasoline, or Mtons CO 2 (e.g., solar water heating, biodiesel, or methane gas recapture, respectively) then a conversion factor between the units of measurement and kWh, gallons of gasoline, or Mtons CO When calculating the fractional 2 should be cited and applied. system contribution, applicants should transparently state and justify (with citations wherever possible) current and future pricing assumptions for all significant value chain segments, including the property produced at the proposed facility. To calculate real-world annual performance, applicants should identify and employ the necessary de-rating factors, including degradation rates, such that the claimed annual performance is reflective of the average annual performance over the lifetime of the SAEP. Where appropriate, typical resource and use conditions should be chosen from the reference data provided in Section H. If the necessary reference data is not available or representative of the applicant’s specific manufactured property, the applicant should provide and substantiate assumptions with market reports and/or field data where possible. A similar approach should be taken for the deployed property lifetime. Specifically, if reference data from Section H is not used, the applicant should cite life-cycle performance data of previously deployed, comparable property. Provided below are equations and examples corresponding to each type of SAEP which can be used as high level guidance when calculating AAMC.

Electricity Generation : For SAEP used to produce energy from the sun, wind, geothermal, or other renewable resources, the following formulas shall be used to estimate the electricity generation attributable to property produced at the proposed facility. Specifically, the AAMC is the kWhs generated which can be attributed to one year’s worth of production from the proposed project:

Where:

And:

Example:

A photovoltaic company is building a “50 MW” crystalline silicon solar cell manufacturing line. 50 MW is input as the first term “W This peak production per year” which is the annual peak power output of property produced from the manufacturing line. 50 MW number is multiplied by a series of terms to produce an AAMC that represents the true lifetime electricity generation from this property after it is deployed.

The second term, “Fractional System Contribution” is used to discount the 50 MW by the solar cell’s fraction of a solar system’s total value. In this example, the company purchases silicon wafers and other consumable materials and processes them into a functional cell. The Fractional System Contribution represents the added value that the manufacturing process adds to the final system price. If the market value of a wafer and consumables is $1/W, the cells are sold for $1.50/W, and the total p p factory gate price of the entire photovoltaic system (including the inverter and balance of system components) is $5/W, then p the Fractional System Contribution is (1.5–1)/5=10%. Note: in this example, 100% of the product manufactured by the solar cell line is allocated for SAEP. If instead, some fraction of the rated 50 MW capacity was allocated for an application other than SAEP, then the “Percentage SAEP” would be reduced from 100% to account for this diverted product stream.

The third term, “Capacity Factor” is used to calculate the ratio of annual energy produced to the total energy implied by the peak power rating of the manufactured property. In this example, the power output of the cells are reduced slightly when they

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are incorporated into a module and reduced further when the DC power from the module is converted to useable AC power via an inverter. Additionally, the modules are projected to degrade over their deployed lifetime. The actual average annual energy output of the system over its lifetime is determined by these reductions and the annual solar insulation or resource which is typical of current installations.

The fourth term, “Deployed Property Lifetime”, is the anticipated hours of operation of the manufactured property over its lifetime (after being incorporated into an end of supply chain component or system). In this example, the end of supply chain component is a photovoltaic module which may have a lifetime of 30 years. Thus the Deployed Property Lifetime would be 219000 hours (30 years multiplied by 8760 hours per year). Note: if the end of supply chain component property was instead, a PV inverter, then the Deployed Property Lifetime would be the expected lifetime, as evidenced by warranty or field data, of the inverter not the PV system. If the potential lifetime of the end of supply chain component is longer than the expected lifetime of the generation system, then the Deployed Property Lifetime should be equal to the expected system lifetime.

Energy Conservation : For SAEP designed to conserve energy, such as advanced building, smart grid, or industrial technologies, the following formulas shall be used to estimate the energy saved which is attributable to the incorporation of the property produced at the proposed facility. Specifically, the AAMC is the kWhs saved which can be attributed to one year’s worth of production from the proposed project:

Where:

And:

Example:

A heating, ventilating, and air conditioning (HVAC) equipment supplier is re-equipping a factory for the manufacture of advanced condensers. The re-equipping will enable 10,000 advanced condensers to be manufactured annually. This number will be input as the first term “# Units per year.” For the equations used above, the condenser could represent a sub-component of an advanced HVAC “component” (the complete collection of sub-components required to enable the conservation of energy, e.g., an advanced air handler, controller, packaging unit, etc). Alternatively, if the condenser alone provides the full energy conservation benefit and can be integrated with traditional HVAC systems in a straightforward manner, then the condenser would be the “component”. In either case, the energy consuming “system” is the entire energy load which is directly impacted by, and fully encompassing of the energy conservation benefit. For this example, the system is simply a building.

The second term, “Fractional Component Contribution” is used to calculate the value fraction of an end of supply chain component that the manufactured condenser comprises. In this example, the company purchases supplies (fans, tubing, etc.) and materials (sheet metal, solder, etc.) to assemble a functional condenser. The “Fractional Component Contribution” represents the added value that the manufacturing process adds to the final component price. If the market value of the supplies and materials is $100 per unit, the controller assembly is sold to downstream manufacturers for $200, and the total “factory gate” price to a HVAC installer of the entire HVAC component is $2000, then the “Fractional Component Contribution” is (200–100)/2000 = 5%. Note: if for example, 20% of the units manufactured were used in a different system where there was no energy conservation benefit, then the “Percentage SAEP” term would be 80% and the “Fractional Component Contribution” would be further reduced accordingly.

The third term, “Annual Energy Savings per Unit” is used to calculate the annual energy savings which is enabled by incorporating only the component into a system and assuming typical climate and operation. In this example, the electricity consumption of the building may be decreased by 5000kWh per year.

The fourth term, “Deployed Property Lifetime”, is the anticipated years of operation of the manufactured property over its lifetime. In this example, the anticipated years of operation should equal the warranty on the entire HVAC unit. Note: if the sub-component lifetime is shorter than the expected lifetime of the component, then the sub-component lifetime should be used for the “Deployed Property Lifetime”. The lifetime of the sub-component cannot be longer than the lifetime of the component or system in which it is installed.

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Fuel Efficiency : For SAEP which increases fuel efficiency, such as a hybrid-electric or plug-in electric drive motor vehicle, the following formulas shall be used to estimate the annual energy saved which is attributable to the incorporation of the property produced at the proposed facility. Specifically, the AAMC is annual fuel savings which can be attributed to one year’s worth of production from the proposed project:

Where:

And:

Example 1:

An automobile supplier is expanding a factory for the manufacture of hybrid-electric controller assemblies. The expansion will enable 10,000 additional controllers to be manufactured annually. This number will be input as the first term “# Units per year.” For the equations used above, the controller could represent a sub-component of a hybrid drive train “component” (the complete collection of sub-components required to enable the efficiency improvement, e.g., a controller, battery, and electric motors). Alternatively, if the controller alone provides the full fuel efficiency improvement and can be integrated with a traditional powertrain, then the controller would be the “component”. In either case, the fuel consuming “system” is the entire load which is directly impacted by, and fully encompassing of the fuel efficiency improvement. For this example, the system is simply the vehicle.

The second term, “Fractional Component Contribution” is used to calculate the value fraction of an end of supply chain component that the manufactured controller assembly comprises. In this example, the company purchases supplies (PCBs, power controllers, etc.) and materials (adhesives, wiring, etc) to assemble a functional controller. The “Fractional Component Contribution” represents the added value that the manufacturing process adds to the final component price. If the market value of the supplies and materials is $500 per unit, the controller assembly is sold to downstream manufacturers for $1000, and the total “factory gate” price to an automobile manufacturer of the entire hybrid electric component is $4000, then the “Fractional Component Contribution” is 12.5%. Note: if, for example, 10% of the units manufactured were allocated instead for electric golf carts (non-SAEP) then the “Percentage SAEP” term would be 90% and the “Fractional Component Contribution” would be further reduced accordingly.

The third term, “Annual Fuel Savings per Unit” is used to calculate the annual fuel savings which is enabled by incorporating only the component into a system under typical use patterns. In this example, the fuel economy of the vehicle may be increased by 10 miles per gallon. The actual annual fuel savings would be determined by this increase in fuel economy and the annual vehicle miles traveled, for which the applicant should provide cited data. For alternative fuels such as diesel, savings should be converted to gallons of gasoline equivalent (GGE). For electric vehicle (EV) or plug-in hybrid electric vehicle (PHEV) systems, where electricity is consumed to further reduce the fuel consumption, an additional calculation of MWh consumed per GGE saved is required in the calculation of CO2 emissions. See further instructions under “Impact on Air Pollution and Anthropogenic Emissions of Greenhouse Gases”.

The fourth term, “Deployed Property Lifetime”, is the anticipated years of operation of the manufactured property over its lifetime. In this example, the anticipated years of operation should be substantiated by citing fleet lifetime of previously deployed comparable systems. Note: if the sub-component lifetime is shorter than the expected lifetime of the system, then the sub-component lifetime should be used for the “Deployed Property Lifetime”. For example, if the subcomponent was a battery for an electric vehicle then the anticipated lifetime might be the warrantied lifetime of the battery rather than the anticipated lifetime of the vehicle. The lifetime of the sub-component cannot be longer than the lifetime of the component or system in which it is installed.

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Example 2:

A manufacturer of reciprocating engines is building a new factory to manufacture a new, high-efficiency engine for use in Combined Heat and Power (CHP) systems. CHP applications are included in “fuel efficiency” for purpose of this notice because they consume energy in the production of electricity and thermal energy. ⁸

The new factory will enable 1,000 high-efficiency engines to be manufactured annually. This number will be input as the first term “# Units per year”. For the equations used above, the reciprocating engines could represent a sub-component of a CHP “component” (the complete collection of sub-components required to enable the efficiency improvement — e.g., fuel handling, thermal recovery unit, integrated controls, etc). The energy consuming “system” is the entire energy load which is directly impacted by, and fully encompassing of the efficiency improvement. For CHP, the system may be an industrial building, hospital or other building.

The second term, “Fractional Component Contribution” is used to calculate the value fraction of an end of supply chain component that the manufactured engine comprises. In this example the company purchases supplies (fuel pumps, tubing, etc) and materials (engine blocks, wire, etc) to assemble a completed engine. The “Fractional Component Contribution” represents the added value that the manufacturing process adds to the final component price. If the market value of the supplies and materials is $40,000 per unit, the controller assembly is sold to downstream manufacturers for $100,000, and the total “factory gate” price to an engineering firm of the complete CHP system $150,000, then the “Fractional Component Contribution” is (100,000–40,000)/150,000 = 40%. Note: if for example, 25% of the units manufactured were used in a different system where there was no efficiency improvement or the system does not qualify as SAEP, then the “Percentage SAEP” term would be 75% and the “Fractional Component Contribution” would be further reduced accordingly.

The third term, “Annual Energy Savings per Unit” is used to calculate the annual energy savings which is enabled by incorporating only the component into a system and assuming typical climate and operation. In this example, the CHP system saves energy by displacing electricity from the grid and onsite thermal energy generation that would be generated by a boiler or other device. The net annual energy savings is the energy that would be consumed by grid generated electricity plus the energy that would be consumed by the onsite boiler minus the energy consumed by the CHP system. This net energy should be expressed in terms of gallons of gasoline equivalent using the conversion factors provided in the Applicant Data Input Spreadsheet.

The fourth term, “Deployed Property Lifetime”, is the anticipated years of operation of the manufactured property over its lifetime. In this example, the anticipated years of operation should equal the warranty on the entire CHP system. Note: if the sub-component lifetime is shorter than the expected lifetime of the system, then the sub-component lifetime should be used for the “Deployed Property Lifetime”. The lifetime of the sub-component cannot be longer than the lifetime of the component or system in which it is installed.

GHG Emission Reduction : For SAEP with the primary purpose of reducing emissions or sequestering GHG, the following formulas shall be used to estimate the annual emission reduction in CO Specifically, the AAMC is the Mtons 2 equivalent gases. of avoided CO 2 equivalent gas emission which can be attributed to one year’s worth of production from the proposed project.

Where:

And:

8 Although the energy source for a CHP system may be renewable (e.g., landfill gas), the CHP system displaces thermal energy production (e.g., a boiler) that would typically use fossil fuel. Because fossil energy consumption is displaced by the CHP system, the “fuel efficiency” analysis is used.

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Example:

A chemical supplier is building a factory for the manufacture of physical solvents for CO The factory will produce 2 capture. 100,000 gallons of solvent. This volume will be input as the first term “# Units per year.” For the equations used above, the physical solvent would represent a sub-component of a CCS “component” (the collection of sub-components required for the full Carbon Capture and Sequestration (CCS) process). The “system” is the entire carbon emitting facility which is directly impacted by, and fully encompassing of, the CCS process.

The second term, “Fractional Component Contribution” is used to calculate the value fraction of an end of supply chain component that the manufactured solvent comprises. In this example the company purchases feedstock materials to process the solvent. The “Fractional Component Contribution” represents the added value that the manufacturing process adds to the final component price. If the feedstock costs $50 per unit volume, this volume is sold to downstream manufacturers for $500, and the total “factory gate” price of a functional CCS apparatus is $5000 (per unit volume), then the “Fractional Component Contribution” is (500–50)/5000 = 9%. Note: if, for example, 30% of the annual manufactured volume was sold for non-CCS applications then the “Percentage SAEP” term would be 70% and the “Fractional Component Contribution” would be further reduced accordingly.

The third term, “CO per Unit” is used to calculate the annual CO which is enabled from incor2eq Reduction 2eq reduction porating only the full CCS component into a system under typical use patterns. In this example, the system emissions will be reduced by 1000 Mtons per year per unit.

The fourth term, “Deployed Property Lifetime”, is the anticipated years of operation of the manufactured property over its lifetime. In this example, the anticipated years of operation should be substantiated by providing information on likely solvent replacement schedules. Note: if the sub-component lifetime is shorter than the expected lifetime of the component, then the sub-component lifetime should be used for the “Deployed Property Lifetime”. The lifetime of the sub-component cannot be longer than the lifetime of the component or system in which it is installed.

Renewable Fuel Refining or Blending : For SAEP to be used exclusively in the refining or blending of renewable fuels, the following formulas shall be used to estimate the production of renewable fuel which is directly attributable to the annually manufactured property. Specifically, the AAMC is the renewable fuel generation which can be attributed to one year’s worth of production from the proposed project:

Where:

Example:

A pump manufacturer is building a factory for the manufacture of pumps specifically designed for renewable fuel refining or blending. The factory will produce 10,000 pumps per year. This volume will be inputted as the first term “# Units per year.”

The second term, “Capacity per Unit” is the estimated annual volume of fuel refined or blended annually, which is enabled by the pump under typical plant operations. For example, if a single pump is installed per biofuel refinery, the enabled capacity is the annual refined or blended product from the biofuel refinery.

The third term, “Fractional System Contribution” is used to calculate the value fraction of an end of supply chain system that the manufactured pump comprises. In this example the company purchases sub-components and materials to manufacture each pump. The “Fractional System Contribution” represents the added value that the manufacturing process adds to the final component price. If the sub-component and materials cost $5000 per pump, this pump is sold to a construction company for $10,000, and the total price of the constructed refinery, the “system,” is $1M, then the “Fractional Component Contribution” is (10,000–5000)/1,000,000 = 0.5%. Note: as per the requirement that no portion of such a project be used for the refining or blending of non-renewable fuels, the “Percentage SAEP” term must be equal to 100% for such SAEP.

The fourth term, “Deployed Property Lifetime”, is the anticipated years of operation of the manufactured property over its lifetime. In this example, the anticipated years of operation should equal the anticipated lifetime based on the planned service schedule or warranty. The lifetime of the component cannot be longer than the lifetime of the system in which it is installed.

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Other Advanced Energy Technologies : For other technologies with the primary benefit of storing or transmitting renewable energy, applicants should quantify the annual renewable energy generated and/or saved which is directly attributable to the manufacture of their technology discounted by the likely fraction of their annual production which will be used for this purpose. Although no generic equations are provided for this technology area, applicants should review the equations and methodology above and transparently employ analogous calculations where possible and appropriate.

Impact on Air Pollution and Anthropogenic Emissions of Greenhouse Gases:

The DOE anticipates a wide variety of manufacturing proposals and thus no standard, all-encompassing approach will be used to calculate pollutants and GHG emissions. Instead, the applicant is expected to quantify or discuss the pollutant and/or GHG emissions associated with the full value chain manufacture, installation, operation, and end-of-life processes associated with the SAEP attributable to the project.

To quantify the primary effects on CO 2 emissions (“AAMC CO2 Reduction” as listed in the Applicant Data Input Spreadsheet), the following four technology-specific approaches are used.

For Electricity Generation and Energy Conservation SAEP, the following equation is used to calculate the reduction in emissions of CO from the AAMC: 2

This calculation ignores CO 2 emissions associated with the manufacture, installation, and end-of-life processes and assumes that the dominant impact with respect to CO Where possible, 2 emissions is the offset consumption of average U.S. grid electricity. the applicant is expected to quantify or discuss CO with the full value chain manufacture, installation, 2 emissions associated operation, and end-of-life processes associated with the SAEP attributable to the project. The rationale for requiring a full value chain assessment is to prevent the review process from advantaging the lowest energy manufacturing steps when all value chain steps are required to realize any CO 2 reduction.

For most Fuel Efficiency SAEP, a similar equation is used:

As with the previous energy types, applicants should, where possible, discuss the full value chain, life cycle emissions of CO 2 associated with their manufactured property.

For Fuel Efficiency SAEP, such as EVs and PHEVs, which require the consumption of electricity to enable the full fuel efficiency, the following equation is used:

The “MWh/GGE” term is calculated by the applicant. As with the previous energy types, applicants should, where possible, discuss life cycle emissions of CO 2 associated with their manufactured property.

For Renewable Fuel Refining or Blending SAEP, the calculation is modified to account for CO2 emissions associated with the manufacture of renewable fuel:

The “LCA” term is determined by the applicant by selecting the most relevant fuel and corresponding process from the “LCA Fuel CO Assumptions” tab. Applicants must select the life cycle analysis (LCA) number which most closely corresponds 2 to their SAEP. If the applicant believes that the actual LCA emissions associated with the operation of the SAEP differs significantly from data provided, then the applicant may substantiate an alternative LCA number in their narrative. No further discussion regarding CO 2 emissions are required because emissions associated with installation, operation, and end-of-life processes associated with the SAEP are encompassed by the LCA number.

For GHG Emission Reduction SAEP, the AAMC is equivalent to the CO 2 emission reduction and thus no additional calculations are necessary.

The AAMC CO Reduction represents the total CO impact over the lifetime of deployed property which is attributable to 2 2 one year of manufacturing. This number is further adjusted in three ways to assess the magnitude of the CO reduction of 2 a given project. First, the normalized value of this reduction is assessed by dividing by the tax credit sought. Second, the normalized AAMC CO 2 Reduction is then divided by the deployed property lifetime to capture the CO2 impact after the first year of SAEP deployment. Third, the normalized AAMC CO This 2 Reduction is multiplied by the projected factory lifetime. number calculates the total carbon impact over the lifetime of all deployed property over the lifetime of the factory. Because this number will scale with the factory lifetime, the applicant should justify the claimed operational period of the factory in the project narrative. All of these three AAMC CO 2 Reduction figures will be used in the scoring of Evaluation Criteria 2.

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Technological Innovation and Cost Reduction:

Applicants must provide quantitative information regarding their project’s innovation and value. This information is captured with the related metrics of technological or cost advantage over competitors, levelized cost, and the cost of CO abatement. 2 The preferred approach is for the applicant to discuss and quantify each of these three metrics. However, DOE recognizes the difficulty associated with calculating levelized costs (and thus $/CO ) for many types eligible property. If the applicant is unable 2 to perform a levelized cost or CO abatement cost calculation for the SAEP then the applicant should provide a quantitative 2 or quantitative assessment of how their technological or cost advantage over competitors translates into system price savings, improved performance, or improved system life.

Technological or Cost Advantage over Competitors : The applicant data sheet requires applicants to identify their “Technological or Cost Advantage over Competitors” with respect to the most relevant figure of merit. Ideally this is an apples-to-apples comparison between similar property of similar function. For example, a wind blade manufacturer might compare the performance and cost of the proposed blade manufacturing to current commercially manufactured blades. Although high level metrics such as levelized costs can capture this cost advantage, applicants are encourage to select a lower level metric (i.e. $/W, $/Unit, efficiency, etc.) and later discuss the impact this granular cost advantage has upon the levelized cost. If the applicant’s manufactured property has multiple advantages over currently manufactured property, the applicant should select and quantify the most significant advantage in the Applicant Data Input Spreadsheet while discussing all technological and cost advantages in their narrative.

Levelized Cost: The levelized cost of energy (LCOE) calculation should assume that the manufactured property is part of the SAEP and where appropriate, be based on the financial and resource assumptions provided in Section H. This “improved” LCOE value should be expressed in nominal terms and should not include any Federal, State or other financial incentives. Further, plant and related cost values and prices of commodity fuels or feedstocks used in the calculation should reflect current national wholesale averages where possible. The following information should be provided as documentation:

and maintenance costs, and prices of commodity fuels or feedstocks.

their potential directional effect on the resulting cost (i.e., increase or decrease).

relies on the competitive standard of the day), based on the same financial and resource assumptions used in the “improved” calculation.

Cost of Abatement: The form and units of the levelized cost vary across each energy type in the Applicant Data Input Spreadsheet. Thus, the cost of abatement equations are specific to each energy type to ensure consistent, accurate and comparable abatement costs are produced by the Applicant Data Input Spreadsheet. For all energy types the cost of abatement reflects the incremental cost and associated incremental reduction in carbon emissions from a baseline.

For Electricity Generation and Efficiency technologies the cost of abatement is calculated with the following equation:

The baseline ¢/kWh is defined by the retail electric rate of the electricity being generated or saved (i.e. residential, commercial, or utility). The factor of 10 in the numerator provides dimensional consistency. For simplicity, all improved technologies are assumed to non-carbon emitting.

For Fuel Efficiency technologies the cost of abatement is calculated with the following equation:

Incremental levelized cost / incremental emissions reduction:

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In this calculation, an incremental LCOE term is used to simplify the applicant’s data entry into the Applicant Data Input Spreadsheet. This term represents the difference in LCOE ($/GGE) costs between the baseline system and the improved system. The specific calculation of this difference or increment will vary depending upon the fuel efficiency technology being considered. The denominator represents the emissions reduction associated putting the improved system in place, principally in terms of its displacement of the baseline technology.

For example, for a vehicle fuel efficiency technology, the incremental LCOE ($/GGE) may be calculated as:

In this case the $/Mile term represents the fully-burdened cost associated with each mile driven and includes factors such as depreciation. To calculate the incremental $/GGE, the applicant calculates the difference between baseline and improved $/GGE. The denominator of the cost of abatement term is based on the “well to wheels” emissions associated with burning a GGE of the consumed fuel. Applicants should show their work and reference Section H when calculating these values.

For other fuel efficiency technologies, such as a CHP application, the incremental LCOE ($/GGE) may be calculated as:

In this case, the $/BTU term represents the fully-burdened cost associated with each BTU of heat that the CHP system generates as a by-product of the power generation. The cost of abatement denominator reflects the emissions avoided as a result of the reduced consumption of the fuel that would have be burned to generate the heat now supplied by the CHP system.

For GHG Reduction technologies the cost of abatement is equivalent to the levelized cost (i.e., for these technologies, the levelized cost is already expressed as the cost abatement) and thus no additional calculations are necessary.

For Renewable Fuel Refining or Blending technologies the cost of abatement calculation is analogous to the Electricity equations provided above:

In this case the traditional fuel is the fossil fuel not consumed. The term “Mtons/GGE ” in the denominator is traditional similar to the denominator term in the fuel efficiency example provided previously. The second term in the denominator “Mtons/GGE ” accounts for the life-cycle (“seed to wheels”) carbon emissions associated with consumption of the refined renewable fuel. This value is referenced from the “LCA Fuel CO2 Assumptions” tab based upon the applicant’s renewable fuel type selection.

If an applicant cannot reasonably calculate a LCOE for the SAEP associated with the proposed manufactured property, the applicant can instead provide an estimated cost of GHG emissions abatement. The applicant should provide and justify the use of a cost value from a published study (e.g., McKinsey’s published 2009 report estimating global abatement costs) for a comparable energy system.

If the applicant chooses to calculate a cost of abatement without a corresponding LCOE value for the SAEP, the basis of the calculation is similar to that required in the LCOE calculation. For example, an applicant could calculate an incremental LCOE by calculating the net present value of the incremental cost to the baseline system and dividing by the net present value of the incremental performance improvement. This calculation should also be based on the financial and resource assumptions provided and should be expressed in nominal terms and should not include Federal, State or other financial incentives. Further, plant and related cost values and prices of commodity fuels or feedstocks used in the calculation should reflect current national wholesale averages where possible. The following information should be provided as documentation:

and maintenance costs, prices of commodity fuels or feedstocks, and carbon emissions associated with the operation of the end use energy product

their potential directional effect on the resulting cost (i.e., increase or decrease).

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relies on the competitive standard of the day), based on the same financial and resource assumptions used in the “improved” calculation.

Finally, if the applicant chooses to provide a cost of abatement value for the closest comparable end use energy product from a published study, the following information should be provided as documentation:

reported in real terms; e.g., $2008), the year of costs and prices of fuel commodities, the year to which the end cost value is referenced (e.g., could be a future year), the extent of technology improvement assumed for the comparable end use energy product, the regional extent of the baseline assumed (e.g., global, U.S., region of U.S.), the carbon emissions associated with the baseline energy mix and the end use energy product, the key financial assumptions (e.g., interest rates, taxes, incentives included), and the resource-related parameters (e.g., capacity factors).

abatement, and the potential directional effect of these differences on the study’s cost value (i.e., if the aforementioned assumptions required for cost of abatement calculation had been used, would the study’s cost value likely have increased or decreased).

V. SUPPORTING DOCUMENTS

The applicant should include such appendices as are applicable to the project. Examples of appropriate appendices include:

or an executed contract to purchase or lease the site.

the unaudited quarterly interim financial statements for the current fiscal year.

H. Technical References for Advanced Energy Technologies Supplied Figures

This section is provided to assist the applicant in calculating the quantitative factors required in the project proposal. Wherever appropriate, the applicant should use this information for baseline assumptions for estimating factors such as the annual performance of the SAEP, expected lifetime of the deployed property and LCOE property. Additionally, in the event that the applicant is unable to calculate the levelized cost or the cost of abatement, this information may be used as inputs to the Applicant Data Input Spreadsheet.

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Table 1: Financial Assumptions for Levelized Cost of Energy Analysis

Common Financial Inputs for LCOE Analysis by Market Sector

Market Buildings (grid-tied) Central Generation

Residential Commercial Utility Financials

Residential Mortgage Commercial Loan IPP and Utility General

Analysis Period 20 20 20 Inflation Rate 2.5% 2.5% 2.5% Real Discount Rate 5.5% 5.5% 7.5% Taxes & Insurance

Federal Tax 29% 35% 35% State Tax 7% 7% 8% Property Tax 0 0 0 Sales Tax 0 0 0 Insurance 0 0 0 Depreciation

Federal N/A MACRS-Mid-Q MACRS-Mid-Q State N/A MACRS-Mid-Q MACRS-Mid-Q Loan

Loan (Debt) Percent 100% 50% 50% Loan Term 30 15 20 Loan Rate 6% 6% 6% Constraining Assumptions

PPA Escalation Rate N/A N/A 0 Target Internal Rate of Return N/A N/A 15% Target Minimum Debt Service N/A N/A 1.4 Coverage Ratio

Positive Cash Flow N/A N/A No Incentives

Federal, State, or Local Subsidies Do not include Do not include Do not include

Suggested LCOE Tools:

All Electricity Generating Technologies (general tool): RET Finance: http://analysis.nrel.gov/retfinance/ The NREL Strategic Energy Analysis Center launched RET Finance in October 2001. It is an Internet-based cost of electricity model that simulates a 30-year nominal dollar cash flow for a variety of renewable energy power projects. As an online application, RET Finance is accessible from anywhere using an Internet connection and a browser. RET Finance calculates project earnings, detailed cash flows, and debt payments and also computes a project’s levelized cost-of-electricity, after-tax internal rate of return, and debt service coverage ratio.

Solar Technologies SAM 3.0.3.0: https://www.nrel.gov/analysis/sam/ The National Renewable Energy Laboratory (NREL), in conjunction with Sandia National Laboratory and in partnership with the U.S. Department of Energy (DOE) Solar Energy Technologies Program (SETP), developed the Solar Advisor Model (SAM) in 2006. This version was last updated on July 24, 2009 . The Solar Advisor Model evaluates several types of financing (from residential to utility-scale) and a variety of technology-specific cost models for several (and eventually all) SETP technologies. The SETP technologies currently represented in SAM include concentrating solar power (CSP) parabolic trough and dish-stirling systems and photovoltaic (PV) flat plate and concentrating technologies. Other technologies will be added in future versions, including CSP central receivers and residential solar water heating.

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Geothermal Technologies Geothermal Electricity Technology Evaluation Model (GETEM): Posted on-line since July 31, 2009: http://www1.eere.energy.gov/geothermal/getem.html . The Geothermal Electricity Technology Evaluation Model (GETEM) was developed to aid the Geothermal Technologies Program (GTP) in understanding the performance and the cost of the technologies it is seeking to improve. It is a detailed model of the estimated performance and costs of currently available U.S. geothermal power systems. GETEM can be used to analyze and evaluate currently available technologies and it can also be used to estimate what certain technologies might cost five to twenty years in the future, given the direction of potential RD&D projects. The model is intended to help GTP determine which proposed RD&D programs and projects might offer the most improvements for the taxpayer dollar.

Small Wind Technologies www.nrel.gov/wind/docs/spread_sheet_Final.xls Global Cost of Measured Reduction in Greenhouse Gas Emissions Applicants may choose to use published report such as the McKinsey and Company. “Pathways to a Low-Carbon Economy.” Version 2 of the Global Greenhouse Gas Abatement Cost Curve (2009). The report can be downloaded here: http://www.mckinsey.com/clientservice/ccsi/pathways_low_carbon_economy.asp

(Based on Costs of the Full Supply Chain) ⁹ .

Table 2: Vehicle Assumptions

Table 3: Common Service Life Years

9 Baseline data and abatement potential can differ slightly between this referenced global abatement study and the national studies previously published by McKinsey. National studies provide a deeper view of the specifics of each respective country and to a much larger extent rely on national baseline data and other national statistics. Also, in national studies additional levers are included which are particularly relevant in that country.

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Assumption Tables to the EIA AEO, March 2009. http://www.eia.doe.gov/oiaf/aeo/assumption/index.html

Table 4: Other Common Technical Assumptions and Baseline for Levelized Cost of Energy Analysis

Electricity Generation and Storage

1 Generation — NREL Analysis estimates based on averages from multiple published sources; Storage — Input costs from EPRI 2009 Overview of Electric Energy Storage Options for the Electric Enterprise 2 A constant nominal price of $2.02/million Btu should be assumed to determine the fuel price contribution to the LCOE. N/A - not applicable If a natural gas price is needed to compute the LCOE of at technology, a constant nominal price of $4.66/ thousand cubic feet should be used (based on EIA AEO 2009).

I. 48C Preliminary Application

This preliminary application will enable DOE to preview the types of forthcoming final applications to ensure that we establish the relevant resources for an efficient and effective review process. Please provide brief responses summarizing the content in your final applications. This preliminary application will not be included in the review of the final application as we understand the final numbers might differ slightly from those in the preliminary application. However, you must use numbers that are as accurate as possible, and we would appreciate the data here to be within 10% of the final data.

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Narrative Describing the Scope of the Project (300 words or less)

Applicant Checklist

J. Applicant Data Input Spreadsheet

This section is provided to give the applicant a depiction of the Applicant Data Input Spreadsheet, captured in the images on the following pages.

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scope is appropriately limited in certain cases. See section 301.7701(i)–4(a) of the Procedure and Administration Regulations. The Commissioner may also determine that an entity not described in section 301.7701(i)–4(a)(1) is not a TMP if the entity has a purpose similar to that of entities described in 301.7701(i)–4(a)(1). Section 301.7701(i)–4(a)(3).