Qualifying Advanced Energy Project Credit Notice 2013-12

Qualifying Advanced Energy Project Credit

Notice 2013-12
TABLE OF CONTENTS
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Section 9.
Section 10.
Section 11.
Section 12.
Section 13.
Appendix A.
Appendix B.

Purpose
Background
Definitions
Section 48C Phase II Program
Concept Papers and Applications for DOE Recommendation
and § 48C Certification
Issuance of Certification
Other Requirements
Reduction or Forfeiture of Allocated Credits
Qualified Progress Expenditures
Disclosure of Information
Effective Date
Paperwork Reduction Act
Drafting Information
Agreement
Request for Concept Papers and Applications for DOE
Recommendation

SECTION 1. PURPOSE
Section 48C of the Internal Revenue Code provides for the qualifying advanced
energy property project program and authorizes $2.3 billion of credits (“the § 48C Phase
I program” and “the § 48C Phase I credit”). This notice reports the results of the § 48C
Phase I program and, as provided by § 48C(d)(4), establishes a second phase of the
qualifying advanced energy project program (“the § 48C Phase II program”) to distribute
the § 48C Phase I credits that are available for re-allocation after review of the

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§ 48C Phase I program.
To be considered for an allocation of credits in the § 48C Phase II program,
taxpayers must submit concept papers to the U.S. Department of Energy (“DOE”) by
April 9, 2013 and applications to DOE and the Internal Revenue Service (“Service”) by
July 23, 2013.
SECTION 2. BACKGROUND
.01 Section 46 provides that the amount of the investment credit for any taxable
year is the sum of the credits listed in § 46. That list includes the qualifying advanced
energy project credit under § 48C.
.02 Section 48C(d)(1) provides that the Secretary, in consultation with the
Secretary of Energy, shall establish a qualifying advanced energy project program to
consider and award certifications for qualified investments eligible for credits to
qualifying advanced energy project sponsors. In 2009, the Treasury Department and
the Service, in consultation with the Secretary of Energy, established the § 48C Phase I
program in Notice 2009-72, 2009-37 I.R.B. 325.
.03 Pursuant to § 48C(d)(1)(B), the § 48C Phase I program provided for
$ 2.3 billion of credits to be allocated to qualifying advanced energy projects. The
Service fully allocated $2.3 billion of credits under the § 48C Phase I program in 20092010.
.04 Section 48C(d)(4) requires the Secretary to review the allocation of
§ 48C Phase I credits not later than the date that is 4 years after the date of enactment
of § 48C. The Secretary may conduct an additional program for applications for

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certification if the Secretary determines that: (1) there is an insufficient quantity of
qualifying applications for certification pending at the time of the review, or (2) any
certification made pursuant to § 48C(d)(2) has been revoked pursuant to
§ 48C(d)(2)(B) because the project subject to the certification has been delayed as a
result of third-party opposition or litigation.
.05 The Service has completed this review and has determined that § 48C Phase
I credits in the total amount of $150,228,397.00 are available for reallocation under the
§ 48C Phase II program.
.06 Pursuant to § 48C(a), the qualifying advanced energy project credit for a
taxable year is an amount equal to 30 percent of the qualified investment (as defined in
§ 48C(b)) for that taxable year with respect to the taxpayer’s qualifying advanced
energy project (as defined in § 48C(c)(1)).
.07 Section 48C(b)(1) provides that the qualified investment for any taxable year
is the basis of eligible property that is placed in service by the taxpayer during such
taxable year and is part of a qualifying advanced energy project.
.08 Section 48C(b)(3) provides that the qualified investment for all taxable years
with respect to any qualifying advanced energy project is limited to the amount
designated by the Secretary as eligible for the credit under § 48C.
.09 Section 48C(d)(3) specifies the criteria that must be considered in
determining which qualifying advanced energy projects are certified under
§ 48C(d).
.10 The qualifying advanced energy project credit generally is allowed in the

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taxable year in which the eligible property (as defined in § 48C(c)(2)) is placed in
service (as defined in section 3.04 of this notice) by the taxpayer. Pursuant to
§ 48C(d)(2)(C), a taxpayer that receives a certification under § 48C(d)(2) has 3 years
from the date of issuance of certification to place the qualifying advanced energy project
in service. If the taxpayer does not place the project in service by the end of that period,
the certification is no longer valid.
.11 The at-risk rules in § 49 and the recapture and other special rules in
§ 50 apply to the qualifying advanced energy project credit.
.12 For further information regarding the qualifying advanced energy project
program under § 48C, taxpayers may refer to http://www.irs.gov/Businesses/AdvancedEnergy-Credit-for-Manufacturers-(IRC-48C). This website contains various information
relating to the program, including answers to frequently asked questions.
SECTION 3. DEFINITIONS
The following definitions apply for purposes of § 48C and this notice:
.01 Qualifying Advanced Energy Project. A qualifying advanced energy project is
a project that meets the following requirements:
(1) the project re-equips, expands, or establishes a manufacturing facility (as
defined in section 3.05 of this notice) for the production of specified advanced energy
property or property that, after further manufacture, will become specified advanced
energy property;
(2) the Service has certified pursuant to § 48C(d)(2) that part or all of the
qualified investment in the project is eligible for a credit under § 48C; and

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(3) the project does not produce any property which is used in the refining or
blending of any transportation fuel (other than renewable fuels).
.02 Specified Advanced Energy Property. Specified advanced energy property
means any of the following:
(1) property designed for use in the production of energy from the sun, wind,
geothermal deposits (within the meaning of § 613(e)(2)), or 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 property for the storage of such energy;
(4) property designed to capture and sequester carbon dioxide and sequester
carbon dioxide emissions;
(5) property designed to refine or blend renewable fuels (but not fossil fuels) or to
produce energy conservation technologies (including energy-conserving lighting
technologies and smart grid technologies);
(6) new plug-in electric drive motor vehicles (as defined by § 30D), qualified plugin electric vehicles (as defined by § 30(d)), or components that are designed specifically
for use with such vehicles, including electric motors, generators, and power control
units; or
(7) other property designed to reduce greenhouse gas emissions as may be
determined by the Service as described in section 3.06 of this notice.
.03 Eligible Property. Eligible property is any property (other than a building or its

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structural components) that meets the following requirements:
(1) the property is necessary for the production of specified advanced energy
property described in § 48C(c)(1)(A)(i) or section 3.02 of this notice;
(2) the property is
(a) tangible personal property, or
(b) other tangible property (not including a building or its structural components)
that is used as an integral part of the qualifying advanced energy project; and
(3) depreciation (or amortization in lieu of depreciation) is allowable with respect
to the property.
.04 Placed In Service. For purposes of § 48C, property is placed in service in the
taxable year in which the property is placed in a condition or state of readiness and
availability for a specifically assigned function. See § 1.46-3(d)(1)(ii) of the Income Tax
Regulations. Thus, a qualifying advanced energy project is placed in service in the
taxable year in which the project is placed in a condition or state of readiness and
availability for its intended purpose. Eligible property (as defined in § 48C(c)(2) and
section 3.03 of this notice) that is a part of the project is placed in service in the taxable
year in which the property is placed in a condition or state of readiness and availability
for its intended purpose.
.05 Manufacturing Facilities. For purposes of § 48C, manufacturing facilities are
facilities that make, or process raw materials into, finished products (or accomplish any
intermediate stage in that process).
.06 Advanced Energy Property Designed To Reduce Greenhouse Gas

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Emissions. Property may be determined to be designed to reduce greenhouse gas
emissions either through published guidance or in the letter notifying a taxpayer that the
Service has accepted the taxpayer’s application for § 48C certification with respect to
the property.
SECTION 4. SECTION 48C PHASE II PROGRAM
.01 In General. The Service will consider a project under the qualifying advanced
energy project program only if DOE provides a recommendation and ranking for the
project (DOE recommendation). DOE will provide a recommendation and ranking only
if it determines that the project has a reasonable expectation of commercial viability and
merits a recommendation based on the criteria in § 48C(d)(3)(B). Accordingly, a
taxpayer must submit for each project that it sponsors: (1) a concept paper for DOE
consideration; (2) an application for recommendation by DOE (“application for DOE
recommendation”); and (3) an application for certification under § 48C(d)(2) by the
Service (“application for § 48C certification”) (collectively (2) and (3) are referred to
herein as “the § 48C applications”). A taxpayer must submit a concept paper and the
§ 48C applications as specified in section 5 and Appendix B of this notice through the
eXCHANGE website at https://eere-exchange.energy.gov. EXCHANGE is an online
application portal used by the Office of Energy Efficiency & Renewable Energy, DOE,
into which applicants may securely input their data and information for review by DOE
and the Service. Applicants will be able to submit an application for DOE
recommendation and an application for § 48C certification simultaneously using
eXCHANGE.

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.02 Program Specifications.
(1) The Service determines the amount of the qualifying advanced energy project
credit allocated to a qualifying advanced energy project at the time the Service accepts
the application for certification for that project in accordance with section 4.02(8) of this
notice (see section 5 of this notice for the requirements applicable to the concept paper
and the § 48C applications).
(2) Section 48C Phase II credits in the amount of $150,228,397.00 are available
for allocation.
(3) The amount of the qualified investment that is eligible for the credit with
respect to any project is limited to $100 million. Accordingly, the maximum amount of
credits allocated per project will be $30 million.
(4) The DOE recommendations will include a ranking of projects in descending
order (that is, first, second, third, etc.). The project receiving the highest ranking (that is,
first) will be allocated the full amount of credit requested not to exceed $30 million
before any credit is allocated to a lower-ranked project. The amount of credit allocated
to a project reduces the amount of credit available to lower-ranked projects. The same
process will apply to the second and lower-ranked projects until the amount available for
allocation is exhausted. DOE will recommend and rank projects only to the extent
necessary to exhaust the amount available for allocation.
(5) For the § 48C Phase II program, the application period for certification begins
on February 7, 2013, and ends on July 23, 2013. All timely submitted applications will
be evaluated and ranked on their merit regardless of when in the application period they

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are submitted.
(6) For the § 48C Phase II program, a concept paper for DOE consideration must
be submitted by April 9, 2013. The § 48C applications must be submitted by July 23,
2013. If the § 48C applications are received on or before July 23, 2013, and otherwise
meet the preliminary compliance review criteria, DOE will determine the merit of the
project and (for projects determined to be meritorious) provide the DOE
recommendation to the Service by October 11, 2013. See section 5.02 of this notice
and Appendix B to this notice for the information required to be submitted to DOE in an
application for DOE recommendation. Also, see Appendix B to this notice for a
discussion relating to the process for applying for DOE recommendation and the
instructions for filing concept papers and applications for DOE recommendation.
(7) Each applicant will receive an electronically generated confirmation of receipt
upon submission of (a) the concept paper and (b) the § 48C applications. The
timeliness of submission of the § 48C applications will be determined by the submittal
date and time shown on the confirmation of receipt.
(8) For the § 48C Phase II program, the Service will accept or reject a taxpayer’s
application for § 48C certification by November 15, 2013, and it will notify the taxpayer,
by letter, of its decision. If the application is accepted, the date of this letter will be
treated as the acceptance date.
(9) If the taxpayer’s application for § 48C certification is accepted, the
acceptance letter will state the amount of the credit allocated to the project. The
qualifying advanced energy project credit with respect to any project for all taxable

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years may not exceed the amount of credit allocated to the project under section 4 of
this notice. If a credit is allocated to a taxpayer’s project, the taxpayer will be required to
execute an agreement in the form set forth in Appendix A to this notice. The taxpayer
must execute and return the agreement to the Service by January 10, 2014, at the
address listed in section 6.02 of this notice. The Service will execute and return the
agreement to the taxpayer by March 14, 2014. The executed agreement applies only to
the taxpayer that signed the agreement. The taxpayer must notify the Service within 90
days of the acquisition of the project by any other person (a successor in interest) or, if
the taxpayer is a member of an affiliated group filing consolidated returns, a change in
the common parent company of the affiliated group. A successor in interest that plans
to claim the § 48C credit allocated to the project must request permission to execute a
new agreement with the Service. If the request is granted, the new agreement must be
executed no later than the due date (including extensions) of the successor in interest’s
Federal income tax return for the taxable year in which the transfer occurs. If the
successor in interest does not execute a new agreement, the following rules apply:
(a) in the case of an interest acquired before the time the qualifying advanced
energy project is placed in service, any credit allocated to the project will be fully
forfeited (and rules similar to the recapture rules of § 50(a) apply with respect to
qualified progress expenditures); and
(b) in the case of an interest acquired after the qualifying advanced energy
project is placed in service, the project ceases to be investment credit property (and
rules similar to the recapture rules of § 50(a) will apply with respect to qualified progress

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expenditures).
.03 For qualifying advanced energy projects that re-equip or expand a
manufacturing facility, the taxpayer’s qualified investment is limited to property that reequips or expands the facility to produce specified advanced energy property listed in
section 3.02 of this notice.
.04 The qualifying advanced energy project credit will not be allocated to 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 Tax
Act of 2009, Division B of Pub. L. 111-5, 123 Stat 115.
SECTION 5. CONCEPT PAPERS AND APPLICATIONS FOR DOE
RECOMMENDATION AND § 48C CERTIFICATION
.01 In General. A taxpayer must submit for each project it sponsors (1) by April
9, 2013, a concept paper for DOE consideration and (2) if invited by DOE, by July 23,
2013, the § 48C applications. If an application for DOE recommendation does not (1)
propose an eligible project or (2) include all of the information required by Appendix B to
this notice, DOE may decline to consider the application. If DOE does not provide a
recommendation for the application, the Service will not consider the application for
§ 48C certification.
.02 Information Required in the Concept Paper and Application for DOE
Recommendation. A concept paper and application for DOE recommendation must
include the information requested in Appendix B to this notice. Upon review of the
concept paper, DOE will notify those applicants whose projects will be considered for

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DOE recommendation, and will invite the applicants to submit an application for DOE
recommendation. An applicant who is not invited will not be permitted to submit an
application for DOE recommendation or an application for §48C certification.
.03 Information Required in the Application for § 48C Certification. By submitting
an application through eXCHANGE, an applicant is submitting simultaneously an
application for DOE recommendation and an application for § 48C certification.
EXCHANGE will prompt an applicant to enter necessary information and will provide
corresponding instructions regarding the requirements for the application for § 48C
certification.
SECTION 6. ISSUANCE OF CERTIFICATION
.01 Requirements for Certification. Pursuant to § 48C(d)(2)(B), a taxpayer has
one year from the date of acceptance of the application for § 48C certification during
which to provide evidence that the requirements of the certification have been met in
accordance with section 6.02 of this notice. If such evidence is not timely received, the
allocated § 48C Phase II credits are forfeited. A project is eligible for certification only if
the taxpayer has received all federal, state, and local permits, including environmental
authorization or reviews necessary to commence construction of the project. Section
48C(d)(2)(C) provides that a taxpayer that receives a certification has three years from
the date of issuance of the certification to place the project in service and that the
certification is void if the project is not placed in service by the end of that three-year
period.
.02 Satisfaction of Requirements for Certification. Within one year from the

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acceptance date (as determined in section 4.02(8) of this notice), the taxpayer must
submit to the Service an electronic version on a USB flash drive or a CD of the
documentation establishing that the certification requirements of section 6.01 of this
notice are satisfied. The documentation must be formatted in one of the following
software applications: Microsoft ® Word 2007 or later edition; Microsoft ® Excel 2007 or
later edition; or Adobe ® Acrobat PDF 7.0 or later edition. The taxpayer should mark
the package, ”SECTION 48C CERTIFICATION REQUIREMENTS” and submit by U.S.
mail, designated private delivery service, or hand delivery service (between the hours of
8 a.m. and 4 p.m. Central time, Monday through Friday) to:
Internal Revenue Service
Industry Director, Natural Resources and Construction
Attn: Executive Assistant (Technical)
1919 Smith Street, floor 23
Mail Stop 1000-HOU
Houston, TX 77002
(1) The documentation establishing that the certification requirements of section
6.01 of this notice are satisfied must be accompanied by a letter that includes the
following written declaration: “I declare that I am authorized to bind [name of applicant].
Under penalties of perjury, I declare that I have examined this submission, including
accompanying documents, and, to the best of my knowledge and belief, all of the facts
contained herein are true, correct, and complete.”
(2) The taxpayer’s submission (the letter including the perjury declaration and
documentation) must be signed and dated by the taxpayer. The person signing for the
taxpayer must have personal knowledge of the facts. Further, the submission must be
signed by a person authorized under state law to bind the taxpayer, such as an officer

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on behalf of a corporation, a general partner of a state law partnership, a membermanager on behalf of a limited liability company, a trustee on behalf of a trust, or the
proprietor in the case of a sole proprietorship. If the taxpayer is a member of an
affiliated group filing consolidated returns, the submission also must be signed by a duly
authorized officer of the common parent of the group. A stamped, scanned, faxed, or
otherwise copied signature is not permitted.
.03 Service’s Action on Certification. After receiving the submission described in
section 6.02 of this notice, the Service will decide whether or not to certify the project
and will notify the taxpayer, by letter, of that decision. If the Service certifies the project,
the date of this letter is the date of issuance of the certification.
SECTION 7. OTHER REQUIREMENTS
.01 Significant Change in Plans. The taxpayer must inform the Service if the
plans for the project change in any significant respect from the plans set forth in the
§ 48C applications. A significant change is any change that a reasonable person would
conclude might have adversely influenced DOE in recommending or ranking of the
project or the Service in accepting the application had they known about the change
when they were considering the application. If the Service is informed of the change
after the date on which the § 48C applications are due under section 4.02(6) of this
notice:
(1) the Service will give no further consideration to the project; and
(2) any acceptance provided by the Service and any allocation or certification
based on that acceptance will be void.

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.02 Recapture of the § 48C Phase II Credits. Section 48C Phase II credits are
subject to the recapture rules of § 50. Section 50(a)(1) provides, generally, for
recapture of the investment credit if, during any taxable year, investment tax credit
property is disposed of or otherwise ceases to be investment credit property with
respect to the taxpayer before the close of the recapture period. The recapture period
under § 50(a) is the 5-year period beginning on the date the property is placed in
service.
.03 Effect of an Acceptance, Allocation, or Certification. An acceptance,
allocation, or certification by the Service under this notice is not a determination that a
project is eligible for the qualifying advanced energy project credit under § 48C or that
any property that is part of the project is an eligible property under § 48C(c)(2). The
Service may, upon examination (and after any appropriate consultation with DOE),
determine that the project does not qualify for this credit or that the property is not an
eligible property for purposes of this credit.
.04 No Right to a Conference or Appeal. A taxpayer does not have a right to a
conference relating to any matters under this notice. Further, a taxpayer does not have
a right to appeal the decisions made under this notice (including the acceptance or
rejection of the application for § 48C certification, the amount of credit allocated to the
project, or whether or not to certify the project) to any official of DOE or the Service.
.05 Submissions by U.S. Mail. For purposes of this notice, any information
submitted to the Service pursuant to sections 4.02(9), 6.02, 7.01, or 8 of this notice that
is submitted by U.S. mail will be treated as received by the Service on the date of the

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postmark and any information submitted by a private delivery service will be treated as
received by the Service on the date recorded or the date marked in accordance with
§7502.
SECTION 8. REDUCTION OR FORFEITURE OF ALLOCATED CREDITS
Under the provisions of this notice and the agreement set forth in Appendix A to
this notice, the § 48C Phase II credits allocated under section 4 of this notice will be
reduced or forfeited in certain situations. A taxpayer must notify the Service of the
amount of any reduction or forfeiture required under the agreement. This notification
must be sent to the address listed in section 6.02 of this notice.
SECTION 9. QUALIFIED PROGRESS EXPENDITURES
.01 Section 48C(b)(2) provides that rules similar to the rules of § 46(c)(4) and (d)
(as in effect on the day before the enactment of the Revenue Reconciliation Act of
1990) shall apply for purposes of § 48C. Former § 46(c)(4) and (d) provided the rules
for claiming the investment credit on qualified progress expenditures (as defined in
former § 46(d)(3)) made by a taxpayer during the taxable year for the construction of
progress expenditure property (as defined in former § 46(d)(2)).
.02 In the case of self-constructed property (as defined in former § 46(d)(5)(A)),
former § 46(d)(3)(A) defined qualified progress expenditures to mean the amount that is
properly chargeable (during the taxable year) to capital account with respect to that
property. With respect to a qualifying advanced energy project that is self-constructed
property, amounts paid or incurred are chargeable to capital account at the time and to
the extent they are properly includible in computing basis under the taxpayer’s method

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of accounting (for example, after applying the requirements of § 461, including the
economic performance requirement of § 461(h)).
.03 To claim the advanced energy project credit with respect to the qualified
progress expenditures paid or incurred by a taxpayer during the taxable year for
construction of a qualifying advanced energy project, the taxpayer must make an
election under the rules set forth in § 1.46-5(o) of the Income Tax Regulations. A
taxpayer may not make the qualified progress expenditures election for a qualifying
advanced energy project until the taxpayer has received an acceptance letter for the
project under section 4.02(8) of this notice.
.04 If a taxpayer makes the qualified progress expenditures election pursuant to
section 9.03 of this notice, rules similar to the recapture rules in § 50(a)(2)(A) through
(D) apply. In addition to the cessation events listed in § 50(a)(2)(A), examples of other
events that will cause the project to cease being a qualifying advanced energy project
are:
(1) Failure to receive a certification for the project in accordance with section 6 of
this notice;
(2) Failure to place the project in service within 3 years from the date of issuance
of the certification under section 6.01 of this notice; or
(3) A significant change to the plans for the project as set forth in the § 48C
applications if, under section 7.01 of this notice, the Service’s acceptance of the project
is void as a result of the change.
SECTION 10. DISCLOSURE OF INFORMATION

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.01 Announcement. Section 48C(d)(5) provides that the Service shall, upon
making a certification, publicly disclose the identity of the applicant and the amount of
the credit certified with respect to such applicant. Accordingly, the Service will publish
the results of the allocation process, and disclose the following information in the event
a qualifying advanced energy project credit is allocated to the taxpayer's project: (1) the
name of the taxpayer and (2) the amount of the § 48C Phase II credit allocated to the
project.
.02 Voluntary disclosure. Applicants may authorize the government to release
additional information by completing and signing the voluntary disclosure waiver in the
Disclosure Waiver section of the Taxpayer Data Spreadsheet. An applicant’s decision
to disclose or to withhold additional information does not influence the selection process
either by DOE or by the Service.
.03 In General. A concept paper, the § 48C applications, and any other
documentation submitted by the taxpayer pursuant to section 6.02 of this notice, and
any documentation generated by the Service or DOE as part of this process are return
information subject to § 6103. Except for the items of information that § 48C(d)(5)
requires the Service to make available to the public or any other information that the
applicant consents to disclose pursuant to section 10.02 of this notice, the other
material remains the applicant's confidential return information, which is exempt from
disclosure under the Freedom of Information Act (FOIA), 5 USC § 552(b)(3), in
conjunction with § 6103. Other FOIA exemptions may also apply. For example, FOIA
includes exemptions for trade secrets and commercial or financial information (5 USC

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§ 552(b)(4)), as well as personal information (5 USC § 552(b)(6)).
.04 FOIA requests. Anyone interested in submitting a request for records under
the FOIA with respect to the qualifying advanced energy project program under § 48C
should direct a request that conforms to the Service’s FOIA regulations, found at 26
C.F.R. § 601.702, to the following address:
IRS FOIA Request
Baltimore Disclosure Office
Room 940
31 Hopkins Plaza
Baltimore, MD 21201
SECTION 11. EFFECTIVE DATE
This notice is effective on February 7, 2013.
SECTION 12. 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.
The collections of information in this notice are in sections 4, 5, 6, 7, and
Appendix B of this notice. This information is required to obtain an allocation of
qualifying advanced energy project credits. This information will be used by the Service
to verify that the taxpayer is eligible for the qualifying advanced energy project credits.
The collection of information is required to obtain a benefit. The likely respondents are

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business or other for-profit institutions.
The estimated total annual reporting burden is 55,000 hours.
The estimated annual burden per respondent varies from 70 to 150 hours,
depending on individual circumstances, with an estimated average of 110 hours. The
estimated number of respondents is 500.
The estimated annual frequency of responses is on occasion.
Books or records relating to a collection of information must be retained as long
as their contents may become material in the administration of any internal revenue law.
Generally, tax returns and return information are confidential, as required by 26 U.S.C.
§ 6103.
SECTION 13. DRAFTING INFORMATION
The principal author of this notice is Philip Tiegerman of the Office of Associate
Chief Counsel (Passthroughs & Special Industries). For further information regarding
this notice, contact Philip Tiegerman at (202) 622-3110 (not a toll-free number). For
further information regarding the § 48C applications, the documentation to be submitted
to the Service establishing that the requirements of § 48C(d)(2) are satisfied, and the
issuance of the certification that the requirements of § 48C(d)(2) are satisfied, contact
Marc Bernabo, 48C Program Manager, Office of the Industry Director, Natural
Resources and Construction, at (713) 209-3669 (not a toll-free number).

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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 § 48C Phase II
program described in Notice 2013-12 (“Application for § 48C Certification”);
2. Taxpayer’s Application for § 48C Certification is for the qualifying advanced
energy project (the “Project”) described below-(1) The name of the Project is [insert name as provided in Taxpayer’s
application];
(2) The Project will be located in or near [insert city and state];
(3) 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)].
(4) On [insert date of acceptance letter issued under section 4.02(7) of Notice
2013-12], 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.

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NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL INCOME TAX
PURPOSES THAT:
1. The total amount of the § 48C Phase II credit to be claimed for the Project
under § 48C(a) must not exceed the amount allocated to the Project as specified in
WHEREAS clause 2(4).
2. If Taxpayer fails to satisfy the certification requirements under section 6.02 of
Notice 2013-12 within the time specified in § 48C(d)(2)(B) (1 year from the date the IRS
accepted the Taxpayer’s Application for § 48C Certification for the Project as specified
in WHEREAS clause 2(4)), or if the IRS does not issue a certification for the Project
under Notice 2013-12, the § 48C Phase II credit in the amount allocated to the Project
as specified in WHEREAS clause 2(4) is fully forfeited.
3. Taxpayer will notify the IRS in writing at the address listed in section 6.02 of
Notice 2013-12 when the Project is placed in service. This notification must be sent
within 30 days of the date 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 6.03 of Notice 2013-12, the
§ 48C Phase II credit in the amount allocated to the Project as specified in WHEREAS
clause 2(4) 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 4.01 of Notice
2013-12) and the Application for § 48C Certification and, under section 7.03 of Notice

22

2013-12, the acceptance of Taxpayer’s Application for § 48C Certification on the date
the IRS accepted the Taxpayer’s Application for § 48C Certification for the Project as
specified in WHEREAS clause 2(4) is void, then the § 48C Phase II credit in the amount
allocated to the Project as specified in WHEREAS clause 2(4) 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 for 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. Taxpayer must notify the IRS within
90 days of the acquisition of the Project by any other person (a successor in interest). A
successor in interest that plans to claim the § 48C credit allocated to the Project must
request permission to execute a new agreement with the IRS. If the request is granted,
the new agreement must be executed no later than the due date (including extensions)

23

of the successor in interest’s Federal income tax return for the taxable year in which the
transfer occurs. 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 allocated to the Project, as specified in
the WHEREAS clause 2(4), 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.

24

By signing, the parties certify that they have read and agreed to the terms of this
Agreement.
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: Industry Director, Natural Resources & Construction

25

APPENDIX B: REQUEST FOR CONCEPT PAPERS AND FULL APPLICATIONS FOR
DOE RECOMMENDATION
Table of Contents
I. Overview
II. DOE Review Process
III. Eligibility Information
IV.
Submission Information for DOE Recommendation Process
A. General
B. Application Forms
C. Content and Form of Concept Papers
D. Content and Form of Full Applications
E. Submission and Registration Requirements
F. Application Review Information
V.
Instructions Regarding Quantitative Factors Information Submission
VI. Supporting Documents
VII.
Technical References for Advanced Energy Technologies Supplied Figures
VIII.
Taxpayer Data Spreadsheet
IX.
Questions
I. OVERVIEW
The Internal Revenue Service (“Service”) with the assistance of the Department of
Energy (“DOE”) seeks to select for certification applications of innovative technologies
that demonstrate a reasonable expectation of commercial viability and are eligible for
consideration based on the selection criteria in sections III and IV below. To be eligible,
applications must be for qualifying advanced energy projects and projects must have a
reasonable expectation of commercial viability.
This request for concept papers and full applications for DOE Recommendation:
1. Describes the information to be provided by the taxpayer to allow DOE to
review and recommend projects,
2. Identifies the eligibility requirements, the merit review criteria for the concept
papers, the merit review criteria for the full applications for DOE
recommendation and Program Policy Factors to be used by DOE in the
review of applications, and
3. Requests a tax credit that is 30% of the qualified investment not to exceed
$30 million per project.

26

In conducting its review, DOE may utilize assistance and advice from qualified
personnel from other Federal agencies and/or contractors. DOE will obtain conflict of
interest/non-disclosure acknowledgements in advance from all reviewers to assure that
application information shall be kept confidential and used only for reviewing purposes.
Reviewers will be required to report all personal and organizational conflicts of interest.
DOE reserves the right to request clarifications and/or supplemental information from
some or all taxpayers submitting applications through written submissions and/or oral
presentations.
DOE may determine whether to recommend an application to the Service at any time
after the full application has been received, without further exchanges or discussions
with the Taxpayer.
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 submitted under Notice 2013-12 (Notice).
DOE will be hosting an informational webinar on the § 48C Phase II program for
potential applicants (taxpayers) on February 19, 2013 at 2:00 p.m. Eastern time. This
initial webinar will provide information about how to prepare the Concept Paper.
Participants will have the opportunity to submit written questions during the webinar.
Answers will be posted on the IRS website at http://www.irs.gov/Businesses/AdvancedEnergy-Credit-for-Manufacturers-(IRC-48C) and on DOE's eXCHANGE system at
https://eere-exchange.energy.gov/ under the § 48C Phase II opportunity announcement.
The February 12, 2013 webinar will only address topics related to the concept paper
phase of the process. Applicants who are subsequently invited to submit a full
application will also be invited to a webinar addressing that stage of the process.
Webinar information is as follows:
1.

Click this link to start or to join the Webinar:

https://www1.gotomeeting.com/register/838885833
2.

Choose one of the following audio options:

TO USE YOUR COMPUTER’S AUDIO:
When the Webinar begins, you will be connected to audio using your computer’s
microphone and speakers (VoIP). A headset is recommended.
TO USE YOUR TELEPHONE:

27

If you prefer to use your phone, you must select “Use Telephone” after joining the
Webinar and call in using the numbers below.
Toll: +1 (415) 655-0055
Access Code: 674-939-455
Audio PIN: Shown after joining the meeting

II. DOE REVIEW PROCESS
A two-phase technical evaluation process will be used for applications submitted under the
Notice: Phase 1 – concept paper and Phase 2 – full application. Based on the results of the
concept paper review, a select number of taxpayers (up to approximately 50) will be invited
to submit full applications. At its sole discretion, DOE may give all taxpayers who submit a
full application the option of doing an in-person presentation, at their own expense, at DOE
Headquarters at 1000 Independence Avenue SW, Washington, DC. 20585.
FULL APPLICATIONS WILL BE ACCEPTED ONLY FROM TAXPAYERS THAT
RECEIVE AN INVITATION TO SUBMIT THE FULL APPLICATION. NO OTHER FULL
APPLICATIONS SUBMITTED UNDER THIS NOTICE WILL BE REVIEWED.
• Concept Paper – DUE April 9, 2013
The first phase requires a taxpayer to submit a concept paper. As a result of this
preliminary review, taxpayers will either receive an invitation to submit a full application
package or be removed from further consideration. DOE expects to invite selected
taxpayers to submit full applications no later than June 4, 2013.
As part of the review of the concept papers, DOE will carry out an initial compliance review
to determine that (1) the concept paper meets the eligibility requirements (see Section III),
(2) all required information has been submitted, and (3) all mandatory requirements of this
Notice are satisfied. If a concept paper clearly fails to meet the eligibility requirements or
does not provide sufficient information for evaluation, the concept paper will be considered
non-responsive and eliminated from further review.
• Full Application – DUE July 23, 2013
The second evaluation phase will consist of a review of full application packages submitted
by invitation as a result of the concept paper Phase. Applications submitted that were not
invited, or do not expand on successful Phase I – concept paper proposals will not be
reviewed. Successful Phase I – concept paper Taxpayers invited to submit full applications
may not significantly change the scope or focus of the original concept paper proposals.
The review will be a thorough, consistent, and objective examination of applications
based on merit review criteria outlined in Section IV (F).

28

Prior to the comprehensive review of the full applications, DOE will review compliance
to determine that (1) the application meets the eligibility requirements, (2) the
information required by this Notice has been submitted, (3) the taxpayer filed a timely
concept paper, and (4) all mandatory requirements of this Notice are satisfied.

III. ELIGIBILITY INFORMATION
To be eligible, (1) concept papers and applications must be for advanced energy
projects, and (2) projects must have a reasonable expectation of commercial viability.
Concept papers and full applications that do not clearly demonstrate how the
proposed project meets the eligibility requirements will not be reviewed.
Eligibility requirements are as follows:
A. Qualifies as an advanced energy project
As defined in 26 U.S.C. § 48C(c)(1), the term “qualifying advanced energy project”
means a project—
(i) which re-equips, expands, or establishes a manufacturing facility for the
production of:
1. property designed to be used to produce energy from the sun, wind, geothermal
deposits (within the meaning of § 613(e)(2)), or other renewable resources,
2. fuel cells, microturbines, or an energy storage system for use with electric or
hybridelectric 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 (including energy-conserving lighting technologies and
smart grid technologies),
6. new qualified plug-in electric drive motor vehicles (as defined by § 30D), qualified
plug-in electric vehicles (as defined by § 30(d)), or components which are
designed specifically for use with such vehicles, including electric motors,
generators, and power control units, or
7. other advanced energy property designed to reduce greenhouse gas emissions
as may be determined by the Treasury Secretary, and
(ii) any portion of the qualified investment of which is certified as eligible for the §
48C credit.
B. Has a reasonable expectation of commercial viability
The application must demonstrate that the project has a reasonable expectation of
commercial viability.

29

IV. SUBMISSION INFORMATION FOR DOE RECOMMENDATION PROCESS
A. General
An application for DOE recommendation and ranking must include a concept paper at
Phase 1 and a full application at Phase 2 as described below. 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.
Concept papers and full applications should clearly address each of the eligibility
requirements and applicable merit review criteria to demonstrate the taxpayer’s
capability, knowledge, and experience regarding the requirements described herein.
Taxpayers 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.
ALL CONCEPT PAPERS AND FULL APPLICATIONS MUST BE SUBMITTED
THROUGH EERE eXCHANGE TO BE CONSIDERED FOR DOE
RECOMMENDATION UNDER THIS NOTICE.
CONCEPT PAPERS AND FULL APPLICATIONS RECEIVED AFTER THE STATED
DEADLINES WILL NOT BE REVIEWED OR CONSIDERED FOR DOE
RECOMMENDATION.
B. Application Forms
Required forms and information for downloading concept papers and full applications
are available at https://eere-exchange.energy.gov. Taxpayers will need to register and
create an account in EERE eXCHANGE at https://eere-exchange.energy.gov/. This
account will then allow the user to submit concept papers and full applications for the
48C tax credit re-allocation. The taxpayer will have the opportunity to re-submit revised
application materials for any reason as long as the revision is submitted by the specified
deadline.
The taxpayer will receive an automated response when the concept paper or full
application is received. This will serve as a confirmation of receipt. Please do not reply
to the automated response. The Users’ Guide for Applying to the Department of Energy
EERE Funding Opportunity Announcements is found at https://eereexchange.energy.gov/Manuals.aspx.

30

C. Content and Form of Concept Papers
See Section III for a description of the eligibility requirements for the 48C tax credit
under this Notice. See Section IV (F) for a description of the merit review criteria that will
be used to evaluate the concept papers.
The purpose of the concept paper phase is to save taxpayers the considerable time and
expense of preparing full applications for proposed projects that are unlikely to be
selected for recommendation.
The concept paper must conform to the following requirements:
• The concept paper must be written in English.
• All pages must be formatted to fit on 8-1/2 by 11 inch paper with margins not
less than one inch on every side. Use Times New Roman typeface, a black
font, and a font size of 11 points or larger (except in figures and tables). A
symbol font may be used to insert Greek letters or special characters; the font
size requirement still applies.
• The control number1 must be prominently displayed on the upper right corner
of the header of every page. Page numbers must be included in the footer of
every page.
Each concept paper should be limited to a single project.
Concept papers must be limited to 10 pages of narrative and five (5) pages of
appendices. Pages in excess of the page limitation will not be considered for review.
Merit review criteria are listed in Section IV (F).
Table 1. Content Requirements for Concept Papers
SECTION
Executive
Summary

INFORMATION REQUIRED
Describe succinctly:
1. A brief summary of the project.
2. Tax credit requested (30% of the qualified investment
and no more than $30 million).
3. The potential impact that the proposed project would
have on the relevant technology field, as well as on

1

Upon login to EERE eXCHANGE (https://eere-eXCHANGE.energy.gov/login.aspx), the taxpayer
may access its submissions to this Notice by clicking the “My Submissions” link in the navigation bar on
the left side of the page. Every application that it has submitted to EERE and the corresponding control
number is displayed on this page. If the Taxpayer submits more than one application to this Notice, a
unique control number is assigned to each application.

31

domestic manufacturing.
For eligibility purposes, provide:
A description of the specified advanced energy property
(SAEP) the re-equipped, expanded or new manufacturing
Description of facility will produce. In the case of a project producing
property that, after further manufacture, will become an
Advanced
Energy Project SAEP, the taxpayer 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.
For merit review purposes, the taxpayer should present a
discussion of:
1. The market segment(s) for the manufactured product
including: sufficiency of existing market(s), particularly
dollar volume; market stability (demand and price for
product and end product/system(s)); potential for sale
of product into multiple market(s); and growth
potential for market(s).
2. Competitiveness of the product, including: pricing;
strength of competitors (new and existing); and
market entry strategy (e.g., product differentiation,
barriers to entry, intellectual property rights, first
mover advantage, etc.).
Description of
Commercial
Viability

3. Other viability factors, including: payback period;
profitability of investment; and financial assumptions
(costs, revenues, discount rate, etc.).
4. Potential for project success based on: the level of
commitment as demonstrated through references to
partnership agreements, permits and other examples
of progress; the track record of the management team
in areas relevant to the project; and the identification
of potential risks and plans for their mitigation.

American

5. Description of overall corporate health, including any
company-wide issues that could affect the taxpayer’s
ability to complete the project as proposed. Discuss
any legal claims or liabilities, planned debt
restructuring, planned corporate actions, or other
factors which could negatively affect the likelihood of
project completion.
Briefly describe:

32

Manufacturing

1. How the facility is sustainable in the United States
(U.S.). As applicable, include discussion of what
aspects of the product, technology, facility, process,
or other aspect of the project are well suited for
manufacturing in the U.S., the extent this activity is
supported by local or domestic supply chain(s), and if
the project is likely to be foundational in a strategic
and growing industry segment, or other ways in which
the project is sustainable or significant for American
manufacturing.
2. How the project adds to regional economic
development, including whether the product or
process is likely to contribute to greater research and
development in the U.S., or if the project brings new
skills to the American workforce.
3. The major effects receipt of this tax credit would have
on your decision making (examples could include
decisions related to: whether to pursue the project;
whether to develop the project in the U.S. or
elsewhere; the timing of pursuing the project; size of
the project, etc.).

Technological
Innovation

For merit review purposes, briefly identify any unique
technological innovations in which the product or process
will play a key role.

Domestic Job
Creation

For merit review purposes, please enter the number of
direct jobs in the data fields in the eXCHANGE system
(described in IV-E). Jobs should be listed as full-time
equivalent employees directly billable to the project for
each calendar year.

Project
Schedule and
Time to
Completion
Impact on Air
Pollution and
Anthropogenic
Emissions of
Greenhouse

For merit review purposes, identify the date the project is
scheduled to be fully operational.
For merit review purposes, briefly identify any unique
contribution(s) the product will make in avoiding or
reducing air pollutants and/or anthropogenic emissions of
greenhouse gases.

33

Gases
D. Content and Form of Full Applications
Based on the results of the concept paper review, a select number of taxpayers will be
invited to submit full applications. FULL APPLICATIONS WILL BE ACCEPTED ONLY
FROM TAXPAYERS THAT HAVE RECEIVED AN INVITATION TO SUBMIT THE
FULL APPLICATION. NO OTHER FULL APPLICATIONS WILL BE REVIEWED.
The Advanced Energy Project must be deemed eligible and a concept paper must have
been submitted in order for a full application to be considered.
Full applications must conform to the following requirements:
•
•

•
•

All full applications must be written in English.
All pages must be formatted to fit on 8-1/2 by 11 inch paper with margins not
less than one inch on every side. Use Times New Roman typeface, a black
font, and a font size of 11 points or larger (except in figures and tables). A
symbol font may be used to insert Greek letters or special characters; the font
size requirement still applies.
The control number, which is the same number used for the concept paper,2
must be prominently displayed on the upper right corner of the header of
every page. Page numbers must be included in the footer of every page.
Financial models should be submitted using Microsoft ® Excel spreadsheet(s)
and must include calculation formulas and assumptions.

Each full application should be limited to a single project.
The full application, excluding Appendices and Taxpayer Data Spreadsheet, shall not
exceed thirty (30) pages. Pages in excess of the page limitation will not be considered
for review. No material may be incorporated in any application by reference as a means
to circumvent the page limitation.
This section outlines the format of the full application to be submitted by the taxpayer to
the DOE for project recommendation. Guidelines and suggestions for specific content
are included below. Full applications should be arranged in the following order. Strict
adherence is required.
2

Upon login to EERE eXCHANGE (https://eere-eXCHANGE.energy.gov/login.aspx), the Taxpayer
may access its submissions to this Notice by clicking the “My Submissions” link in the navigation on the
left side of the page. Every application that it has submitted to EERE and the corresponding control
number is displayed on this page. If the Taxpayer submits more than one application to this Notice, a
unique control number is assigned to each application.

34

Table 2. Content Requirements for Full Application
SECTION

Executive
Summary and
Introduction

American
Manufacturing

Commercial
Viability

INFORMATION REQUIRED
Provide an overall summary of the project, covering the
following:
1. A description of the project, including incremental
manufacturing capacity.
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 taxpayer should
describe both the property produced at the facility and
the SAEP for which the produced property will be
used.
3. The amount of tax credit requested and the estimated
amount that will be treated as a qualified investment.
The Taxpayer must request a credit that is no more
than $30 million and 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 taxpayer may use a reasonable methodology and
assumptions in determining such estimated amount.
Describe:
1. How the facility is sustainable in the U.S. As
applicable, include discussion of what aspects of the
product, technology, facility, process, or other aspect
of the project are well suited for manufacturing in the
U.S., the extent this activity is supported by local or
domestic supply chain(s), and if the project is likely to
be foundational in a strategic and growing industry
segment, or other ways in which the project is
sustainable or significant for American manufacturing.
2. How the project adds to regional economic
development, including whether the product or process
is likely to contribute to greater research and
development in the U.S., or if the project brings new
skills to the American workforce.
1. Business plan with information sufficient to allow
reviewers to fully evaluate the project. This section
should include, but not be limited to:
a) The market environment for the product

35

i.

Define the overall market and market
segment(s) the product will support and the
growth potential of those market segments.
Describe the projected market share for the
next five years. Please document any
assumptions with citations from market reports,
conference proceedings or other sources.

ii.

Describe the size of existing market(s) in terms
of dollar volume and number of players. If
product can be sold in multiple market
segments, please explain the potential for the
various market segments.

iii.

Market stability (demand and price). Discuss
trends and projections for demand and price.
Describe growth potential (short-term and longterm).

iv.

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

v.

Market entry strategy, including a discussion of
any barriers to entry, product differentiation, first
mover advantage, etc. Describe any strategies
for expanding market share.

vi.

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

vii.

Discuss sales forecasts. Identify confirmed or
potential customers who will purchase, lease or
use the property produced.

b) Financial Model Information
i.

Include a financial model, detailing the
investments in and the cash flows anticipated
over the project’s expected lifecycle.

ii.

Description of payback period, Net Present
Value (NPV), Adjusted Present Value (APV)
and break-even analysis for the project. Key
financial ratios, including but not limited to
Return on Investment and Return on Assets,
should be provided as well.

36

iii.

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 taxpayer may
use a reasonable methodology and
assumptions in estimating this amount.

iv.

The financing and ownership structure,
including all beneficiaries.

v.

A description of the amounts and timings of offtake agreements to be entered into prior to
commercial operation, and the financial strength
of off-takers.

vi.

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.

vii.

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.

viii.

Identification of any other federal, state or local
government funding assistance.

ix.

Schedule with any project milestones not
delineated in “Project Schedule and Time to
Completion.”

x.

A description of the methodology and
assumptions used in the financial model.

c) Management Team
A description of the key management team
members who will design, construct, permit, and
operate the facility. Include a description of relevant
industry experience of the top-tier executives
responsible for the success of the project. The
taxpayer should demonstrate that the management

37

team members have a corporate history of
successful completion of similar projects.
d) Risk Management
Description of likely risks and mitigation strategies.

Technological
Innovation and
Commercial
Deployment

2. Include as a separate appendix a copy of audited
financial statements for the taxpayer and other projected
funding sources for the most recently ended three (3)
fiscal years, and the unaudited quarterly interim financial
statements for the most recent quarter. Indicate any
unusual circumstances of which reviewers should be
aware.
Provide evidence of the potential for technological
innovation and commercial deployment, as indicated by
the production of new or significantly improved
technologies; improvements in levelized costs of stored
or generated energy; manufacturing significance and
value, as follows:
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.3,4
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 CO2
abatement. Section VII below explains these metrics
and their quantification in greater detail. In addition to
cost improvements, the taxpayer should describe other
technological improvements for the SAEP attributable

3

A new or significantly improved technology means a technology that is concerned with the production,
consumption or transportation of energy that 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.
4
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 the date that full applications are due.

38

to the system or facility, as compared to the respective
baseline energy solution.
3. A calculation of the Attributable Annual Manufacturing
Capacity (AAMC) in the “Attributable Manufacturing”
tab of the Taxpayer Data Spreadsheet. The AAMC will
be divided by the amount of tax credit requested to
determine a normalized value for comparing different
project proposals.
DOE will primarily focus on direct job creation for this
evaluation criterion. DOE will apply a multiplier to
calculate indirect job creation. DOE will consider both
direct and indirect jobs created on an annual basis over a
five-year period beginning in 2013.

Domestic Job
Creation

Please fill out the “Direct Jobs” tab in the Taxpayer Data
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.5 Please be as
specific as possible, as reviewers will assess the
reasonableness of taxpayers’ assertions. Direct Jobs are
jobs of people whose work is directly billed to the project.
Do not list Indirect Jobs, which are those in the supply
chain rather than those at the project itself. Examples of
indirect jobs include employees of companies who deliver
materials, equipment, and services used on the project,
such as steel workers, accountants, 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.

Project Schedule
and Time to
Completion

1. To quantify the time from certification to completion,
the taxpayer should fill out the first tab of the Taxpayer
Data Spreadsheet. The dates required are: date of
receiving all permits; date of construction; and date of
commencement of production.

5

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.

39

2. In addition, the taxpayer should provide a narrative
supporting the taxpayer’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 for constructing and
commissioning that
i.

is comprehensive and provides sufficient detail
to demonstrate how taxpayer will meet the
certification requirements, and

ii.

demonstrates that the project is on track to be
placed in service within three (3) years of such
certification. The schedule should demonstrate
that the taxpayer 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 taxpayer’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) As applicable, documentation supporting taxpayer's
conclusion that the proposed site can fully meet all
environmental, water supply, transmission
interconnect, and other necessary requirements.
Such documentation may include signed
agreements, letters of intent, or term sheets, such

40

as for supply and product transportation, and
regulatory approvals supporting the key claims.
c) Documentation demonstrating the taxpayer’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 from the site owner
to sell or lease to the taxpayer.
d) Copies of the contracts or summaries of the key
provisions of the following agreements:

Impact on Air
Pollution and
Anthropogenic
Emissions of
Greenhouse
Gases

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, holdbacks, performance guarantees, etc.

iv.

A Professional Engineer (PE) must inspect and
certify the project documents for feasibility. PE
may be an employee of the taxpayer.

Describe the direct impact that the SAEP will have on net
reductions of air pollution and anthropogenic emissions of
greenhouse gases (GHGs). Annual pollution and GHG
emissions from the operation of the manufactured product
should be quantified and discussed. This description
includes total emissions reduced as derived by the
project’s AAMC and the output of the Taxpayer Data
Spreadsheet, as shown in Section VII, for the reequipped, expanded or new manufacturing facility.
Emissions reductions will be divided by the amount of tax
credit requested to determine a normalized value for
comparing different project proposals.6

6

If the taxpayer believes that the total emissions reduction from the SAEP attributable to the project is not
accurately represented by the values provided in the Taxpayer Data Spreadsheet, the taxpayer may also
provide a transparent justification for a different calculation and should employ cited numbers wherever
assumptions are made.

41

Taxpayer Data
Spreadsheet

Complete template provided in eXCHANGE.

Please see Section VI for information on supporting documents.
E. Submission and Registration Requirements for Application to DOE
Please read carefully the Notice and the statute to determine if your project is eligible for
the § 48C credit. The tax credits are for certain types of property in manufacturing
facilities; they are not for renewable deployment projects or energy efficiency
installation projects.
DOE plans to review applications and recommend for tax credits through the following
specific steps:
•
•
•

Taxpayer submission of a concept paper
If requested, a taxpayer submission of a Final Application
DOE recommendations to the Service (no later than)

April 9, 2013
July 23, 2013
October 11, 2013

An application to DOE will not be considered in the 2013 allocation round unless the
concept paper is received by April 9, 2013 and, if requested, the full application is
received by July 23, 2013. Only applications submitted via the EERE eXCHANGE
system (https://eere-exchange.energy.gov) will be accepted.
1. Where to Submit
Application material must be submitted under this announcement through EERE
eXCHANGE at https://eere-exchange.energy.gov/ to be considered. You cannot submit
an application through EERE eXCHANGE unless you are registered. Please read the
registration requirements below carefully and start the process immediately.
Applications submitted by any other means will not be accepted.
If you have problems completing the registration process or submitting your application,
send an email to the EERE eXCHANGE helpdesk at [email protected].
It is the responsibility of the taxpayer to verify successful transmission prior to the
Application due date and time.
2. Registration Process Requirements
Prior to submitting an application, the taxpayer must register and create an account on

42

EERE eXCHANGE at: https://eere-exchange.energy.gov/. This account will then allow
the user to register for any open EERE Funding Opportunity Announcements (FOAs)
that are currently in eXCHANGE. It is recommended that each business unit use only
one account as the appropriate contact point for each submission.
The taxpayer will receive an automated response when the concept paper and full
application have been submitted. This will serve as a confirmation of receipt. Please
do not reply to the automated response. The taxpayer will have the opportunity to resubmit revised application materials for any reason until the specified deadline.
The taxpayer is responsible for the integrity and structure of the electronic files. DOE
will not be responsible for reformatting, restructuring or converting any files submitted in
response to this request.
3. Electronic Authorization of Applications
Submission of material under this announcement through electronic systems used by
DOE, including EERE eXCHANGE, constitutes the authorized representative’s approval
and electronic signature.
4. Markings of Confidential Information
If elements of an application contain information the taxpayer 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 taxpayer 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:
“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. If this taxpayer 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, except as prohibited or limited by
law, shall have the right to use or disclose the data herein, other than such data
that have been properly reasserted as containing trade secrets or proprietary
information in the agreement described under section 4.02(9) of Notice 2013-12.
This restriction does not otherwise limit the government’s right to use or disclose
data that was obtained from any source, including the taxpayer.”
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:

43

“The following contains proprietary information that [name of Taxpayer] requests
not be released to persons outside the Government, except for purposes of
review.”
F. Application Review Information
1. Compliance Review for Concept Papers and Full Applications
As explained in more detail in Sections II and III, as part of the review of the concept
papers and full applications DOE will carry out an initial compliance review to determine
that (1) the application meets the eligibility requirements, (2) the required information
has been submitted, (3) as applicable to full applications, a timely concept paper was
submitted, and (4) all mandatory requirements of this Notice are satisfied. If an
application clearly fails to meet the eligibility requirements or does not provide sufficient
information for evaluation, the application will be considered non-responsive and
eliminated from further review.
2. Merit Review Criteria
a. Merit Review Criteria for Concept Papers
Subsequent to determining that the taxpayer’s project is eligible, DOE will screen
projects for Technical Applicability and Corporate Viability on a pass/fail basis; projects
that pass the screen will then be assigned numeric scores based on Commercial
Viability. Criteria for the Technical Applicability Review and Commercial Viability are
shown below.
Technical Applicability and Corporate Viability Review criteria (pass/fail):
• Technical validity
• Technology readiness
• Technology appropriateness for the role that is contemplated
• Potential technology obsolescence in the near term
• Corporate Viability
Only Advanced Energy Projects that pass the above screen will be scored for
Commercial Viability. Commercial Viability merit review criteria are as follows:
1) Market and Product Viability
•

(35 points)

Market segment(s) for the manufactured product
o Sufficiency of existing market(s) ($ volume)
o Market stability (demand and price)

44

•

o Growth potential for market(s)
o Potential for sale of product into multiple market segments
Product is competitive
o Pricing
o Product differentiation or technical novelty
o Strength of competitors (new and existing)
o Market entry strategy (barriers to entry, intellectual property rights, first
mover advantage, and others as appropriate to the product.)

2) Project Financial Viability
(35 points)
• The investment is profitable, based on described cash flow analysis of the project
• Payback period is reasonable
• Assumptions (costs, revenues, discount rate, etc.) are reasonable
3) Other Viability Factors
(25 points)
• Level of Commitment – Commitment to the project is demonstrated through
references to partnership agreements, existing financing arrangements, permits,
and other indicators of progress
• Management Team – Team has a track record of success in areas relevant to
the project
• Risk Management
o All likely risks have been identified
ƒ Risk mitigation strategies have been identified and are credible
4) Exceptional Project Strengths
(5 points)
The exceptional strength of the proposed project in any of the areas above (for
example, the project is the first of its kind or has a very short payback period)
Concept papers will be rank ordered based on their numeric scores, and the following
may be considered in determining the final group of concept papers invited to submit full
applications:
•

•
•

American Manufacturing Significance
o Sustainability of facility in the U.S.
o Product and facility support a robust local or domestic supply chain; the
company is, or is likely to become, a key player in its local economic,
business, and academic (if applicable) network
o The product is likely to contribute to, or otherwise support, greater
research and development activity in the U.S.
o The project brings new skills to the American workforce
Technological Innovation
Domestic Job Creation

45

•
•
•
•
•
•
•

Project Schedule Time to Completion
Impact on Air Pollution and Anthropogenic Emissions of Greenhouse Gases
U.S. Economic Competitiveness
Regional Economic Development
Geographic Diversity
Technology Diversity
Project Size Diversity

b. Merit Review Criteria for Full Applications
In an effort to make the application process suitable to a diverse set of projects and
streamline the DOE review, taxpayers must input the data necessary to address the
merit review criteria into the Taxpayer Data Spreadsheet, shown in Section VIII.7
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 VII below.
The taxpayer must calculate the incremental energy produced, saved or stored due to
the project. The taxpayer will be required to provide and show the work used to
produce derived numeric values specific to its product. In addition, it is critical that the
taxpayer show and support all necessary calculation steps in the project’s narrative.
The DOE review and recommendation process generally requires the use of the U.S.
national averages (e.g., national grid mix, national fleet fuel efficiency) as a baseline for
certain comparisons.8
7

If a Taxpayer can justify that it has a value that better represents its project than the values referenced
in the Taxpayer Data Spreadsheet, the taxpayer 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 of the
spreadsheet. Any customized calculations should be done according to commonly accepted industry
standards and be sufficiently transparent to be reproducible by the merit review panel.
8
A taxpayer may provide a different baseline for comparison if the taxpayer can justify that the SAEP
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.

46

Full applications will be evaluated based on the following criteria:
1) Has strong potential to expand American manufacturing (Weight: 25%):
• Sustainability of facility in the U.S.
• Product and facility support a robust local or domestic supply chain; the
company is, or is likely to become, a key player in its local economic,
business, and academic (if applicable) network
• The product is likely to contribute to, or otherwise support, greater research
and development activity in the U.S.
• The project brings new skills to the American workforce
• Growth potential of industry segment(s)
2) Demonstrates significant potential for commercial viability (Weight 20%):
• The business is capable of sustaining the project
• Market segment(s) for the manufactured product are identified
• Product is competitive
• Manufacturing project cost estimate is reasonable and supported
• The investment is profitable and the payback period is reasonable relative to
the type of project
• Risk management issues and mitigation strategies are identified and
sufficiently addressed
• Management Team has a track record of success in areas relevant to the
project
3) Has the potential for technological innovation and commercial deployment,
as indicated by (Weight 20%):
• Production of new or significantly improved technologies
• Improvements in levelized cost of stored or generated energy
• Manufacturing significance and value
4) Provides domestic job creation (Weight 15%):
• Total jobs created and jobs per tax credit requested
• Quality and sustainability of operating jobs created
• Reasonableness of number of jobs forecasted
5) Has shortest project time from certification to completion (Weight 10%)
• Number of months to project completion
• Readiness to proceed with project as evidenced by firmness of site selection,
progress of permitting process, written commitments from actual project
partners
• Reasonableness of schedule forecasted

47

6) Contributes to avoiding or reducing airborne pollutants and/or greenhouse
gases (Weight 10%):
• Calculated total of net reduction or avoidance of anthropogenic emissions of
greenhouse gases
• Avoided, sequestered, or reduced pollutants (e.g. NOx, SOx, etc.)
• Reasonableness of analysis and assumptions used to forecast emissions
reductions or avoidance (based upon AAMC assumptions in Taxpayer Data
Spreadsheet)
The comments and the scores assigned during the merit review process will not be
made available for review by the taxpayer.
3. Program Policy Factors
In addition to the above criteria, DOE may consider the following program policy factors
in determining which taxpayers will be invited to submit full applications to select for
recommendation to the Service.
•
•
•
•
•

U.S. Economic Competitiveness
Geographic Diversity
Technology Diversity
Project Size Diversity
Regional Economic Development

Unlike the Merit Review Criteria, these factors are not weighted.

V. INSTRUCTIONS REGARDING QUANTITATIVE FACTORS INFORMATION
SUBMISSION
Taxpayers should fill out the Taxpayer Data 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 taxpayers conform to this process in order to ensure a competitive review
of all proposals. Additionally, taxpayers should substantiate in their narrative any data
which is inputted into the Taxpayer Data Spreadsheet. Specifically, taxpayers should
cite or justify their stated assumptions and show any calculations which are not
performed by the Taxpayer Data 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 VII.
Attributable Annual Manufacturing Capacity (AAMC)

48

In order to assess the significance of a taxpayer’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-dollarof-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, taxpayers are required to justify the
claimed production by providing yield loss (both manufacturing and downstream) and
throughput data wherever possible. In particular, taxpayers should discuss previous
manufacturing experience on similar or identical manufacturing equipment. If the
taxpayer’s annual production is not measured in terms of kWh, gallons of gasoline, or
Mtons CO2 (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 CO2 should be cited and applied. When calculating the fractional
system contribution, taxpayers 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 realworld annual performance, taxpayers should identify and employ the necessary derating 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 VII. If the necessary reference data is not available or
representative of the taxpayer’s specific manufactured property, the taxpayer 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 VII is not used, the taxpayer should cite lifecycle 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:

49

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 “Wpeak production per year” which is the
annual peak power output of property produced from the manufacturing line. This 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 $0.25/Wp, the cells are sold for $0.40/Wp, and the total
factory gate price of the entire PV system hardware (including the inverter and balance
of system components) is $1.50/Wp, then the Fractional System Contribution is (.400.25)/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
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 25 years. Thus the
Deployed Property Lifetime would be 219,000 hours (25 years multiplied by 8,760 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

50

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 reequipping 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
inputted 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 $2,000, then the “Fractional Component Contribution” is (200-100)/2000 =
5%. Note: if for example, 20% of the units manufactured were used in a different

51

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 5,000kWh 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 subcomponent lifetime is shorter than the expected lifetime of the component, then the subcomponent 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.
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 hybridelectric controller assemblies. The expansion will enable 10,000 additional controllers
to be manufactured annually. This number will be inputted 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

52

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 $4,000, 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 taxpayer
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 subcomponent cannot be longer than the lifetime of the component or system in which it is
installed.
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

53

they consume energy in the production of electricity and thermal energy.9
The new factory will enable 1,000 high-efficiency engines to be manufactured
annually. This number will be inputted 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 Taxpayer Data 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
9

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.

54

sequestering GHG, the following formulas shall be used to estimate the annual
emission reduction in CO2 equivalent gases. Specifically, the AAMC is the Mtons of
avoided CO2 equivalent gas emission which can be attributed to one year’s worth of
production from the proposed project.

Where:

And:

Example:
A chemical supplier is building a factory for the manufacture of physical solvents
for CO2 capture. The factory will produce 100,000 gallons of solvent. This volume will
be inputted 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 $5,000 (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, “CO2eq Reduction per Unit” is used to calculate the annual CO2eq
reduction which is enabled from incorporating 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.

55

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

56

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.
Other Advanced Energy Technologies: For other technologies with the primary benefit
of storing or transmitting renewable energy, taxpayers 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, taxpayers 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:
DOE anticipates a wide variety of manufacturing proposals and thus no standard, allencompassing approach will be used to calculate pollutants and GHG emissions.
Instead, the taxpayer is expected to quantify or discuss the pollutant and/or GHG
emissions associated with the operation of the SAEP.
To quantify the primary effects on CO2 emissions (“AAMC CO2 Reduction” as listed in
the Taxpayer Data 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 CO2 from the AAMC:

This calculation ignores CO2 emissions associated with the manufacture, installation,
and end-of-life processes and assumes that the dominant impact with respect to CO2
emissions is the offset consumption of average U.S. grid electricity reduction.
For most Fuel Efficiency SAEP, a similar equation is used:

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:

57

The “MWh/GGE” term is calculated by the taxpayer.
For Renewable Fuel Refining or Blending SAEP, the calculation is modified to account
for CO2 emissions associated with the manufacture of renewable fuel:

The life cycle analysis (LCA) is determined by the taxpayer by selecting the most
relevant fuel and corresponding process from the “LCA Fuel CO2 Assumptions” tab.
Taxpayers must select the LCA number which most closely corresponds to their SAEP.
If the taxpayer believes that the actual LCA emissions associated with the operation of
the SAEP differs significantly from data provided, then the taxpayer may substantiate an
alternative LCA number in their narrative.
For GHG Emission Reduction SAEP, the AAMC is equivalent to the CO2 emission
reduction and thus no additional calculations are necessary.
The AAMC CO2 Reduction represents the total CO2 impact over the lifetime of deployed
property which is attributable to one year of manufacturing. This number is further
adjusted in three ways to assess the magnitude of the CO2 reduction of a given project.
First, the normalized value of this reduction is assessed by dividing by the requested tax
credit. Second, the normalized AAMC CO2 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 CO2 Reduction is multiplied by the projected factory
lifetime. This 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 taxpayer should justify the claimed operational period of the factory in the
project narrative. All of these three AAMC CO2 Reduction figures will be used in the
scoring of Evaluation Criteria 2 as shown in the Taxpayer Data Spreadsheet workbook.
Technological Innovation and Cost Reduction:
Taxpayers 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 CO2 abatement. The
preferred approach is for the taxpayer to discuss and quantify each of these three
metrics. However, DOE recognizes the difficulty associated with calculating levelized
costs (and thus $/CO2) for many types of eligible property. If the taxpayer is unable to
perform a levelized cost or CO2 abatement cost calculation for the SAEP then the
taxpayer should provide a quantitative or qualitative assessment of how their

58

technological or cost advantage over competitors translates into system price savings,
improved performance, or improved system life.
Technological or Cost Advantage over Competitors: The Taxpayer Data Spreadsheet
requires taxpayers 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, taxpayers are
encouraged 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
taxpayer’s manufactured property has multiple advantages over currently manufactured
property, the taxpayer should select and quantify the most significant advantage in the
Taxpayer Data 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 VII. 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:
• Brief description of the methodology used as the basis for the calculation. This
methodology should be a commonly accepted industry standard.
• Identification and brief rationale for the source of key values used in the calculation,
including capital or first costs, operating and maintenance costs, and prices of
commodity fuels or feedstocks.
• Justification for any use of a resource-related parameter (e.g., capacity factor)
different than the national averages provided.
• Explanation of any factors impacting the levelized cost that could not be quantified
and included in the calculation, and their potential directional effect on the resulting cost
(i.e., increase or decrease).
• Explanation of any relationship between the cost of the manufactured property and
the performance of the end use energy product.
• If possible, an “unimproved” levelized cost calculation that does not reflect the input
of the manufactured property (e.g., 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 Taxpayer Data Spreadsheet. Thus, the cost of abatement equations are
specific to each energy type to ensure consistent, accurate and comparable abatement

59

costs are produced by the Taxpayer Data 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 be non-carbon emitting.
For Fuel Efficiency technologies the cost of abatement is calculated with the following
equation:
Incremental levelized cost / incremental emissions reduction:

In this calculation, an incremental LCOE term is used to simplify the taxpayer’s data
entry into the Taxpayer Data 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

60

$/GGE, the taxpayer calculates the difference between baseline and improved $/GGE.
The denominator of the cost of abatement term is based on the “well to wheels”
emissions associated with burning a GGE of the consumed fuel. taxpayers should
show their work and reference Section VII when calculating these values.
For other fuel efficiency technologies, such as a CHP application, the incremental LCOE
($/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 to 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/GGEtraditional” in the denominator is similar to the denominator term in the fuel
efficiency example provided previously. The second term in the denominator
“Mtons/GGErefined” accounts for the life-cycle (“seed to wheels”) carbon emissions
associated with consumption of the renewable fuel. This value is referenced from the
“LCA Fuel CO2 Assumptions” tab based upon the taxpayer’s renewable fuel type
selection.
If a taxpayer cannot reasonably calculate a LCOE for the SAEP associated with the
proposed manufactured property, the taxpayer can instead provide an estimated cost of
GHG emissions abatement. The taxpayer should provide and justify the use of a cost
value from a published study for a comparable energy system.
If the taxpayer 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

61

calculation. For example, a taxpayer 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:
• Explanation of why an LCOE value either could not be calculated or was not
appropriate to calculate for the end use energy product.
• Brief description of the methodology used as the basis for the calculation. This
methodology should be a commonly accepted industry standard.
• Identification and brief rationale for the source of key values used in the
calculation, including capital or first costs, operating and maintenance costs,
prices of commodity fuels or feedstocks, and carbon emissions associated with
the operation of the end use energy product.
• Identification and brief rationale for the key values associated with the baseline
energy mix, including the cost of generation and carbon emissions.
• Explanation of any factors impacting the cost of abatement that could not be
quantified and included in the calculation, and their potential directional effect on
the resulting cost (i.e., increase or decrease).
• Explanation of any relationship between the cost of the manufactured property
and the performance of the end use energy product.
• If possible, an “unimproved” cost of abatement calculation that does not reflect
the input of the manufactured property (e.g., relies on the competitive standard of
the day), based on the same financial and resource assumptions used in the
“improved” calculation.
Finally, if the taxpayer 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:
• Explanation of why an LCOE value either could not be calculated or was not
appropriate to calculate for the end use energy product.
• Brief description of the methodology used in the cited study.
• Identification of key assumptions used in the study, including the year basis for
which the cost is reported (if the cost is reported in real terms; e.g., $2011), 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

62

•

financial assumptions (e.g., interest rates, taxes, incentives included), and the
resource-related parameters (e.g., capacity factors).
Explanation of how the above assumptions differ from those provided above for
guiding the calculation of the cost of 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).
VI. SUPPORTING DOCUMENTS

The taxpayer should include such appendices as are applicable to the project. In
addition to items specifically requested in Table 2 of IV (D) above, examples of
appropriate appendices include:
•
•

•
•
•
•
•

Copy of internal or external engineering reports.
Copy of site plan, together with evidence that taxpayer owns or controls a
site. Examples of evidence would include a deed, or an executed contract to
purchase or lease the site.
Lists of all federal, state, and local permits, including environmental
authorizations or reviews, necessary to commence construction.
Information supporting taxpayer's conclusion that the site is fully acceptable
as the project site for a manufacturing facility and for its intended use.
Taxpayer expressions of interest or commitment letters from equity and debt
financing sources.
Expressions of interest or commitment letters from potential customers.
Off-take agreements.

VII. TECHNICAL REFERENCES FOR ADVANCED ENERGY TECHNOLOGIES
SUPPLIED FIGURES
This section assists the taxpayer in calculating the quantitative factors required in the
project proposal. Wherever appropriate, the taxpayer 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 taxpayer is unable to calculate the levelized cost or the cost of
abatement, this information may be used as inputs to the Taxpayer Data Spreadsheet.
Table 1: Financial Assumptions for Levelized Cost of Energy Analysis
Common Financial Inputs for LCOE Analysis by Market Sector
Central
Market
Buildings (grid-tied)
Generation
Residential
Commercial
Utility

63

Financials
Residential
Mortgage
General
20
Analysis Period
2.5%
Inflation Rate
Real Discount
5.5%
Rate
Taxes & Insurance
29%
Federal Tax
7%
State Tax
0
Property Tax
0
Sales Tax
0
Insurance
Depreciation
N/A
Federal
N/A
State
Loan
Loan (Debt)
100%
Percent
30
Loan Term
6%
Loan Rate
Constraining Assumptions
N/A
PPA Escalation
Rate
Target Internal
N/A
Rate of Return
Target Minimum
N/A
Debt Service
Coverage Ratio
Positive Cash
N/A
Flow
Incentives
Federal, State, or
Do not include
Local Subsidies

Commercial
Loan

IPP and Utility

20
2.5%

20
2.5%

5.5%

7.5%

35%
7%
0
0
0

35%
8%
0
0
0

MACRS-Mid-Q
MACRS-Mid-Q

MACRS-Mid-Q
MACRS-Mid-Q

50%
15
6%

50%
20
6%

N/A
0
N/A

15%

N/A

1.4

N/A

No

Do not include

Do not include

Suggested LCOE Tools:
All Electricity Generating Technologies (general tool):
RET Finance: http://analysis.nrel.gov/retfinance/

64

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 2012.5.11: https://sam.nrel.gov
The National Renewable Energy Laboratory (NREL), in conjunction with Sandia
National Laboratory and in partnership with DOE’s Solar Program developed the Solar
Advisor Model (SAM). 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 dishstirling 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.
Geothermal Technologies
Geothermal Electricity Technology Evaluation Model (GETEM):
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 Research, Development and Demonstration
(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

Table 2: Vehicle Assumptions
Metric
Annual Miles Traveled
Vehicle Lifetime Miles
2008 Average US Gasoline Price
Baseline Vehicle Fuel Economy

Value
12,000
160,000
$3.26
23.4

65

Units
Miles
Miles
$
mpg

Vehicle Cost

$23,337

$

Table 3: Common Service Life Years
Technology
Service Life Years
Solar Photovoltaics
30
Fuel Cell
20
Heat Pumps
7 to 20
Electric Water Heaters
20
Natural Gas Engine
20
Oil-Fired Engine
20
Natural Gas Turbine
20
NG Micro Turbine
20
Wind
30
Electric Rooftop Heat Pump
15
Ground-Source Heat Pump
20
Suggested for non-distributed technologies
20
Assumption Tables to the EIA AEO, August 2012 and DOE Solar Energy Technology
Program. http://www.eia.gov/forecasts/aeo/assumptions/index.cfm
Table 4: Other Common Technical Assumptions and Baseline for Levelized
Cost of Energy Analysis
Electricity Generation and Storage
End Use Energy Product
(Technology)
Biomass (general)
Geothermal
Landfill gas utilization (general)
Wind
Wind – Offshore
Solar Thermal – CSP
Solar Photovoltaic (general)
Storage – CAES
Storage – Pumped Hydro
Storage – Adv. Batteries
Storage – Flywheel

Resource
Characteristics
N/A 2
200 deg C; 3000m depth
N/A
Class 5
Class 5
Phoenix AZ
Phoenix AZ
N/A
N/A
N/A
N/A

1

Capacity
Factor 1
68%
84%
85%
39%
42%
32%
20%
25%
25%
25%
25%

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

66

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 a technology, a constant
nominal price of $4.66/ thousand cubic feet should be used (based on EIA AEO 2009).

67

VIII. SAMPLE TAXPAYER DATA SPREADSHEET
This section provides taxpayers a depiction of the Taxpayer Data Spreadsheet,
captured in the images on the following pages.
User Input
Calculated or from other tab
Instructions are in the yellow boxes next to the corresponding inputs
This worksheet is used to capture quantitative information regarding applicant proposals. Detailed instructions, examples, and reference data are provided
Sections V and VII of Appendix B. Input data and assumptions should be substantiated in and show clear correspondence to applicant's project narrative.
Applicant should first fill out the relevant user input (green) cells in the Applicant Information section of the Applicant Data Sheet tab. Next, applicant should fill
out user input cells in both the Direct Jobs and Tech Innovation, Cost Reduction tabs. Finally, applicant should verify that all necessary calculations have been
performed as anticipated and are captured in the calculated cells (pink) for each criteria area shown on the Applicant Data Sheet tab. Data will be extracted
from this workbook to compare submission. Therefore no cells, rows, or columns, should be added.

Applicant Information
Company Name
City
State
Qualified Investment $
Tax Credit Requested $
(30% of Qualified Inv)
Energy Type

$

$30 million maximum

Click to choose

Used to categorize applications for review process

Technology Area
If Other Technology:

Product Description (<50
words):
Factory Lifetime

Years

Deployed property lifetime

Years

Date Complete permitting

mm/dd/yyyy

Date Begin Construction

mm/dd/yyyy

Date Begin Production

mm/dd/yyyy

Refers to the manufactured property and should correlate with the warranty
on this property.

Net present value assessment for the cost of technolgy using the financial
and resource assumptions (where available) provided in Section H of
Appendix B and including life cycle costs as possible.

Levelized Cost (or
Incremental Levelized Cost
for Fuel Efficiency)
Type of Electricity
Generation Being Replaced
or Saved

Required for Energy Generation or Energy Efficiency Only - Used to
calculate the cost of carbon emission reduction.

Click to choose

Demonstrated or verified competitiveness over directly comparable
technology with respect to most relevant figure of merit (i.e. $/W, ¢/kWh,
$/GGE, ¢/BTU, $/Mton CO2, $/sq ft, etc). This number is not used in
further calculations.

Technological or Cost
Advantage over
Competitors
Brief description of cost
advantage (<50 words).
Full description to be
provided in narrative.

Criterion 1: Creates domestic jobs

Direct Job Summary

Jobs/ $1M Tax
Credit

Number of Employees
FTE

Construction Jobs
Operating Jobs
Total Direct Jobs

-

#DIV/0!
#DIV/0!
#DIV/0!

68

Has the shortest project time from certification to completion

Milestone

Date
mm/dd/yyyy

Days to
complete
milestone

Application Due Date
Complete permitting
Begin Construction

0
0

Begin Production

0

IX. QUESTIONS/ AGENCY CONTACTS
All questions and answers related to this Notice will be posted on EERE eXCHANGE at:
https://eere-eXCHANGE.energy.gov/. Please note that you must first select 48C
from the list of options in order to view the questions and answers specific to this
Notice. Service/DOE will attempt to respond to a question within 3 business days,
unless a similar question and answer has already been posted on the website.
Please send questions in writing via fax to the Service point of contact Marc Bernabo at
(713) 209-3964. He may also be reached by telephone at (713) 209-3669.
Questions related to the registration process and use of the EERE eXCHANGE website
should be submitted to: [email protected]

69