|APPLICATION FOR DOE CERTIFICATION
FOR SUPPLEMENTAL APPLICATION INFORMATION FOR DOE
|The Internal Revenue Service (“IRS”)
and the Department of Energy (“DOE”) seek to certify applications
that demonstrate a high likelihood of being successfully implemented by the
applicants. To qualify, projects must be economically feasible and use the
appropriate clean coal technology.
|This request for submission of supplemental
||1. Describes the information to be provided by the applicant seeking
a certification of feasibility, and
||2. Lists the evaluation criteria and Program Policy Factors to be used
by DOE in the evaluation of applications.
|In conducting this evaluation, the DOE
may utilize assistance and advice from qualified personnel from other Federal
agencies and/or non-conflicted contractors. DOE will obtain assurances in
advance from all evaluators that application information shall be kept confidential
and used only for evaluation purposes. DOE reserves the right to request
clarifications and/or supplemental information from some or all applicants
through written submissions and/or oral presentations.
|Notice is given that DOE may determine
whether or not to provide a certification to the IRS at any time after the
application has been received, without further exchanges or discussions. Therefore,
all applicants are advised to submit their most complete and responsive application.
|Applications will not be returned.
|SUBMISSION INFORMATION FOR DOE CERTIFICATION
|This request, together with the information
in sections 5.02, 7.01, and 7.02 of Notice 2007-52 includes all the information
needed to complete an application for DOE certification. All applications
shall be prepared in accordance with this request in order to provide a standard
basis for evaluation and to ensure that each application will be uniform as
to format and sequence.
|Each application should clearly demonstrate
the applicant’s capability, knowledge, and experience in regard to the
requirements described herein.
|Applicants should fully address the requirements
of Notice 2007-52 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.
|Unnecessarily elaborate brochures or other
presentations beyond those sufficient to present a complete and effective
application are not desired. Elaborate art work, graphics and pictures are
neither required nor encouraged.
Submission for DOE Certification
|The application submission to DOE must
include the information and documentation required by sections 5.02, 7.01,
and 7.02 of Notice 2007-52.
|An application to DOE will not be considered
in the allocation round conducted in 2007-08 unless it is postmarked by October
31, 2007, and will not be considered in the allocation round conducted in
2008-09 unless it is postmarked by October 31, 2008. Two paper copies and
one electronic version on a floppy disc or a CD of the Application must be
|Melissa Robe National Energy Technology
Laboratory 3610 Collins Ferry Road Morgantown, WV 26507
|Note that under section 5.03(1) of Notice
2007-52, one paper copy and one electronic version must be sent to the IRS
as part of the application for IRS certification. The application for IRS
certification will not be considered in the allocation round conducted in
2007-08 unless it is submitted to the IRS by March 3, 2008, and will not be
considered in the allocation round conducted in 2008-09 unless it is submitted
to the IRS by March 2, 2009.
REQUIRED BY THIS REQUEST MUST BE SUBMITTED USING THE FORMAT AND THE HEADINGS
OF THE “PROJECT INFORMATION MEMORANDUM” AS DESCRIBED BELOW.
|To aid in evaluation, applications shall
be clearly and concisely written and logically assembled. All pages of each
part shall be appropriately numbered and identified with the name of the applicant
and the date.
|The application, including the Project
Information Memorandum, MUST be formatted in one of the following software
|Microsoft Wordtm 2002
or later edition Microsoft Exceltm 2002 or later
edition Adobe Acrobattm PDF 6.0 or later edition
|Financial models should be submitted using
the Exceltm spreadsheet and must include calculation
formulas and assumptions.
|The applicant is responsible for the integrity
and structure of the electronic files. The DOE will not be responsible for
reformatting, restructuring or converting any files submitted under this announcement.
|The Project Information Memorandum, excluding
Appendices, shall not exceed seventy-five (75) pages. Pages in
excess of the page limitation will not be considered for evaluation. All
text shall be typed, single spaced, using 12 point font, 1 inch margins, and
unreduced 8-1/2-inch by 11-inch pages. Illustrations and charts shall be
legible with all text in legible font. Pages shall be sequentially numbered.
Except as otherwise noted herein the page guidelines previously set forth
constitute a limitation on the total amount of material that may be submitted
for evaluation. No material may be incorporated in any application by reference
as a means to circumvent the page limitation.
|D. Form of Project
|PROJECT INFORMATION MEMORANDUM
|I. SUMMARY AND INTRODUCTION
Description of the Project
Financing and Ownership Structure
Describe the main parties to the project, including background, ownership
and related experience
Current Project Status and Schedule to Beginning of Construction
|II. TECHNOLOGY AND TECHNICAL INFORMATION
|Provide a description of the proposed
technology, including sufficient supporting information (such as vendor guarantees,
process flow diagrams, equipment descriptions, information on each major process
unit and the total plant, compositions of major streams, and the technical
plan for achieving the goals proposed for the project) as would be needed
to allow DOE to confirm that the technical requirements of § 48A
are met. Specifically the applicant should:
Provide evidence sufficient to demonstrate that the proposed technology
meets the definition of “Advanced Coal-Based Generation Technology,”
either as integrated gasification combined cycle (IGCC) technology, or other
advanced coal-based electric generation technology meeting the heat rate requirement
of 8530 Btu/kWh. For advanced coal-based electric generation:
The applicant must provide evidence sufficient to justify the actual
heat rate and heat rate corrected to conditions specified in § 48A(f)(2)
For projects including existing units, the applicant must provide evidence
sufficient to justify that the proposed technology meets heat rate requirements
specified in § 48A(f)(3)
Provide evidence sufficient to justify that the proposed project is
designed to meet the following performance requirements:
SO2 (subbituminous coal is 80 percent or more of fuel input)……..99
percent removal or emissions not more than 0.04 lbs/MMBTU
SO2 (subbituminous coal is not more than 80 percent of fuel input)……………………....99
SO2 (for all projects other than subbituminous coal projects)…………………...99
NOx emissions……………0.07 lbs / MMBTU
PM emissions……………..0.015 lbs / MMBTU
Hg percent removal……….90 percent
Provide evidence sufficient to demonstrate that the project meets the
requirements for qualifying advanced coal projects as specified under § 48A(e)(1)
The project will power a new electric generation unit or retrofit/repower
an existing electric generation unit. At least 50% of the useful output of
the project is electrical power.
The fuel for the project is at least 75% coal (as defined in § 48A(c)(4)
and section 3.01 of Notice 2007-52), on an energy input basis.
The project is located at one site and has a total nameplate electric
power generating capacity (as defined in section 3.02 of Notice 2007-52) of
at least 400 MW
|III. APPLICANT’S CAPABILITY TO
ACCOMPLISH THE TECHNICAL OBJECTIVES
|Provide a narrative supporting the Applicant’s
capability to accomplish the technical objectives of the proposed project,
including supporting documentation demonstrating that the applicant has assembled
a team that is formally committed to participate in the proposed project.
Provide information to support that the applicant has assembled a team
with the skills and resources needed to implement the project as proposed.
Provide signed agreements or letters from team members demonstrating that
the proposed team members are fully committed to the project.
Provide information, including examples of prior similar projects completed
by applicant, EPC contractor, and suppliers of major subsystems or equipment,
which support the capabilities of the applicant and its team members to design,
construct, permit, and operate the facility. The applicant should demonstrate
that the team members have a corporate history of successful completion of
Provide information to support that key personnel of the applicant and
its team members have knowledge, experience, and adequate degree of involvement
to successfully implement the project.
Include the project status and relevant information from ongoing engineering
activities. Also include in an appendix any engineering report or reports
used by the applicant to develop the project and to estimate costs and operating
performance. Include copies of any signed agreements to support project status
claims regarding preliminary design studies, FEED, and EPC-type agreements.
|IV. PRIORITY FOR INTEGRATED GASIFICATION
COMBINED CYCLE PROJECTS
|For IGCC Projects, the applicant must
submit information sufficient for categorization and prioritization of projects
for certification, including:
Identification of the primary feedstock (as defined in section 5.02(5)
of Notice 2007-52), and all other feedstocks.
If applicable, evidence demonstrating that the project will be capable
of adding components that can capture, separate and permanently sequester
A plan showing how project by-products will be marketed and utilized.
Other benefits, if any.
|V. SITE CONTROL AND OWNERSHIP
|Provide evidence that demonstrates the
overall feasibility of implementing the project at the proposed site.
Provide evidence that the applicant owns or controls a site in the United
States of sufficient size to allow the proposed project to be constructed
and operated on a long-term basis. Documentation such as a deed demonstrating
the applicant owns the project site, a signed option to purchase the site
from the site owner, or a letter of intent by the site owner to sell the site
to the applicant should be provided.
Describe the current infrastructure at the site available to meet the
needs of the project.
Provide documentation supporting applicant’s conclusion that the
proposed site can fully meet all environmental, coal supply, water supply,
transmission interconnect, and public policy requirements. Such documentation
may include signed agreements, letters of intent, or term sheets, such as
coal supply, water supply, and product transportation, etc., and regulatory
approvals supporting the key claims.
Provide detailed plans, schedules and status updates, particularly,
for sites with pre-existing conditions that could impact the proposed project.
Pre-existing conditions may include, but are not limited to, sites with mandated
environmental remediation efforts; brown-field sites that will require building
demolition; or sites requiring substantial rerouting of existing roads, railroads,
transmission lines or pipelines prior to the start of the project.
Applicants must select one “proposed site.” However, projects
with key physical or logistical elements that require close integration with
another system for the project to succeed should provide information on all
integrated systems regardless of where they are located. Example 1: a power
plant designed to operate exclusively on coal from a to-be-opened mine should
provide supporting documentation for the new mine. Example 2: an oxygen-blown
IGCC plant planning to purchase oxygen from a third party who will construct
a plant exclusively for this project should provide documentation for the
|VI. UTILIZATION OF PROJECT OUTPUT
|Provide evidence that demonstrates that
a majority of the project output is reasonably expected to be acquired or
Provide a projection of the anticipated costs of electricity and other
marketable by-products produced by the plant.
Provide documentation establishing that a majority of the output of
the plant is reasonably expected to be acquired or utilized. Such documentation
should be signed by authorizing officials of both the buyer and seller, and
may include: Sales Agreements, Letters of Intent, Memoranda of Understanding,
Option Agreements, and Power Purchase Agreements.
Describe any energy sales arrangements that exist or that may be contemplated
(e.g., a Power Purchase Agreement or Energy Sales Agreement)
and summarize their key terms and conditions.
Include as an appendix any independent Energy Price Market Study that
has been done in connection with this project, or if no independent market
study has been completed, provide a copy of the applicant-prepared market
Identify and describe any firm arrangements to sell non-power output,
and provide any evidence of such arrangements. If the project produces a product
in addition to power, include as an appendix any related market study of price
and volume of sales expected for that product.
|VII. PROJECT ECONOMICS
|Describe the project economics and provide
satisfactory evidence of economic feasibility as demonstrated through the
financial forecast and the underlying project assumptions. The project economic
and financial assumptions should be clearly stated and explained.
|Show calculation of the amount of tax
credit applied for based on allowable cost.
|VIII. PROJECT DEVELOPMENT AND FINANCIAL
|Provide the total project budget and major
plant costs (e.g., development, operating, capital, construction,
and financing costs). Provide the estimated annual budget for and source
of project development costs from the time of the application until the beginning
of construction, including legal, engineering, financial, environmental, overhead,
and other development costs. Describe the overall approach to project development
and financing sufficient to demonstrate project viability. Provide a complete
explanation of the source and amount of project equity. Provide a complete
explanation of the source and amount of project debt. Provide the audited
financial statements for the most recently ended three fiscal years and quarterly
interim financial statements for the current fiscal year for (a) the applicant,
(b) for any of the project parties providing funding, and (c) for any third
party funding source. If the applicant or another party does not have audited
financial statements, the applicant or the party should provide equivalent
financial statements prepared by the applicant or the party, in accordance
with Generally Accepted Accounting Principles, and certified as to accuracy
and completeness by the Chief Financial Officer of the party providing the
|For internally financed projects, provide
evidence that the applicant has sufficient assets to fund the project with
its own resources. Identify any internal approvals required to commit such
assets. Include in an appendix copies of any board resolution or other approval
authorizing the applicant to commit funds and proceed with the project.
|For projects financed through debt instruments
either unsecured or secured by assets other than the project, provide evidence
that the applicant has sufficient creditworthiness to obtain such financing
along with a discussion of the status of such instruments. Identify any internal
approvals required to commit the applicant to pursue such financing. Include
in an appendix copies of any board resolution or other approval authorizing
the applicant to commit to such financing.
|For projects financed through investor
equity contributions, describe the source and status of each contribution.
Discuss each investor’s financial capability to meet its commitments.
Include in an appendix, copies of any executed investment agreements.
|If financing through a public offering
or private placement of either debt or equity is planned for the project,
provide the expected debt rating for the issue and an explanation of applicant’s
justification for the rating. Describe the status of any discussions with
prospective investment bankers or other financial advisors.
|Include as an appendix copies of any existing
funding commitments or expressions of interest from funding sources for the
|For projects employing non-recourse or
limited recourse debt financing, provide a complete discussion of the approach
to, and status of, such financing. In an appendix, provide an Excel based
financial model of the project, with formulas, so that review of the model
calculations and assumptions may be facilitated; provide pro-forma project
financial, economic, capital cost, and operating assumptions, including detail
of all project capital costs, development costs, interest during construction,
transmission interconnection costs, other operating expenses, and all other
costs and expenses.
|IX. PROJECT CONTRACT STRUCTURE
|Describe the current status of each of
the agreements set forth below. Include as an appendix copies of the contracts
or summaries of the key provisions of each of the following agreements:
Power Purchase Agreement (if not fully explained in Section IV).
Coal Supply: describe the source and price of coal supply for the project.
Include as an appendix any studies of coal supply price and amount that have
been prepared. Include a summary of the coal supply contract and a signed
copy of the contract.
Coal Transportation: explain the arrangements for transporting coal,
Operations & Maintenance Agreement: include a summary of the terms
and conditions of the contract and a copy of the contract.
Shareholders Agreement: summarize key terms and include the agreement
as an appendix.
Engineering, Procurement and Construction Agreement: describe the key
terms of the existing or expected EPC contract arrangement, including firm
price, liquidated damages, hold-backs, performance guarantees, etc.
Water Supply Agreement: confirm the amount, source, and cost of water
Transmission Interconnection Agreement: explain the requirements to
connect to the system and the current status of negotiations in this respect.
|X. PERMITS INCLUDING ENVIRONMENTAL AUTHORIZATIONS
Provide a complete list of all federal, state, and local permits, including
environmental authorizations 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.
Provide a description of the applicant’s plan to obtain and complete
all necessary permits, and environmental authorizations and reviews.
|XI. STEAM TURBINE PURCHASE
If applicant plans to purchase a steam turbine or turbines for the project,
indicate the prospective vendors for the turbine and explain the current status
of purchase negotiations, and provide a timeline for negotiation and purchase
with expected purchase date.
|XII. PROJECT SCHEDULE
Provide an overall project schedule which includes technical, business,
financial, permitting and other factors to substantiate that the project will
meet the 2 year project certification and 5 year placed-in-service requirement.
The project schedule should be comprehensive and provide sufficient
detail to demonstrate how applicant will meet the certification and placed-in-service
requirements. The schedule should demonstrate that the applicant understands
the required tasks, and has allowed realistic times for accomplishing the
technical and financial tasks. The schedule should include the milestone
accomplishments needed to obtain the financing for the project.
Applicants should document their progress toward meeting the 2 year
completion of permitting deadline. Existing permits and permit applications
must be specific to the project proposed. If existing permits are not specific
for the proposed coal-based project (e.g., the permits
are for oil-fired or natural gas-based units), specific plans, procedures
and schedules for reapplying, modifying and/or renegotiating permits should
be provided. Any local, state or federal permitting schedules which may impact
the overall project schedule should be included.
Applicant should document their progress toward obtaining engineering
design information (FEED) to initiate permitting activities and to finalize
the turbine generator purchase specification within the 2 year window. Most
often, this requires final site, technology, process selection. Signed FEED
and/or EPC-type agreements, if available, should be provided.
Copy of internal or external engineering reports.
Copy of site plan, together with evidence that applicant owns or controls
a site. Examples of evidence would include a deed, or an executed contract
to purchase or lease the site.
Information supporting applicant’s conclusion that the site is
fully acceptable as the project site with respect to environment, coal supply,
water supply, transmission interconnect, and public policy reasons.
Power Purchase or Energy Sales Agreement.
Energy Market Study.
Market Study for non-power output.
Financial Model of project.
Financial statements for the applicant and other project funding sources
for the most recently ended three fiscal years, and the unaudited quarterly
interim financial statements for the current fiscal year.
Expressions of interest or commitment letters from funding sources.
For each project contract, if no contract currently exists, provide
a summary of the expected terms and conditions.
List of all federal, state, and local permits, including environmental
authorizations or reviews, necessary to commence construction.
|E. Evaluation Criteria
|Advanced coal projects: will be evaluated
on whether they meet all the requirements of § 48A.
|Technical: will be evaluated on whether
the applicant has demonstrated the capability to accomplish the technical
|Site: will be evaluated on the basis
that the site requirement for ownership or control has been met, and that
the site is suitable for the proposed project.
|Economic: will be evaluated on whether
the project has demonstrated economic feasibility, taking into consideration
the submitted financial and project development and structural information
and financial plan.
|Schedule: will be evaluated on the applicant’s
ability to meet the 2 year project certification and the 5 year placed-in-service
|F. Program Policy
Factors to be used by DOE in the evaluation of applications
|Section 48A identifies minimum requirements
for consideration for the qualifying advanced coal project credit, including
the project’s technical feasibility, cost, and applicant’s ability.
In the event that there are more qualified (certifiable) applications than
there are available tax credits, the DOE will apply additional factors to
rank eligible IGCC and non-IGCC projects based on their ability to advance
coal technology beyond its current state.
|If there are more certified applications
than available credits for a pool described in section 4.02(2) of Notice 2007-52,
DOE will rank the certified projects in descending order (that is, first,
second, third, etc.), based on evaluation of the following Program Policy
Factors. Factors 1, 2, and 3 are Primary Ranking Factors. A certified project
that satisfies one of these factors will be ranked ahead of each project that
satisfies only factors listed below that factor. Specifically, all certified
projects satisfying Factor 1 will be selected before any project that does
not satisfy Factor 1; all projects satisfying Factor 2 will be ranked ahead
of any project that satisfies only Factor 3 and/or one or more Secondary Ranking
Factors; and all projects satisfying Factor 3 will be ranked ahead of any
project that does not satisfy any Primary Ranking Factors.
|Primary Ranking Factors:
||1. Capture and sequestration of 50 percent or more carbon dioxide
emissions. Only projects capturing and sequestering 50 percent or more of
the plant’s carbon dioxide emissions will satisfy this factor. Within
this factor, higher rankings will be given to those projects capturing and
sequestering higher percentages of plant carbon dioxide emissions.
||2. Use of advanced technologies that optimize the plant for future
carbon dioxide capture (for example, gasifier sizing and pressure, air separation
unit sizing, and quench system) as well as systems that are designed to capture
and sequester less than 50 percent of the carbon dioxide. Within this factor,
higher rankings will be given to those projects capturing and sequestering
higher percentages of plant carbon dioxide emissions and/or requiring less
retrofitting to implement greater than 50 percent carbon capture and sequestration.
||3. Location of the facility within 25 miles of potential carbon sequestration
locations and carbon dioxide (CO2) pipelines or pipeline easements. Within
this factor, higher rankings will be given to those projects with the facility
located closer to potential carbon sequestration locations and carbon dioxide
(CO2) pipelines or pipeline easements.
|Secondary Ranking Factors:
Location of the facility relative to potential carbon sequestration
locations and carbon dioxide (CO2) pipelines or pipeline easements (for facilities
not meeting Factor 3).
Presentation of other environmental, economic, or performance benefits
(including, in the case of an IGCC project, priority factors that are listed
in section 5.02(10) of Notice 2007-52 and are not included in the Primary
Higher plant efficiency.
Geographic distribution of potential markets.
The ratio of total nameplate generating capacity (as defined in section
3.02 of Notice 2007-52) to requested tax credit.
Diversity of technology approaches and methods.
Technical and Financial Guidance for Section D “Project Information
|Technology and Technical
It is important that the applicant select a specific gasification system
for their project. Without that decision, it is difficult to provide the
necessary specific design information needed for DOE to evaluate the project
feasibility with respect to performance, emissions, outputs of major streams
as well as capital and operating costs.
The Applicant’s capability to meet the legislated heat rate and/or
environmental targets should be supported with design information, and or
vendor guarantees which are project, site and coal specific.
Applicants should demonstrate the project’s economic feasibility
and financial viability by providing a clear statement and explanation of
the economic and financial assumptions made by the applicant, and a financial
forecast for the project. The financial forecast should flow logically from
the applicant’s assumptions and be consistent with them. Applicants
should include assumptions regarding financial and economic issues that may
not be included in the project costs but have a direct impact on the project.
The examples given in the “Site Control and Ownership” section
are relevant here and their impact on the project economics should be discussed
and Financial Plan
The information provided by the applicant in this section should demonstrate
that the applicant’s financial plan for developing the project is feasible
and that the applicant will have access to necessary financing. The applicant
should explain the source and timing for obtaining all financing, including
the project development costs. It is important that the applicant explain
and provide evidence that it has the capacity to fund the pre-construction
project development costs, together with a budget for and description of those
costs. Note that financial information is required for the applicant and
for any other funding source.
This section requires that the applicant demonstrate an understanding
of the commercial contracting process and show progress in establishing the
framework of contracts and agreements that a project typically requires.
Applicants should show that their intended contract structure is reasonable
and that their assumptions relative to price, terms, and conditions are consistent
with current market conditions. Evidence of final agreements, agreements
in principle, or summaries of terms and conditions between the applicant and
contract counterparties should be provided if available.