| BETC Tier Two Opportunity Announcement Questions and Answers |
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| Posted October 20, 2010 |
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Funding period October – December 2010
1. Applicant Question: When will the second cycle review be completed, at the end of December or on a rolling basis?
Answer: ODOE anticipates completion of the Tier Two Program Priority Review by the end of November. The technical review will take place in late November and December. ODOE plans to issue preliminary certificates before the end of the year.
2. Applicant Question: On page 2 of Appendix 3, Item #2 asks for a Site Assessment to determine the Total Solar Resource Fraction (TSRF). This report is straightforward with the proper tools on an existing building, but these same reports are not available for new building projects. When the roof is not standing or is not finished, we cannot stand on the roof and produce the proper reports. In this light, how can I properly apply for new buildings and meet this requirement?
Answer: For new building projects, estimate the TSRF based on a site plan of where the panels will be located, the height that they will be mounted at, and use assumptions for tilt and orientation. Shading should be estimated based on the site plan. TSRF must be at least 75 percent to qualify.
3. Applicant Question: The application information states that a lower than maximum allowable amount can be requested in this current round. If a project's total costs are greater than $6,000,000, will it be eligible as a Tier Two project if the amount of BETC requested is less than $3,000,000?
Answer: Section 4.3 in the Opportunity Announcement (bottom of page 11) states that, OAR 330-090-0350(3)(e) allows applicants to apply for less than the maximum eligible tax credit for their project, but this does not change the tier within which the application is reviewed. OAR 330-090-0350(3)(b) states that facilities eligible for consideration for BETC preliminary certification under tier two shall consist of applications with a total projected facility cost equal to or greater than $500,000 but less than $6,000,000. Therefore, an application with a total cost of $6 million or greater will not be eligible to apply in a tier two opportunity announcement.
4. Applicant Question: What factors are taken into consideration for scoring the Aligning Renewable and Conservation Activities priority? Does conservation of resources other than energy count for this priority?
Answer: The reviewers are determining if there are none, some, or all relevant renewable and conservation activities in process or complete that are related to the facility (project). For example if an office building is applying to install solar photovoltaic panels, the reviewers are looking for all steps taken to weatherize the building, install energy efficient fixtures or other activities that would align with the activity of installing solar photovoltaic panels. If conservation of resources other than energy is relevant to the project in the tier two application, include those activities in the answer to Question 12 on the Tier Two General Application. In all cases, the applicant should explain how the other renewable and conservation activities relate to or enhance the project for which you are applying.
5. Applicant Question: For the aligning renewable and conservation activities priority —if applications can’t be made for projects that are already started, how is preference given to in-process or completed activities?
Answer: For the aligning renewable and conservation activities priority in Section 4.3 of the Opportunity Announcement, the reviewers give no preference between in-process or complete activities. These activities are in addition to the activity (project) applied for in the tier two opportunity announcement.
6. Applicant Question: Is the simple payback for a hydro-electric generating facility calculated using the average of the first 15 years revenues? If not, what number is used?
Answer: The simple payback period for a hydro-electric generating facility is calculated by using the total estimated facility costs found in Question 8a of Appendix 1 divided by the facility value. The facility value is the combination of the cost savings per year (Question 4d of Appendix) and the total first full year of fuel savings revenue (Question 5c of Appendix, no escalation).
7. Applicant Question: For multiple projects that fall within different Tier levels (i.e. Tier One and Tier Two) who share similar criteria such as common owner, common financing source, and common general contractor, please describe the procedure for how applicants should submit BETC applications so that they are simultaneously considered by the Department of Energy as a single facility. Specifically, please provide guidance as to that section of the BETC Tier One or Tier Two application where applicants should notate that there are multiple projects that should be reviewed together or combined during the Tier II consideration process.
Answer: Refer to Section 3.7 of the Tier Two Opportunity Announcement on “Submitting Multiple Location Sites”, it explains how to submit one application for multiple sites. The applicant should complete a single Tier Two general application and attach the appropriate appendix for each site location. ODOE will consider the costs and data from all the appendices in the review process for determining Tier Two eligibility. On the Tier Two general application, Question 2 provides a space for the applicant to indicate the number of sites for the application. Alternatively, Section 3.6 explains the procedure for submitting multiple applications, to be considered independently.
8. Applicant Question: Please describe the criteria utilized when scoring an application’s Financial Structure. Based on scoring observed during the June 30th 2010 BETC Submission, it appears that the use of Financial Leverage is favored over projects that do not utilize external financing (i.e. projects paid in cash appear to be at a disadvantage when scored). Is this is a correct assumption/observation of the scoring criteria?
Answer: Please refer to Section 3.4 of the Tier Two Opportunity Announcement, within the financial structure priority; ODOE will evaluate the percent of leveraged funds. For the Tier Two review process, leveraged funds are those that the facility owner will be responsible for or later need to repay, such as owner funds or loans. Non-leveraged funds are those that the facility owner will not be responsible for paying back such as tax credits, grants and a variety of utility incentives (such as BETC, federal credits/grants and Energy Trust of Oregon incentives). When ODOE calculates leveraged funds, the criteria does not favor whether the applicant uses owners funds such as cash or finances (takes out a loan or other form of borrowing money). Rather the criteria favors those projects in which, at the end, the owner is paying for a part of the project rather than receiving a larger percentage of the costs of the project ultimately funded through grants, credits and incentives.
9. Applicant Question: Please describe the criteria that is used to measure a project’s ability to “start and complete the facility” within the Group 1 Priorities.
Answer: Please refer to Section 3.4 of the Opportunity Announcement, it explains that the readiness to start and complete a facility is based on the number of days from the date of the program priority review to completion of the facility.
10. Applicant Question: In the Appendix 3 application for Tier Two BETC, section 6 asks for information on the “Energy Sales” of the project. I have two questions about this section: (10a) If the project is under current negotiations as a capital project (cash sale) and the BETC application is approved and accepted, can the project be transferred to an “Energy Sales” or Power Purchase Agreement project?
Answer (10a): Certain changes to the financial structure of a project may be completed without affecting the information submitted during the preliminary application review process, and thus may not require an amendment. It is assumed that a change from a “cash sale” project to a power purchase agreement project would result in a change in facility owner (tax credit recipient and tax ID number) which is not allowed under the program rules. OAR 330-090-0130(7)(c) states that “[p]reliminary certifications issued for facilities using or producing renewable energy resources, or facilities listed as renewable energy resources as defined under ORS 469.185, on or after July 1, 2009 shall not be eligible for consideration of amendments other than equipment modifications within 10% of the approved specification.” Other changes that requires an amendment to the preliminary certificate and application is not allowed.
(10b) If the project’s contract for “Energy Sales” is currently under negotiations but has not been completed, is it expected that we should be able to complete section 6c, which asks for details of the yet-to-be-completed contract?
Answer (10b): It is anticipated that negotiations for energy sales will have started by the time the preliminary application is submitted. It is acceptable to estimate the energy purchase rate listed in Appendix 3 Section 6c. However, ODOE may request documentation for rates that fall outside the expected range of rates for a given project.
11. Applicant Question: In general, we produce solid biofuel from forest waste to replace coal at coal-fired power plants. Our facility does not produce electricity. Our technology doesn’t neatly fit into many of the categories given in the forms. (11a) Do we have to fill out Appendix 1 or Appendix 2, or both?
Answer (11a): Appendix 2
(11b) Appendix 2 – Section 1 – do we qualify for 2nd item? We produce solid biofuel briquettes from forest waste to replace coal at coal-fired power plants. We don’t actually fit in any of described categories. Which category shall we list?
Answer (11b): In Appendix 2, if you answer yes to the second question in Section 1, please provide supporting documentation that indicates how the biomass will be produced into fuel that will be used to produce energy.
(11c) In Appendix 2 - Section 3, what does “fuel distribution” mean?
Answer (11c): In Appendix 2, Section 3, for fuel distribution please provide an overview and explanation of equipment and materials used to distribute the fuel you propose to manufacture. Only equipment and materials that are to be included in the overall project and used to determine eligible costs should be included. For example, if a third party will be distributing the fuel, this should not be included.
(11d) In Appendix 2 – Section 3 and 4, do we need to list our upcoming SBIR Phase II grant application? This application won’t be started until February, 2011, with funding expected in September 2011.
Answer (11d): In Appendix 2, Section 4 include all incentives you have been awarded and those that you plan to apply for that are not competitive, including grants. If the incentive has not been awarded, please mark as unsecured in the appropriate column in Section 4. In Section 3b, please include only federal grants for which you have been awarded or that the grant is not competitive (for example, ITC taken as a grant). If additional incentives, not noted on the application, are received before final certification of any Business Energy Tax Credit, this may reduce the eligible costs and tax credit amount.
(11e) Regarding OARs – 330-090-0105 to 330-090- 450, are we considered a “renewable energy resource facility” by making our product – clean fuel to replace coal from biomass?
Answer (11e): The proposed facility (project) produces solid fuel briquettes from biomass. The use of this fuel as a replacement for coal is outside the scope of the facility; therefore, the department considers that the fuel has the potential to offset multiple fuel sources and may be considered a “renewable energy resource facility” under the definition in OAR 330-090-0110(60). The definition includes an energy facility used in the utilization of renewable energy resources to provide the initial use of energy where electricity, petroleum or natural gas would have been used.
(11f) Regarding the use of the term “renewable energy facility” used on occasion, such as in 330-090-0105, Item #30, subsection g, does this refer to “renewable energy resource facility?” Please confirm that this term means “renewable energy resource facility.”
Answer (11f): The term “renewable energy facility” as stated in OAR 330-090-0110(30) can be used interchangeably with “renewable energy resource facility” as defined in OAR 330-090-0110(60).
(11g) OAR – 330- The terminology says “renewable energy facility.” Does description also refer to “renewable energy resource facility,” used prior?
Answer (11g): The term “renewable energy facility” as found in OAR 330-090-0110(30) can be used interchangeably with “renewable energy resource facility” as defined in OAR 330-090-0110(60).
(11h) OAR 330-090-0120 - Eligible facilities – There is no category in this form that we can see that would include a facility using technology such as ours – to produce solid biofuel to replace coal at coal-fired power plants. What category shall we use? Renewable energy resource facility is not listed as an eligible facility. Is this an omission?
Answer (11h): In OAR 330-090-0120(1), eligible facilities include an “energy facility.” ODOE considers a “renewable energy resource facility” a type of “energy facility.”
(11i) OAR 330-090-0120 Item 2, F, (iii) - Regarding permitting, at this stage of the project, when we haven’t begun construction, what is your expectation with regard to providing authorizations for all work performed, such as licensing and permits? For example, we expect our emissions to be low, and have met with DEQ about them, but permitting will not take place until after this application is due. Also “Biomass energy facility” is used here – but is not defined in the definition section of the OARs. Can you please clarify?
Answer (11i): OAR 330-090-0120(2)(a) requires that persons requesting a Business Energy Tax Credit submit the information required by statute and the additional listed information. One of the items in the list, requires that the applicant provide, “[i]nformation demonstrating that the proposed facility will comply with all other local, federal, and state laws.” In addition, a “biomass energy facility must have required permits from the Oregon Department of Environmental Quality (DEQ).” At the time of submitting the application for preliminary certificate, at the minimum, the applicant needs to be able to provide a list of the required permits and licenses and the estimated timeline for receiving those approvals.
(11j) Regarding BETC Opportunity Announcement Tier Two application priorities, of all group bullets, do we answer only those applicable to our situation?
Answer (11j): Listed in Section 4.3 of the Tier Two Opportunity Announcement are the priorities that the program priority reviewers will use to score each application. ODOE suggests you provide information for all priorities. The priorities are reflected in various questions throughout the application form and appendix. If there is a priority in which you feel the application form and appendix did not represent your facility (project) adequately, please include this information in an attachment with your application materials. Mark and label the attachment clearly.
(11k) Regarding BETC Opportunity Announcement Tier Two application priorities, Group 1, Cost Ratio – Since we make fuel, not power, should we answer this question? In our case, what is DOE’s expectation for an answer?
Answer (11k): Yes. If producing a fuel, please present the cost ratio of power in terms of Btu produced.
12. Applicant Question: Regarding BETC Opportunity Announcement Tier Two application priorities, Group 2, “Aligning Renewable and Conservation Activities, preference to in process or complete activities that are relevant to the facility (project).” - What does this mean? Can you give an example of this?
Answer: Aligning Renewable and Conservation Activities in Section 4.3 of the Tier Two Opportunity Announcement refers to renewable or conservation energy projects that are in process or complete. This priority is looking for renewable and/or conservation activities related to the facility (project) for which you are applying. For example, the application would be given positive consideration, if an applicant has already or demonstrates intent to weatherize a building on which it is proposing to install solar panel.
13. Applicant Question: Are all of our costs, including engineering, that are incurred prior to application, eligible, as long as we have not broken ground?
Answer: In most cases, yes. All costs allowed under the definition of cost, OAR 330-090-0110(20), may be included for consideration if ODOE receives your completed preliminary application prior to starting the facility (project). Facility start is defined as prior to erection, construction, installation or acquisition. For a renewable energy facility, an applicant is not considered to have started erection, construction, installation or acquisition of a proposed facility until excavation or actual physical construction of the renewable energy facility. Eligible costs may include all costs as defined in the rules, including costs incurred prior to the receipt by ODOE of the preliminary certification application related to site and facility development and approval. See OAR 330-090-0110(30)(g). ODOE determines the actual eligible cost and documents it in the preliminary certificate.
14. Applicant Question: In any given section, if instructions do not make note of attachments, is it okay to do so?
Answer: For any part of the application or appendix, you may attach additional pages (even when not specially stated). Clearly mark and reference all attachments in the appropriate place on the application.
15. Applicant Question: On Page 4 – if our explanation does not fit here, can we attach a second page? If we need another page and have attachments, where should they go?
Answer: For any part of the application or appendix, you may attach additional pages to the application. Clearly mark and reference all attachments in the appropriate place on the application.
16. Applicant Question: Appendix 2, section 3 – May we attach a list?
Answer: Appendix 2, Question 3 requests equipment specifications and estimated facility costs. If there is not enough space, you may attach additional pages; however please provide a summary of the costs in Question 3 of the application.
The Oregon Department of Energy has attempted to provide clear and accurate answers, however the department reserves the right to modify any answer if necessary. If you believe an answer was incorrectly stated please contact Elizabeth Ross at 503-373-7953.
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