Maximizing Use of Government Incentives to Finance Renewable Energy Development

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Maximizing Use of Government Incentives to
Finance Renewable Energy Development

• Assistant Secretary Alexander Andy Karsner
• Office of Energy Efficiency and Renewable Energy
• U.S. Department of Energy
• September 20, 2006

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• EERE Programs
• Examples of Government Programs Incentives
• Private Sector Participation
• Additional Information
• Internet Links Points of Contact

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I. EERE Programs

• Biomass
• Building Technologies
• Federal Energy Management
• FreedomCar and Vehicle Technologies
• Geothermal Technologies
• Hydrogen, Fuel Cells Infrastructure
  Technologies
• Industrial Technologies
• Weatherization Intergovernmental
• Wind Hydropower Technologies

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II. Examples of Government Programs Incentives
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Programs
Biomass

• Renewable Fuels Standard
• Requires fuel refiners to steadily increase the
  volume of ethanol and biodiesel added to nations
  fuel supply to 7.5 billion gallons by
  2012,Beginning in 2013, minimum of 250 million
  gallons/yr must be cellulosic ethanol (1501)
• Credit trading among refiners permitted
• Other Commercial Incentives for Biomass Fuel
• Use of renewable fuels required in U.S.
  government fleet vehicles capable of their use
  (701)
• Fueling stations will receive a tax credit of 30
  for the cost of installing pumps dispensing
  alternative fuel (1342)
• Requires federal government contractors to
  purchase biobased products (943)
• SunGrants/Biomass Regional Feedstock partnerships
• Collaboration to identify biomass resources on a
  regional basis

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Programs
FreedomCar and Vehicle Technologies

• E85 Infrastructure Development Planning
• Competitive grant solicitations for assistance in
  deployment of E85 Infrastructure.
• Hybrid Vehicle Incentives
• Tax credits to the consumer of up to 3400 per
  vehicle for energy-efficient hybrid vehicles.
• Competitive grant solicitations for state and
  local government purchase of alternative-fueled
  and hybrid vehicles.
• Clean Diesel Incentives
• Tax credits to the consumer of up to 3400 per
  vehicle for energy-efficient clean diesel
  vehicles.
• Clean Cities
• Competitive grant solicitations for
  implementation of energy efficient transportation
  technologies.

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Programs
Building Technologies

• Energy Star
• Provides market transformation support for energy
  efficient product manufacturers, commercial
  industrial building owners, and home
  builders/contractors. The label is a nationally
  recognized symbol of energy efficiency.
• Energy Smart Schools
• This program promotes the construction,
  renovation and operation of energy efficient
  schools through technical support, education
  initiatives, and energy management training.

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Programs
Federal Energy Management Program

• Promotes energy efficiency and the use of
  renewable energy resources at federal sites.
  Helps agencies save energy, save taxpayer
  dollars, and demonstrate leadership with
  responsible, cleaner energy choices.
• Congress and the President encourage federal
  agencies to use Energy Savings Performance
  Contracts (ESPCs) to finance, through the use of
  private sector investments, the implementation of
  efficiency improvements.
• More than 400 ESPC projects have been awarded by
  19 different federal agencies in 46 states.
• 1.9 billion has been invested in U.S. federal
  facilities through ESPCs, saving 16 trillion Btu
  annually, equivalent to the energy used by a city
  of about 450,000.

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Geothermal
Programs

• GeoPowering the West (GPW)
• The GPW program works with the U.S. geothermal
  industry, power companies, industrial and
  residential consumers, and federal, state, and
  local officials to provide technical and
  institutional support and limited, cost-shared
  funding to state-level activities.
• GPW is pursuing these opportunities by
• Bringing together national, state and local
  stakeholders for state-sponsored geothermal
  development workshops
• Working with public power companies and rural
  electric cooperatives to promote use of
  geothermal power
• Promoting increased federal use of geothermal
  energy
• Helping American Indians identify and develop
  geothermal resources on tribal lands and
• Sponsoring non-technical educational workshops.

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Programs
Hydrogen, Fuel Cells Infrastructure Technologies

• Grants to state, local or municipal governments
  for purchase of alternative fuel, hybrid, and
  fuel cell vehicles (FCV), installation of
  infrastructure, and OM under Section 721 of
  EPAct.
• Grants for up to 10 million for fuel cell
  transit bus demo program in consultation with DOT
  under Section 731 of EPAct.
• Cooperative agreements to cover up to 50 of
  costs with private sector fuel cell bus
  developers for development and demonstration of
  fuel cell school buses and up to 20 for
  infrastructure under Section 743 of EPAct.
• Statutory mandate under Section 782 of EPAct for
  Federal government purchase/lease of fuel cell
  vehicles and hydrogen energy systems within
  non-combat light and heavy duty vehicles to meet
  applicable energy savings goals. Similar
  requirement for stationary, portable, and micro
  fuel cells under Section 783.

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Hydrogen, Fuel Cells Infrastructure
Technologies (cont.)
Programs

• Funding Opportunity Announcement for Research and
  Development for Viable On-Board Vehicular
  Hydrogen Storage Applications
• Final applications have been requested from
  selected applicants for the following two
  categories
• Category 1 Applications are sought for projects
  that support and complement activities of the
  existing Hydrogen Storage Centers of Excellence
  in Metal Hydrides, Chemical Hydrogen Storage, and
  Carbon Based Materials. Such projects must help
  establish important new technical approaches or
  capabilities not presently available at the
  centers.
• Category 2 Applications are sought for
  independent research and development projects
  that address one of three technical topics 1)
  materials discovery 2) engineering science or
  3) systems, safety and environmental analyses.

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Programs
Industrial Technologies

• Works with U.S. industry to improve industrial
  energy efficiency and environmental performance.
• Invests in high-risk, high-value RD to reduce
  industrial energy use while stimulating
  productivity and growth.
• Resulted in many Program funded technologies in
  the marketplace today.

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Solar Energy
Programs

• General Services Administration Photovoltaic
  (PV) energy commercialization program under
  Section 204 of EPAct
• The Administrator may establish a PV
  commercialization program for the procurement and
  installation of PV solar electric systems in
  public buildings
• Solar demonstration program for state and local
  government buildings under Section 935 of EPAct
• Federal funding limited to 40 of the incremental
  cost of the funded project
• Residential Solar and Fuel Cell Tax Credits
• Tax credits for solar (PV, Concentrating Solar
  Power (CSP), water heating, and hybrid lighting).
  These tax credits only apply for 2006 and 2007.
• Technology Pathway Partnerships
• Cost-shared RD on all PV system components with
  a common goal of producing a fully integrated PV
  system optimized for US markets that can compete
  with traditional electricity providers.

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Weatherization and Intergovernmental
Programs

• State Energy Programs
• The State Energy Office network provides programs
  to reduce energy use and costs in State
  government, residences, businesses, institutions
  and vehicles, while promoting renewable energy
  programs and policies.
• SEP provides field support for programs and
  addresses public policy barriers impeding
  technology commercialization and adoption.
• The SEP is the only EERE program that targets all
  technologies and markets.
• For example, within the Buildings sector, 32
  States implement programs aimed at reducing
  energy use and costs in State and local
  government and school facilities.

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Weatherization and Intergovernmental
Programs

• International Renewable Energy Program
• Supports market development for U.S. renewable
  energy technologies overseas, provides technical
  assistance in support of U.S. policy goals
  through
• Participation in the Asia-Pacific Economic
  Cooperation
• Training and Technical Project Support using
  HOMER
• Support of the U.S.-India Energy Dialogue and the
  U.S.-China Renewable Energy and Energy Efficiency
  collaboration
• Tribal Energy Program
• Promotes energy sufficiency and economic
  development on Americas tribal lands through
  financial and technical assistance
• Empowers Tribes to begin strategic planning,
  human capacity building, and energy options
  analyses

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Wind
Programs

• Wind Program pubic-private partnerships
• - Low Wind Speed Technology Program - funds
  public-private partnerships aimed at
  utility-sized wind energy cost reduction through
  technology improvements
• - Distributed Wind Technology Program - funds
  public-private partnerships aimed at
  residential/small business-sized wind energy cost
  reduction through technology improvements
• - All awards made through competitive
  solicitation process
• Small Business Innovation Research (SBIR) and
  Small Business Technology Transfer (STTR)
• - Federal agencies with large research and
  development (RD) budgets set aside a small
  fraction of their funding for competitions among
  small businesses. 
• Small businesses that win awards keep the rights
  to any technology developed and are encouraged to
  commercialize the technology.

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Tax Credits
Incentives

• Renewable Electricity Production Tax Credit
• Corporate tax credit applied as 1.5 cents/kWh,
  adjusted annually for inflation, for electricity
  generated by qualified energy resources such as
  wind, closed-loop biomass and geothermal
  projects.
• Electricity from open-loop biomass, small
  irrigation hydroelectric, landfill gas, municipal
  solid waste resources, and hydropower receive
  half that rate -- currently 0.9 cents/kWh.
• The duration of the credit is generally 10 years
  with some exceptions.
• A business can take the credit by completing Form
  8835, "Renewable Electricity Production Credit,"
  and Form 3800, "General Business Credit."

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Incentives
Tax Credits

• Energy-efficient Commercial building deduction.
• This provision allows a tax deduction for
  energy-efficient commercial buildings that reduce
  annual energy and power consumption by 50
  compared to the American Society of Heating,
  Refrigerating, and Air Conditioning Engineers
  (ASHRAE) 2001 standard.
• The deduction would equal the cost of
  energy-efficient property installed during
  construction, with a maximum deduction of 1.80
  per square foot of the building.
• Additionally, a partial deduction of 60 cents per
  square foot is provided for building subsystems.

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Incentives
Tax Credits

• Residential Energy Efficiency Tax Credit
• The Energy Policy Act of 2005 established tax
  credits for energy efficiency improvements in the
  building envelope of existing homes and for the
  purchase of high-efficiency heating, cooling, and
  water heating equipment.
• These improvements and/or equipment must be
  placed in service from January 1, 2006 through
  December 31, 2007 and must serve a dwelling in
  the United States owned and used by the tax payer
  as a primary residence.
• The maximum amount of homeowner credit for all
  improvements combined is 500 during the two year
  period of the tax credit.

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Tax Credits

• Credit for business installation of qualified
  fuel cells, stationary microturbine power plants,
  and solar equipment. This provides
• a 30 tax credit for the purchase price for
  installing qualified fuel cell power plants for
  businesses,
• a 10 credit for qualifying stationary
  microturbine power plants and
• a 30 credit for qualifying solar energy
  equipment. This is effective January 1, 2006
  through December 31, 2007.

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Incentives
Tax Credits

• Appliance Manufacturing Credits
• Provides a tax credit for the manufacturer of
  energy-efficient dishwashers, clothes
  washers, and refrigerators. Credits vary
  depending on the efficiency of the unit. This is
  effective for appliances manufactured in 2006 and
  2007.
• Vehicle Technologies
• Fuel Cell Vehicles
• Tax credits to the consumer of up to 3400 per
  vehicle for energy-efficient fuel cell vehicles
• Alternative Fuel Infrastructure Tax Credit
• Alternative Motor Vehicle Credit
• Hybrid Motor Vehicle Credit
• Fuel Cell Motor Vehicle Credit
• Electric Vehicle Tax Credit

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Incentives
Tax Credits

• Residential Solar and Fuel Cell Tax Credit
• Establishes a 30 tax credit up to 2,000 for the
  purchase and installation of residential PV
  (solar electric) and solar water heating
  property.
• An individual can take both a 30 credit up to
  the 2,000 cap for a PV system and a 30 credit
  up to a separate 2,000 cap for a solar water
  heating system.
• A 30 tax credit up to 500 per 0.5 kW is also
  available for fuel cells.  
• To be eligible for the credit, a system must be
  "placed in service" or activated between January
  1, 2006, and December 31, 2007.
• The IRS will be issuing further guidance on
  claiming this credit.

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III. Private Sector Participation
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Title XVII Loan Guarantee Program (42 U.S.C.
16511-16514)

• Authorizes the Secretary of Energy, after
  consultation with the Secretary of the Treasury,
  to make loan guarantees for projects that avoid,
  reduce, or sequester air pollutants or
  anthropogenic emissions of greenhouse gases and
  employ new or significantly improved technologies
  as compared to commercial technologies in service
  in the United States at the time the guarantee is
  issued.
• Program Features
• Guidelines and initial Solicitation for
  Pre-Applications issued to the public on August
  9, 2006
• All Pre-Applications due to DOEs Loan Guarantee
  Program Office no later than November 6, 2006
• Proposed projects must be able to produce
  revenues to meet debt service
• Must be innovative commercially viable

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Loan Guarantee Program

• Additional Program Features
• Guidelines make preference for guarantee of no
  greater than 80 of the debt portion of a project
• Applicant must pay DOE fees to cover
  administrative costs and the risk premium or
  Cost Subsidy associated with the applicable
  guaranty
• Eligible applicants include any firm,
  corporation, company, partnership, association,
  society, trust, joint venture, joint stock
  company, or governmental non-Federal entity
• DOE reserves the right, without qualification,
  to reject any or all Pre-Applications and
  Applications received in response to this
  Solicitation and to select any Pre-Application or
  Application, in whole or in part, as a basis for
  negotiation
• Lenders associated with a project should be a
  non-Federal qualified institutional buyer, as
  defined in 17 CFR 230.144A(a), and is able to
  demonstrate experience in originating and
  servicing loans for commercial deals similar in
  size and scope with the project under
  consideration.

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Loan Guarantee Program

• The only project proposals that DOE will
  consider in connection with the first
  solicitation must employ a technology that fits
  within the following categories.
• Biomass
• Hydrogen
• Solar
• Wind Hydropower
• Fossil Energy Coal
• Carbon Sequestration Practices and Technologies
• Efficient Electricity Transmission and Delivery
  and Energy Reliability
• Alternative Fuel Vehicles
• Industrial Energy Efficiency Projects
• Pollution Control Equipment

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Cooperative Agreements

• Cooperative Research and Development Agreements
  (CRADA) with private industry can be used as a
  means of technology transfer.
• The DOE complex of government-owned,
  contractor-operated national laboratories is the
  largest and most extensive research arm of the
  Federal government. The National Labs have
  entered into thousands of CRADAs with private
  industry.
• However, CRADA projects generally do not result
  in the construction of full-scale energy
  production facilities rather industry has used
  the technology available under these CRADAs to
  foster energy-development projects.

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Biofuels Grant Biomass Program Solicitation
(Section 932 of EPAct) for Proposals to Design,
Build, Construct and Operate a commercial- scale
integrated Cellulosic Biorefinery Federal grant
to provide 40 Federal cost share of
project Proposal deadline expired on
8/10/06 Award opportunities will be announced
in November 56 million planned for FY 07 -
160 million in total
Grants
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Production Incentives

• Production Incentives under EPAct Sec 942
• Will establish 1 billion Reverse Auction
  program to purchase first 1 billion gallons of
  cellulosic ethanol from lowest cost provider.
  Designed to
• Accelerate deployment and commercialization of
  biofuels
• Deliver the first 1,000,000,000 gallons in annual
  cellulosic biofuels production by 2015
• Ensure biofuels produced after 2015 are cost
  competitive with gasoline and diesel and
• Ensure that small feedstock producers and rural
  small businesses are full participants in the
  development of the cellulosic biofuels industry.

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IV. Useful Information, Points of Contact
Internet Links
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• Funding Announcements
• All DOE Funding Opportunity Announcements (FOAs)
  can be found through grants.gov
• Need to register in grants.gov in applying under
  DOE FOAs
• Grants.gov start-up information can be found at
• http//www.grants.gov/GetStarted
• Guide to Doing Business with the DOE Laboratories
  of the Laboratory Coordination Council
• http//www.oit.doe.gov/lcc/doing_business.shtml
• To Access a Modular CRADA agreement
• http//www.directives.doe.gov/pdfs/doe/doetext/new
  ord/483/m4831-1.html

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• Loan Guarantee Program Contact Information
• lgprogram_at_hq.doe.gov call 202-586-8336
• Application forms, instructions, and any
  amendments to the Solicitation will be available
  at http//www.LGProgram.energy.gov/
• Clean Renewable Energy Bonds Contact Information
• Internal Revenue Service Timothy L. Jones or
  Aviva M. Roth at 202-622-3980

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• Solar Program Contact Information
• Solar Tax Credits - Tom Kimbis, 202-586-7055
• Technology Pathway Partnerships - Craig
  Cornelius, 202-586-1201
• Solar Market Transformation Strategies
  (Technology Acceptance) - Tom Kimbis,
  202-586-7055
• Buildings Programs Contact Information
• Commercial Building Tax Credits John Ryan
  202-586-8823
• Residential Tax Credits - Ed Pollock 202-586-5778
• Energy Star - Marsha Quinn 202-586-2097
• Energy Smart Schools - Marsha Quinn 202-586-2097
• Building Codes Development - Jean Boulin
  202-586-9870
• National Action Plan for Energy Efficiency -
  David Rodgers, 202-586-5523

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• Biomass Program Contact Information
• Sungrants/Biomass Regional Feedstock Partnerships
  - John Ferrell, 202-586-6745
• Biofuel Reverse Auction Solicitation - Jim Spaeth
  DOE Golden Field Office, 303-275-4771
• Fermentation Organisms RDD - Valerie Reed,
  202-586-8014
• Joint DOE / USDA Solicitation - Doug Kaempf,
  202-586-5264
• Geothermal Program Contact Information
• Geothermal Production Tax Credit - Roy Mink,
  202-586-5463
• Geopowering the West - Roy Mink, 202-586-5463
• Wind Program Contact Information
• Wind Production Tax Credit - Internal Revenue
  Service
• Wind Powering America - Phil Dougherty
  202-586-7950

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• FreedomCar and Vehicle Technologies Program
  Contact Information
• Hybrid Vehicle Incentives - Ed Wall 202-586-0410
• Clean Diesel Incentives - Ed Wall 202-586-0410
• Clean Cities - Dennis A Smith 202-586-1791
• e85 Infrastructure Development Planning - Ed Wall
  202-586-0410
• Weatherization Assistance Program Contact
  Information
• Formula Grants - Jean Diggs, 202-586-8506
• State Energy Plans - Mark Bailey, 202-586-9424
• Hydrogen, Fuel Cells Infrastructure Program
  Contact Information
• Fuel Cell Vehicles - JoAnn Milliken 202-586-2480
• Education and Outreach Partnerships - Christy
  Cooper 202-586-1885
• Codes and Standards Development - JoAnn Milliken
  202-586-2480
• Local zoning reform - JoAnn Milliken 202-586-2480

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• Industry Program Contact Information
• Save Energy Now - Paul Scheihing, 202-586-7234
• Manufacturing Extension Partnerships with
  National Institute of Standard and Technology -
  Paul Scheihing, 202-586-7234
• Industrial Assessment Centers (IAC) - Paul
  Scheihing, 202-586-7234
• State Program Incentives Information
• DSIRE Database Resource (www.DSIREUSA.org)
• Renewable Electric Plant Information System
  (REPiS) database (http//www.nrel.gov/analysis/rep
  is/)