n-15-14.pdf

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Round 2 of Section 48A Phase III Program under the Qualifying Advanced Coal Project
Program

Notice 2015-14

SECTION 1. PURPOSE
This notice updates and amplifies the procedures for the allocation of credits
under the qualifying advanced coal project program of § 48A of the Internal Revenue
Code by announcing the immediate beginning of the 2015 reallocation round
(“Round 2”) of the § 48A Phase III program. Except as specifically provided in this
notice, this allocation round will be conducted in the same manner and under the same
procedures as provided under Notice 2012-51, 2012-2 C.B. 150, which established the
§ 48A Phase III program. To be considered in Round 2 of the § 48A Phase III program,
applications must be submitted to the Department of Energy (“DOE”) (“application for
DOE certification”) and to the Internal Revenue Service (“Service”) (“application for
§ 48A certification”) on or before April 1, 2015. See Section 3 of this notice for
additional rules regarding these applications.
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
coal project credit under § 48A.

.02 Section 48A(d)(1) provides that the Secretary, in consultation with the
Secretary of Energy, shall establish a qualifying advanced coal project program for the
deployment of advanced coal-based generation technologies. The Treasury
Department and the Service established the § 48A Phase I program in Notice 2006-24,
2006-1 C.B. 595, as modified and updated by Notice 2007-52, 2007-1 C.B. 1456.
.03 Pursuant to § 48A(d)(3)(B)(i) and (ii), the § 48A Phase I program provided
for (i) $800 million of credits to be allocated to integrated gasification combined cycle
projects and (ii) $500 million of credits to other advanced coal projects. The Service
allocated credits through annual allocation rounds in 2006, 2007-08, and 2008-09, and
a special allocation round in 2008.
.04 Pursuant to § 48A(d)(3)(B)(iii), the Treasury Department and the Service
established the § 48A Phase II program by issuing Notice 2009-24, 2009-1 C.B. 817, to
allocate an additional $1.25 billion of credits for advanced coal-based generation
technology projects. The Service allocated credits through two allocation rounds in
2009-10 and 2011-12.
.05 Pursuant to § 48A(d)(4), the Treasury Department and the Service issued
Notice 2012-51, 2012-2 C.B. 150, to establish the § 48A Phase III program to reallocate
$658.5 million of Phase I credits. In Announcement 2013-43, 2013-2 C.B. 524, the
Service announced that the total amount of $658.5 million of credits had been allocated,
and accordingly, the 2012-13 allocation round would be the only allocation round in
Phase III.

.06 The Service has since determined that $1,104,000,000 of § 48A credits are
available for reallocation due to forfeitures of previously allocated Phase I and Phase II
credits and unallocated Phase II credits. Accordingly, the Treasury Department and the
Service have determined that an additional allocation round is appropriate, and this
notice therefore begins Round 2 of the § 48A Phase III program.
SECTION 3. SECTION 48A PHASE III PROGRAM
.01 Except as otherwise specifically provided in this notice, Round 2 of the
§ 48A Phase III program will be conducted in the same manner and under the same
procedures as provided under Notice 2012-51. This notice restates or references
certain provisions in Notice 2012-51 as a convenience to taxpayers. The restatement or
referencing of these provisions does not diminish the effect of provisions that are not
restated or referenced.
.02 For Round 2 of the § 48A Phase III program, § 48A Phase III credits in the
amount of $1,104,000,000 are available for reallocation. The credits will not be
separated into pools based on the type of projects or the type of primary feedstock.
.03 The § 48A Phase III credit for a taxable year is an amount equal to 30
percent of the qualified investment (as defined in § 48A(b)) for that taxable year in a
qualifying advanced coal project (as defined in § 48A(c)(1) and § 48A(e)). This rule
applies to both facilities that use an integrated gasification combined cycle (as defined
in § 48A(c)(7)) and facilities that use other advanced coal-based generation
technologies (as defined in § 48A(f)).

.04 For Round 2 of the § 48A Phase III program, the application period for § 48A
certification begins on February 18, 2015, and ends on April 1, 2015. See section 3.07
for the date by which the application for DOE certification must be submitted to DOE.
For purposes of determining the timeliness of submission of an application for § 48A
certification by the Service, the rules of § 7502 shall apply.
.05 The Service will consider a project under Round 2 of the § 48A Phase III
program only if the application for § 48A certification for the project is submitted during
the application period and DOE provides the DOE certification and ranking (if any) for
the project on or before April 22, 2015.
.06 If an application for DOE certification does not include all of the information
required by section 5.02 of Notice 2012-51, DOE may decline to accept the application.
If an application for § 48A certification does not include all of the information listed in
section 5.03 of Notice 2012-51, the application will not be accepted by the Service.
.07 For Round 2 of the § 48A Phase III program, DOE will consider an
application for DOE certification only if the application is postmarked on or before April
1, 2015. See section 5.02 of Notice 2012-51 and Appendix B to this notice for the
information to be submitted to DOE in an application for DOE certification. Appendix B
to this notice also provides the instructions and address for filing the application for DOE
certification. DOE will determine the technical and economic feasibility of the project
and, if the project is determined to be feasible, will provide a DOE certification for the
project to the Service. If DOE certifies two or more projects, DOE also will rank each of

the projects it certifies (for example, first, second, third, etc.) relative to other certified
projects and credits will be allocated to projects based on DOE ranking. DOE will
provide DOE certification for projects determined to be feasible and DOE ranking (if
any) to the Service by April 22, 2015.
.08 By April 30, 2015, the Service will accept or reject the taxpayer’s application
for § 48A certification and will notify the taxpayer, by letter, of its decision.
.09 If the taxpayer’s application for § 48A certification is accepted, the
acceptance letter will state the amount of the credit allocated to the project. 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. By May 29, 2015, the taxpayer must
execute and return the agreement to the Service at the appropriate address listed in
section 5.04 of Notice 2012-51. The Service will execute and return the agreement to
the taxpayer by June 30, 2015. The executed agreement applies only to the accepted
taxpayer.
SECTION 4. EFFECT ON OTHER DOCUMENTS
Notice 2012-51, 2012-2 C.B. 150, is updated and amplified.

SECTION 5. EFFECTIVE DATE
This notice is effective on February 18, 2015.
SECTION 6. PAPERWORK REDUCTION ACT
The collection of information contained in this notice has been reviewed and
approved by the Office of Management and Budget in accordance with the Paperwork

Reduction Act (44 U.S.C. § 3507) under control number 1545-2003.
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 section 3 and Appendix B. This
information is required to obtain an allocation of qualifying advanced coal project
credits. This information will be used by the Service to verify that the taxpayer is eligible
for an allocation of the qualifying advanced coal project credits. The collection of
information is required to obtain a benefit. The likely respondents are business or other
for-profit institutions.
The estimated total annual reporting burden is 550 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 5.
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 tax return information are confidential, as required by
26 U.S.C. § 6103.
SECTION 7. DRAFTING INFORMATION
The principal author of this notice is Jennifer C. Bernardini of the Office of

Associate Chief Counsel (Passthroughs & Special Industries). For further information
regarding this notice contact Ms. Bernardini on (202) 317-6853 (not a toll-free call).

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 April 1, 2015, Taxpayer submitted to the Internal Revenue
Service (“Service”), an application for certification under Round 2 of the § 48A Phase III
program described in Notice 2015-14 (“Application for § 48A Certification”).
2. Taxpayer’s Application for § 48A Certification in Round 2 is for the project
described below (the “Project”):
(a) The Project will use an advanced coal-based generation technology (as
defined in § 48A(c)(2) and (f)).
(b) The Project will be located at [insert address or other identifying designation].
(c) The Project site in subsection (b) above may be changed only if the change
is consistent with the objectives of the qualifying advanced coal project program, is
requested by the taxpayer that received the credit allocation, and involves moving the
Project site to improve the potential to capture and sequester CO
2
emissions, reduce
costs of transporting feedstock, and serve a broader customer base. The Service will
not agree to a project site change if the dollar amount of tax credits allocated to the
taxpayer under § 48A would increase as a result of the site change or if the Project
would not have been originally certified had such modification been included in the

taxpayer’s application.
(d) The Project is [insert either: “a new electric generation unit (as defined in
§ 48A(c)(6))”; “a retrofit of an existing electric generation unit (as defined in
§ 48A(c)(6))”; or “a repower of an existing electric generation unit (as defined in
§ 48A(c)(6)).”]
(e) The Project will have a total nameplate generating capacity (as defined in
section 3.02 of Notice 2012-51) of at least [insert number] megawatts.
(f) At all times at least 75 percent of the cumulative total fuel input (as defined in
section 3.03(1) of Notice 2012-51) used during normal plant operations (as defined in
section 3.03(2) of Notice 2012-51) for the Project will be coal (as defined in section 3.01
of Notice 2012-51).
3. On [insert date of acceptance letter issued under Notice 2015-14], the Service
accepted Taxpayer’s Application for § 48A Certification for the Project and allocated
qualifying advanced coal project credit under § 48A in the amount of $[insert number] to
the Project.
4. Taxpayer understands that if Taxpayer fails to satisfy any of the certification
requirements in § 48A(e)(2) within the time specified in § 48A(d)(2)(D) (2 years from the
date specified in WHEREAS clause #3), or if the Service does not issue a certification
for the Project under Notice 2015-14, the § 48A Phase III credit in the amount specified
in WHEREAS clause #3 allocated to the Project in Round 2 is fully forfeited.
5. Taxpayer understands that if the Project fails to attain or maintain the

separation and sequestration of CO
2
emissions required by § 48A(e)(1)(G), the § 48A
Phase III credit in the amount specified in WHEREAS clause #3 allocated to the Project
in Round 2 will be recaptured pursuant to § 50.
6. Taxpayer understands that if the Project is not placed in service by Taxpayer
within 5 years of the date of issuance of the certification as determined under section
6.03 of Notice 2012-51, the § 48A Phase III credit in the amount specified in WHEREAS
clause #3 allocated to the Project in Round 2 is fully forfeited. Taxpayer must provide
evidence to the Service that the Project has been timely placed in service.
7. Taxpayer understands that if the plans for the Project change in any
significant respect from the plans set forth in the application for DOE certification
(as defined in section 5.02 of Notice 2012-51) and the Application for § 48A Certification
(as defined in section 5.03 of Notice 2012-51) and, under section 7.01 of
Notice 2012-51, the acceptance of Taxpayer’s Application for § 48A Certification on the
date specified in WHEREAS clause #3 is void, the § 48A Phase III credit in the amount
specified in WHEREAS clause #3 allocated to the Project in Round 2 is fully forfeited.
8. Taxpayer understands that if the Project fails to satisfy any of the requirements
in § 48A(e)(1)(A), (C), (D), (E), and (F) for a qualifying advanced coal project or, during
normal plant operations (as defined in section 3.03(2) of Notice 2012-51), fails to satisfy
the requirement in § 48A(e)(1)(B) for a qualifying advanced coal project--
(a) at the time the Project is placed in service, § 48A Phase III credit in the
amount specified in WHEREAS clause #3 allocated to the Project in Round 2 is fully

forfeited; and
(b) after the Project is placed in service (and after satisfying all such
requirements at the time the Project is placed in service), the Project ceases to be
investment credit property and the recapture rules of § 50(a) apply.
9. Taxpayer understands that if at any time more than 25 percent of the
cumulative total fuel input (as defined in section 3.03(1) of Notice 2012-51) used during
normal plant operations (as defined in section 3.03(2) of Notice 2012-51) is not coal (as
defined in section 3.01 of Notice 2012-51), the Project ceases to be investment credit
property and the recapture rules of § 50(a) apply.
10. Taxpayer cannot claim the qualifying gasification project credit under § 48B
for any qualified investment for which the qualifying advanced coal project credit is
allowed under §48A.
11. Taxpayer understands that if Taxpayer elects to claim the qualifying
advanced coal project credit on the qualified progress expenditures paid or incurred by
Taxpayer during the taxable year(s) during which the Project is under construction and
the Project ceases to be a qualifying advanced coal 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.
12. This Agreement applies only to Taxpayer. Taxpayer must notify the Service
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 § 48A 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 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 § 48A Phase III credit in the amount specified in WHEREAS clause #3
allocated to the Project in Round 2 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.
NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL INCOME TAX
PURPOSES THAT:
1. The total amount of the § 48A Phase III credit that Taxpayer will claim for the
Project under this Agreement on account of the acceptance of Taxpayer’s Application
for § 48A Certification in Round 2 cannot exceed the amount specified in WHEREAS
clause #3.
2. This Agreement does not express whether the Taxpayer has met the
certification requirements under § 48A(e)(2) or other future requirements to receive tax
credits under § 48A.
3. This Agreement is limited and applies only to Taxpayer. A successor in
interest that plans to claim the § 48A credit allocated to the Project must request

permission to execute a new agreement with the Service.
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 (including any stated exception for § 7122)
notwithstanding any law or rule of law; and
3. If it relates to a tax period ending after the date of this Agreement, it is subject
to any law enacted after such date, which applies to the tax period.

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

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: ____________
Kathy J. Robbins

Title: Industry Director, Natural Resources & Construction

APPENDIX B

APPLICATION FOR DOE CERTIFICATION

REQUEST FOR SUPPLEMENTAL APPLICATION INFORMATION FOR DOE

The Internal Revenue Service (“Service”) 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 technically and
economically feasible and use the appropriate clean coal technology.

This request for submission of supplemental application information:

● Describes the information to be provided by the applicant seeking a
certification of feasibility from DOE, and
● Lists the evaluation criteria and Program Policy Factors to be used by
DOE in the evaluation of applications.

If after review by DOE a project is determined to be feasible, DOE will provide a
DOE certification of feasibility to the Service. The Service will then accept or reject the
taxpayer’s application for certification of tax credit.

In conducting this evaluation 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 Service 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.

A. General

This request, together with the information in relevant sections of Notice 2012-51
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 regarding the requirements described herein.

Applicants should fully address the requirements of Notice 2012-51 and this
request and not rely on the presumed background knowledge of reviewers. DOE may
reject an application that does not follow the instructions regarding the organization and
content of the application when the nature of the deviation and/or omission precludes
meaningful review of the application.

B. Unnecessarily Elaborate Applications

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

C. Application Submission for DOE Certification

The application submission to DOE must include the information and
documentation required by relevant sections of Notice 2012-51.

An application to DOE will not be considered in Round 2 of the § 48A Phase III
program unless it is postmarked by April 1, 2015. One electronic version on a USB
flash drive or a CD of the application must be submitted to:

Gina Mick
National Energy Technology Laboratory
3610 Collins Ferry Road
Morgantown, WV 26507

Note that under section 5.03(4) of Notice 2012-51, one electronic version of the
application for DOE certification must be sent to the Service as part of the application
for § 48A certification. The application for § 48A certification will not be considered in
Round 2 under this notice unless it is submitted to the Service before April 1, 2015.

THE INFORMATION 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 applications:
● Microsoft Word
tm
2010 or later edition
● Microsoft Excel
tm
2010 or later edition
● Adobe Acrobat
tm
PDF 7.0 or later edition

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

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

The Project Information Memorandum, excluding Appendices, shall not exceed
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. Project Information Memorandum

1. Summary and Introduction

a. Description of the Project
b. Financing and Ownership Structure
c. Description of the main parties to the project, including background,
ownership and related experience
d. Current Project Status and Schedule to Beginning of Construction

2. 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:
○ SO
2
(subbituminous coal is 80 percent or more of fuel input)........99
percent removal or emissions not more than 0.04 lbs/MMBTU
○ SO
2
(subbituminous coal is not more than 80 percent of fuel input)...
.......99 percent removal
○ SO
2
(for all projects other than subbituminous coal projects)..........99
percent removal
○ 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) including:
○ 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 2012-51), 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 2012-51) of at
least 400 MW.
○ The project includes equipment that separates and sequesters at least
70 percent of such project’s total carbon dioxide (“CO
2
”) emissions. The CO
2

separation, capture, sequestration, and emission values shall be reported on
metric tons per hour and metric tons per year basis under normal plant operating
conditions. The CO
2
separation and sequestration percentages shall be
calculated based on the total CO
2
that would otherwise be released into the
atmosphere as industrial emission of greenhouse gas (“CO
2
emissions”).

3. 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, engineering-procurement-construction (“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 similar projects.

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, front-end engineering design (“FEED”), and EPC-type
agreements.

4. Priority for Qualifying Advanced Coal Projects

The applicant must submit information sufficient for categorization and
prioritization of projects for certification, including documentation pertaining to the
following:

● High priority project factors:
○ Increased by-product utilization, if applicable.
○ Research partnership with an eligible educational institution as defined
in §48A(e)(3)(B)(iii), if applicable.

● Highest priority factor: Separation and sequestration percentage of total CO
2

emissions.

5. 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
signed by the site owner and stating the site owner’s intent 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 relating to coal supply, water supply, and product (e.g.
CO
2
) 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 oxygen supplier. Example 3: an IGCC plant planning to sell CO
2
for enhanced oil
recovery (“EOR”) should provide an agreement for such a transaction indicating the
annual CO
2
purchase quantity, expected project lifetime sales, CO
2
capacity of the site
for EOR, and EOR site ownership.

6. Utilization of Project Output

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 study.

Identify and describe any firm arrangements to sell non-power output, such as
CO
2
, 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.

7. 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.

8. Project Development and Financial Plan

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 (a) for 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 statements.

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 project.

For projects employing nonrecourse or limited recourse debt financing, provide a
complete discussion of the approach to, and status of, such financing. In an appendix:

(1) provide an Excel
tm
-based financial model of the project, with formulas, so that review
of the model calculations and assumptions may be facilitated; and (2) 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.

9. 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 6 above).

● 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, including
costs.

● 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
supply.

● Transmission Interconnection Agreement: explain the requirements to
connect to the system and the current status of negotiations in this respect.

● If CO
2
is to be sold to a third party for sequestration, provide a Sales
Agreement and provide specifics, such as CO
2
sales (metric tons per year),
expected project lifetime sales (metric tons), potential CO
2
capacity of the site for

sequestration (metric tons), technology and site suitability for sequestration, and
sequestration site ownership and operation.

10. 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.

11. 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.

12. 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 any 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 that may impact the
overall project schedule should be included.

Applicant should document their progress toward obtaining engineering design
information (i.e., 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, and process selection. Signed FEED and/or EPC-type
agreements, if available, should be provided.

13. Appendices

a. Copy of internal or external engineering reports.
b. 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.
c. 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.
d. Power Purchase or Energy Sales Agreement.
e. Energy Market Study.
f. Market Study for non-power output.
g. Financial Model of project.
h. 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.
i. Expressions of interest or commitment letters from funding sources.
j. For each project contract, if no contract currently exists, provide a summary of
the expected terms and conditions.
k. 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 objectives.

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 requirement.

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 amount of tax credit, DOE will apply additional factors to rank
eligible Advanced Coal Projects based on their ability to advance coal technology
beyond its current state.

If there are more certified applications than available amount of § 48A Phase III
credits in Round 2, DOE will rank the certified projects based on evaluation of the
following Program Policy Factors. In ranking certified projects, highest priority will be
given to the Primary Ranking Factor. Secondary and Tertiary Ranking Factors will be
taken into account to rank projects that are not clearly differentiated on the basis of the
Primary Ranking Factor, with higher priority given to Secondary Ranking Factors than to
Tertiary Ranking Factors.

Primary Ranking Factor:

• Capture and sequestration of more than 70 percent CO
2
emissions. Only
projects that capture and sequester 70 percent or more of the plant’s CO
2
emissions will be considered for DOE certification. Among the certified
projects, highest rankings will be given to projects with the greatest
separation and sequestration percentages of total CO
2
emissions.

Secondary Ranking Factors:

• Increased by-product utilization.
• Research partnership with an eligible educational institution as defined in
§48A(e)(3)(B)(iii).

Tertiary Ranking Factors:

• Presentation of other environmental, economic, or performance benefits
• Higher plant efficiency.
• Geographic distribution of potential markets.
• The ratio of total nameplate generating capacity (as defined in section 3.02 of
Notice 2012-51) to requested tax credit.
• Diversity of technology approaches and methods.

G. Supplemental Technical and Financial Guidance for Project Information
Memorandum

Technology and Technical Information

It is important that the applicant select a specific advanced coal system for the
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 that are
project, site and coal specific.

Project Economics

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 here.

Project Development 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.

Project Contract Structure

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.

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