Request for Information Regarding the Manufacturing Capital Connector, 9132-9135 [2024-02711]

Agencies

• DEPARTMENT OF ENERGY

[Federal Register Volume 89, Number 28 (Friday, February 9, 2024)]
[Notices]
[Pages 9132-9135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02711]


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DEPARTMENT OF ENERGY


Request for Information Regarding the Manufacturing Capital 
Connector

AGENCY: Office of Manufacturing and Energy Supply Chains, Department of 
Energy.

ACTION: Request for information (RFI).

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SUMMARY: The Department of Energy (DOE or the Department)'s Office of 
Manufacturing and Energy Supply Chains is issuing this RFI to notify 
parties of its potential interest in initiating a Manufacturing Capital 
Connector (MCC) to support applicants seeking clean energy 
manufacturing funding opportunities and/or tax credits. The Department 
also seeks input from all stakeholders through this RFI to help gauge 
the interest in and to inform the overall design of the MCC.

DATES: Written comments and information are requested by March 4, 2024.

ADDRESSES: Interested parties may submit comments electronically to 
[email protected] in accordance with the Response 
Guidelines in section VI of this document.

FOR FURTHER INFORMATION CONTACT: Questions may be addressed to Rachel 
Gould, [email protected] or (202) 586-6116.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Department of Energy (DOE)'s Office of Manufacturing and Energy 
Supply Chains (MESC) is considering establishing a Manufacturing 
Capital Connector (MCC). The goal of the MCC is to facilitate the 
commitment of private sector capital necessary to bring important clean 
energy manufacturing projects to commercial operation. Specifically, 
the MCC will:
    (1) Educate capital providers about DOE's supply chain priority 
areas and DOE-administered clean energy manufacturing opportunities, 
such as the Qualifying Advanced Energy Project Credit (48C);
    (2) Develop a list of capital providers interested in financing 
clean energy manufacturing projects and the Best Practices they offer 
(Best Practices are defined as a private capital provider's proposed 
minimum level of consistent terms across applications regarding 
response time, pricing, minimum amount of capital, diligence requests 
(i.e., all topics covered under Question 14 in the For Potential 
Capital Providers questions)) and share the list of interested capital 
providers and their Best Practices on a publicly accessible DOE 
website; and
    (3) If an applicant decides to do so, the applicant may directly 
share their application information with those capital providers that 
offer Best Practices they find appealing. DOE is prohibited from 
providing capital providers with any information about the applicant 
nor confirmation of whether an organization has applied. Thus, 
information exchange would be independent of DOE and voluntary.
    The notional MCC could be particularly beneficial to applicants for 
programs like 48C. The 48C program is an investment tax credit (ITC), 
and as such the IRS will make final allocation decisions, with 
companies receiving the tax credit only after the project is placed in 
service and the credit is earned. Therefore, unlike many DOE-
administered grant and loan programs,

[[Page 9133]]

the applicant must commit all capital upfront for development and 
construction, with costs offset by the tax credit only after the fact. 
Given the scale of the 48C program, the Department's broader 
manufacturing investments, and focus on historical energy communities 
and disadvantaged communities, the Department of Energy seeks to find 
ways to facilitate, expedite and streamline the initial non-federal 
funding required. In summary, the intent of this RFI is to explore a 
potential pathway to connect private capital to clean energy 
manufacturing projects as outlined in the three goals above and 
increase the likelihood that these projects reach completion and reap 
the financial benefits, including tax credits or grant funding.

II. A Case Study--48C

A. Background

    The 48C program was established by the American Recovery and 
Reinvestment Act of 2009 \1\ and expanded with a $10 billion investment 
under the Inflation Reduction Act of 2022.2 3 The Department 
of the Treasury and the IRS, in partnership with DOE, have announced 
that approximately $4 billion will be allocated in Round 1, full 
applications for which were due on December 26, 2023, with the 
remaining to be announced in at least one more round of applications. 
The expanded program provides an ITC for up to 30% of the qualified 
investment for certified projects that meet prevailing wage and 
apprenticeship requirements. At least forty percent of tax credit 
allocations must go toward projects in energy communities \4\ and, as 
one of its program policy factors, MESC seeks to support manufacturers 
of all sizes including small- and medium-sized manufacturers. Although 
using an MCC participating capital provider would not provide an 
applicant any preference or advantage over a non-MCC participating 
capital source, the creation of the MCC facilitates companies in 
obtaining the 48C tax credit, which may be particularly helpful as 
those in energy communities and/or small- and medium-sized 
manufacturers have, historically, had less access to broader financing 
sources.
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    \1\ American Recovery and Reinvestment Act of 2009, Public Law 
111-5 (February 17, 2009), https://www.congress.gov/bill/111th-congress/house-bill/1/text.
    \2\ Inflation Reduction Act of 2022, Public Law 117-169 (August 
16, 2022), https://www.congress.gov/bill/117th-congress/house-bill/5376/text.
    \3\ https://www.energy.gov/infrastructure/qualifying-advanced-energy-project-credit-48c-program.
    \4\ Project located in a census tract that satisfies the 
relevant requirements of an energy community and has not received 
funding in a prior round of 48C: https://arcgis.netl.doe.gov/portal/apps/experiencebuilder/experience/?id=a44704679a4f44a5aac122324eb00914&page=home.
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    The 48C program targets three topic areas:
    (1) Clean energy manufacturing and recycling, including renewable 
energy; electric grid modernization; carbon capture, utilization, or 
storage; chemical/fuel refining, blending or electrolyzing equipment; 
energy efficiency; and electric or fuel cell vehicles and associated 
recharging/refueling infrastructure;
    (2) Industrial Greenhouse Gas (GHG) Emissions Reductions (e.g., GHG 
reductions of an existing facility such as steel, cement, chemicals 
etc.); and,
    (3) Critical material refining, processing, and recycling.
    The 48C program competitively selects the most qualified projects 
from the applicant pool for receipt of the tax credit allocation based 
on commercial viability, greenhouse gas emissions impacts, workforce 
and community engagement, and ability to strengthen U.S. supply chains 
and domestic manufacturing for a net-zero economy.

B. 48C Concept Papers

    In August 2023, DOE received concept papers, i.e., high-level 
application information, from applicants seeking the Round 1 tax credit 
allocation. DOE provided encourage or discourage letters to applicants 
who submitted concept papers on November 3, 2023. The submission 
deadline for full applications was December 26, 2023.
    In Round 1, concept papers requesting $42 billion in tax credit 
allocations were received, of which nearly $11 billion were for 
projects proposed in 48C energy communities. Together, Round 1 concept 
papers represented over $142 billion of total investment in potential 
projects.

III. Manufacturing Capital Connector--General Characteristics

    The proposed MCC, as presently conceived, would encourage capital 
providers to leverage the time-intensive, competitive, and thorough 
application processes for Federal programs by providing applicants the 
option to share their application information with participating 
private sector financing counterparties. Applicants could choose to 
share their application materials with potential private sector capital 
providers without DOE serving as an intermediary. DOE cannot directly 
provide capital providers any information about whether an organization 
is or is not a 48C program applicant. Applicants would be able to share 
their materials with the capital providers that offer Best Practices 
preferred by the applicant that enhance their project's potential for 
success. Applicants could also choose to share their application 
materials with capital providers not participating in the MCC. Private 
capital providers would be able to select the clean energy projects 
they would like to finance at their discretion and following any 
additional due diligence steps required by the private capital 
provider, without DOE involvement.
    DOE seeks feedback on the proposal for the structure of the MCC as 
well as expressions of interest from private sector capital providers 
potentially interested in joining the MCC. If the proposed MCC moves 
forward, DOE aims to compile a list of capital providers in March 2024 
and outline Best Practices during the second quarter of 2024.

IV. Potential Benefits

    For the company applicants participating in MCC, the MCC would 
strive to (1) improve the timing and magnitude of available capital, 
(2) reduce the redundancy of work due to the overlap of document 
requirements between their application and private sector commercial 
due diligence processes (e.g., financial model, market report), (3) 
lower the cost of capital, and (4) enable potentially less financially 
sophisticated and smaller manufacturers better and more affordable 
access to larger pools of capital with lower transaction costs. Note 
that federal program applicants that choose to use an MCC participating 
capital provider would not receive any preference in the application 
process for doing so over other sources of financing.
    For the private sector financing partners, the MCC would (1) 
facilitate access to an origination stream of mature-technology clean 
energy projects with a combined enterprise value in the tens of 
billions, (2) enable a faster due diligence process because of the 
extensive relevant documentation already generated for an application 
to Federal programs, and (3) help federal program applicants with de-
risked projects that have received or are being evaluated to receive a 
Federal financial benefit and that align with priority investment areas 
to connect with potential private sector financing partners.
    In making recommendations to the IRS about which 48C projects 
should receive allocations and in making selections for clean energy

[[Page 9134]]

manufacturing awards under DOE grants, DOE aims to select the most 
impactful projects that align with DOE priority areas, considering 
commercial viability and a full ecosystem that promotes their success. 
To further this aim, the MCC as described previously could increase the 
number of selected projects that obtain the financing needed to reach 
completion and secure the ITC as well as potentially provide a lower 
cost of capital and ease the financing process for some organizations.

V. Questions for Request for Information

    To help inform the interest in and design of the MCC for clean 
energy manufacturing programs, DOE is seeking public input on the 
potential structure, benefits, and risks of the proposed MCC from 
potential capital providers and clean energy manufacturing program 
applicants or selectees. DOE specifically welcomes comment on the 
following questions:

For Applicants or Selectees

    1. What impediments do you see in DOE providing applicants and the 
public with information about private sector capital providers 
interested in financing clean energy projects?
    2. Would you be more likely to apply for a grant, tax credit 
allocation, or other Federal funding, if you knew that a list of 
private sector financial institutions interested in financing clean 
energy manufacturing projects would be available on a publicly 
accessible DOE website?
    3. What information would be most helpful to have from interested 
private sector capital providers?
    4. Does the establishment of the MCC potentially increase the speed 
at which you can develop your project?
    5. Do you anticipate your organization would review the list of 
interested private sector capital providers and/or would your company 
be likely to share your application materials? Are there any materials 
typical to a Federal application that an applicant would not be willing 
to share with private sector capital providers?
    6. Do you foresee risks to the involved stakeholders in leveraging 
already provided application materials with applicants directly sharing 
information with private sector financing? What are those risks and how 
could they be mitigated in the creation and operation of the MCC?
    7. What Best Practices should private sector capital providers 
offer in order to participate in the MCC?
    8. What types of capital and support from private sector financial 
institutions does your project need to proceed forward to commercial 
operations? For example, if your project is seeking the 48C tax credit 
allocation, would your company need support in monetizing the tax 
credits?

For Potential Capital Providers

    9. Would your institution have interest in participating in the MCC 
as described in (or similar to) this RFI and have information about 
your interest available on a publicly accessible DOE website?
    10. What is the most effective way DOE could catalyze private 
sector investment into clean energy projects? Are there alternatives to 
the MCC that DOE can provide to achieve the same goals? Are there other 
tenets to the MCC that DOE should try to include?
    11. What is the most effective way DOE could educate private 
capital providers on Federal clean energy programs in order to 
facilitate private sector investment?
    12. Financial institutions interested in financing clean energy 
projects such as those that apply to 48C need to evaluate projects in a 
timely manner and commit to deploy capital. What are some Best 
Practices your institution would be willing to offer in evaluating 
clean energy manufacturing projects? For instance, would private sector 
capital providers commit to finance a certain amount ($) or number of 
projects, respond with a term sheet in a certain number of days, and/or 
commit to a percentage of viewed opportunities, within a range of 
parameters (e.g., interest rate, tenor)?
    13. Application overview and information sharing (for reference, 
DOE funding opportunity announcements often require a detailed 
application narrative, workforce and community benefits plan, data 
sheet, and appendices that include a financial model, financial 
statements, and offtake/sales agreements):
    a. What information and documentation are most pertinent for a 
financing institution's decision? Is there further information that 
your institution may need to make an investment decision?
    b. What are industry best practices for protecting applicants' 
privacy? How can private sector financial institutions seeking to 
participate in the MCC demonstrate that they have appropriate 
safeguards in place to prevent the release of confidential business?
    14. Questions regarding Capital Provider's Best Practices:
    a. Based on the three topic areas noted in the 48C Case Study, is 
your institution interested in all/most of the three topic areas? If 
not, please specify topics areas that are not of interest.
    b. What part of the capital structure would your institution be 
interested in participating in (e.g., senior secured, mezzanine, 
preferred equity, common equity, tax equity (original investment or 
subsequent transferability), other)? Please outline all structures of 
interest.
    c. What is your typical minimum and maximum investment amount, 
advance rate, and tenor on an investment in these topic areas?
    d. Is there a minimum or maximum number of projects your 
institution would be interested in financing?
    e. How much capital would your financial institution be potentially 
willing to make available to projects via the MCC?
    f. Does your institution require a type of revenue/offtake 
contract? If so, what kind, what tenor, and for what percentage of the 
output? Please provide as much detail as possible.
    g. What balance sheet metrics (e.g., liquidity, debt-to-equity) 
does your institution look for in the project and in the Sponsor of a 
project?
    h. What terms (e.g., interest rate, DSCR, tenor, maturity) would 
your institution potentially be willing to provide as one of the 
private sector capital providers?
    15. What would enable a capital provider to view eligible clean 
energy manufacturing projects, such as 48C projects, as a portfolio 
versus one-off projects? Would viewing as a portfolio lower the cost of 
capital from your institution?
    16. What would be the potential sources of your capital? Would your 
financial institution be using existing funds, or would they raise 
outside capital?
    17. Do you foresee risks to the involved stakeholders in using the 
MCC to find potential manufacturing projects to finance?

VI. Response Guidelines

    Commenters are welcome to comment on any question regardless of 
status as a potential applicant or private capital provider. Commenters 
do not need to identify whether they are a previous, current, or 
potential applicant or private capital provider. RFI responses shall 
include:
    1. RFI title;
    2. Name(s), phone number(s), and email address(es) for the 
principal point(s) of contact;
    3. Institution or organization affiliation and postal address; and

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    4. Clear indication of the specific question(s) to which you are 
responding.
    Responses to this RFI must be submitted electronically to 
[email protected]. with the subject line ``Manufacturing 
Capital Connector'' no later than 5:00 p.m. (ET) on March 4, 2024. 
Responses must be provided as attachments to an email. It is 
recommended that attachments with file sizes exceeding 25 MB be 
compressed (i.e., zipped) to ensure message delivery. Responses must be 
provided as a Microsoft Word (*.docx) or Adobe Acrobat (*.pdf) 
attachment to the email, and no more than 10 pages in length, 12-point 
font, 1-inch margins. Only electronic responses will be accepted.
    Responses including confidential business information will be 
handled per guidance in section VII of this document.
    A response to this RFI will not be viewed as a binding commitment 
to develop or pursue the project or ideas discussed. MESC may engage in 
pre- and post-response conversations with interested parties.

VII. Confidential Business Information

    Because information received in response to this RFI may be used to 
structure future programs and/or otherwise be made available to the 
public, respondents are strongly advised NOT to include any information 
in their responses that might be considered business sensitive, 
proprietary, or otherwise confidential.
    Pursuant to 10 CFR 1004.11, any person submitting information that 
he or she believes to be confidential and exempt by law from public 
disclosure should submit via email two well-marked copies: One copy of 
the document marked ``confidential'' including all the information 
believed to be confidential, and one copy of the document marked ``non-
confidential'' with the information believed to be confidential 
deleted. Failure to comply with these marking requirements may result 
in the disclosure of the unmarked information under the Freedom of 
Information Act or otherwise. The U.S. Government is not liable for the 
disclosure or use of unmarked information and may use or disclose such 
information for any purpose.
    If your response contains confidential, proprietary, or privileged 
information, you must include a cover sheet marked as follows 
identifying the specific pages containing confidential, proprietary, or 
privileged information:

Notice of Restriction on Disclosure and Use of Data:
    Pages [list applicable pages] of this response may contain 
confidential, proprietary, or privileged information that is exempt 
from public disclosure. Such information shall be used or disclosed 
only for the purposes described in this RFI. The Government may use or 
disclose any information that is not appropriately marked or otherwise 
restricted, regardless of source.

    In addition, (1) the header and footer of every page that contains 
confidential, proprietary, or privileged information must be marked as 
follows: ``Contains Confidential, Proprietary, or Privileged 
Information Exempt from Public Disclosure'' and (2) every line and 
paragraph containing proprietary, privileged, or trade secret 
information must be clearly marked with [[double brackets]] or 
highlighting.

Signing Authority

    This document of the Department of Energy was signed on February 6, 
2024, by Giulia Siccardo, Director, Office of Manufacturing and Energy 
Supply Chains, pursuant to delegated authority from the Secretary of 
Energy. That document with the original signature and date is 
maintained by DOE. For administrative purposes only, and in compliance 
with requirements of the Office of the Federal Register, the 
undersigned DOE Federal Register Liaison Officer has been authorized to 
sign and submit the document in electronic format for publication, as 
an official document of the Department of Energy. This administrative 
process in no way alters the legal effect of this document upon 
publication in the Federal Register.

    Signed in Washington, DC, on February 6, 2024.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2024-02711 Filed 2-8-24; 8:45 am]
BILLING CODE 6450-01-P