Energy Innovation Program. Oil and Gas Clean Tech Program

Transcription

1 Department of Natural Resources Office of Energy R&D Energy Innovation Program Oil and Gas Clean Tech Program Request for Project Proposals Applicants Guide August 10, 2016 Ce document est aussi disponible en français. Veuillez envoyer un courriel à NRCan.EnergyInnovation- en indiquant à la ligne Objet «Guide de démonstration» (sans les guillemets). Natural Resources Canada Ressources naturelles Canada

2 Table of Contents Table of Contents... ii 1 Request for Project Proposals Process Request for Applicants Package Submitting a Project Proposal Proposal Review, Selection, and Notification Due Diligence Assessment Contribution Agreement Negotiation Program Inquiries Program Objectives Expected Outcomes Description of the Program Definitions Timeframe for Funding Eligible Proponents Canadian Environmental Assessment Act Funding Maximum and Minimum Amount Payable per Project Demonstrations Front End Engineering and Design (FEED) Studies Basis and Timing of Payment Stacking of Assistance Eligible Expenditures and Non-permissible Costs Reporting Requirements Repayable Contributions Other Terms and Conditions Confidentiality and Security of Information Application Schedule and Process Application Schedule Submitting a Project Proposal Supporting Documents and Requests for Supplementary Information Selection Criteria Selection Criteria Project Proposals Mandatory Criteria Evaluation Criteria Other Criteria Scope for Project Proposals...16 Appendix 1: Proposal Template...17 Appendix 2: Costing Memorandum Eligible Expenditures Ineligible Costs Non-permissible Costs In-kind Support...20 Appendix 3: Expected Program Outcomes Guide to Outputs and Outcomes...24 Appendix 4: Technology Readiness Levels...26 Technology Readiness Level Descriptions:...26 ii

3 1 Request for Project Proposals Process This Applicants Guide outlines the Request for Project Proposals (RPP) process for demonstration projects to be funded under the Energy Innovation Program (the Program) 1. It explains how the Department of Natural Resources (NRCan) will review, in a consistent, fair, and transparent manner, Project Proposals submitted in response to the RPP in order to identify, select, and approve an allocation of funding to those projects that best fit with the program s objectives. Applicants must complete an information form on the Program website at in order to receive the necessary documents, and to be on the electronic mailing list for program updates. Project proposal review and selection will be a five step process: (1) request for an Applicants Package, (2) submission of a project proposal, (3) proposal review, selection, and applicant notification, (4) subsequent review of successful projects through a due diligence process, and (5) entering into a contribution agreement acceptable to NRCan. NRCan will make the final decision as to which projects will receive funding, and the level of support that will be available to each project. An applicant may withdraw its proposal without penalty at any stage of the evaluation process, by notification in writing. NRCan reserves the right to alter or cancel the currently envisaged process and deadlines at its sole discretion. Funding for this program is subject to Treasury Board approval. Any changes will be communicated to applicants via Request for Applicants Package In order to receive a copy of the Applicants Package, applicants will be required to submit a one-page Project Summary including contact information, via the Program website. If you have received this information package through another mechanism, please also submit a Project Summary on the Program website in order to receive regular program updates. 1.2 Submitting a Project Proposal Applicants may submit a full Project Proposal using the template provided in the Applicants Package. Further details are provided in Section 5 of this document. 1.3 Proposal Review, Selection, and Notification Project Proposals will be evaluated and ranked according to the criteria outlined in Section 6 of this document. 1 The scope of the activities that will be funded is set out in Section 7. 3

4 Both successful and unsuccessful applicants will be notified, and unsuccessful applicants will be offered the opportunity to receive formal feedback on the review of their project proposal. 1.4 Due Diligence Assessment All successful applicants will undergo a due diligence assessment, which will include an evaluation of the project s finances, technical risk, and team risk. NRCan may request that the proponent provide additional information to support the due diligence evaluation. All proponents undergoing due diligence will be notified whether or not their project passes the due diligence assessment. Following due diligence assessment, applicants whose projects pass the due diligence assessment will be invited to begin negotiating a contribution agreement. 1.5 Contribution Agreement Negotiation Any funding under this entire submission, review and assessment process will be contingent upon the execution of a contribution agreement. Until a written contribution agreement is signed by both parties, no commitment or obligation exists on the part of NRCan to make a financial contribution to any project, including any expenditure incurred or paid prior to the signing of such contribution agreement. More information on NRCan contribution agreements will be made available to successful applicants. 1.6 Program Inquiries In order to ensure that all applicants have access to the same information and that there is a written response to every question, all questions and answers will be sent and received via the program , NRCan.EnergyInnovation-Innovationenergetique.RNCan@Canada.ca. Recurring questions or those that may be useful to other applicants will be posted on the program s website in a Frequently Asked Questions section. Confidential information and details revealing identity will first be removed. No meetings related to the Program will be held between any proposed applicant and program staff involved with the project selection process. 4

5 2 Program Objectives The Program s objective is to support energy technology innovation to produce and use energy in a more clean and efficient way. This Program is a key component of the Government of Canada s actions to achieve real emissions reductions, while maintaining Canada s economic advantage and its ability to create jobs for Canadians. The Program will also help in the search for long-term solutions to reducing and eliminating air pollutants from energy production and use. The Program will provide funding for clean energy research, development, and demonstration (RD&D) activities to support energy technology innovation to produce and use energy more cleanly and efficiently. The scope of the activities that will be funded under this component is set out in Section 7. The Program will be built on the principles of collaboration among players in the national innovation system. Collaboration among provincial/territorial and municipal governments, utilities and private companies will be encouraged. 2.1 Expected Outcomes Expected long term outcomes of the Program will include an improved suite of clean energy technologies, new knowledge to inform improved regulations; increased involvement and collaboration of the research community and key stakeholders; increased competitiveness of Canada s clean tech industry; increased awareness and understanding of technologies and processes associated with reducing air emissions; increased capability to develop new and improved energy systems and technologies that contribute to clean air objectives. New technologies will be expected to lead to significantly reduced emissions of particulates, gaseous pollutants, toxic substances and greenhouse gases from the production and use of energy. New knowledge will also support the development of regulations, codes and standards. A detailed description of the short, medium, and long-term outcomes for the Program is provided in Appendix 3: Expected Program Outcomes. 5

6 3 Description of the Program The Program has the following terms and conditions. These features will be incorporated in the contribution agreements entered into with selected applicants. 3.1 Definitions Contribution means funding provided by Canada under the contribution agreement toward Eligible Expenditures. Due Diligence Start Date means the date on which the proponent was notified that it succeeded to the Due Diligence stage; Eligible Expenditure Period means the period starting on the later of the date on which the proponent was notified that it passed a due diligence assessment, or April 1 of the fiscal year in which the contribution agreement is signed and ending on the earlier of Completion Date and March 31, 2018; Eligible Expenditures means those costs incurred within the Eligible Expenditure Period, either directly by the Proponent or through a third party, which are cash disbursements made with respect to the activities set out in the Proposal; Profit means in relation to the project, net operating profit as determined by Generally Accepted Accounting Principles (GAAP); "Project" means the Applicant s proposal, as submitted to NRCan; Total Project Costs means the Contribution and other verifiable contributions either received or contributed by the Proponent from the Due Diligence Start Date to the Completion Date and directly attributable to the Project. 3.2 Timeframe for Funding Projects will be eligible for Program funding from the time that an applicant is notified that their project has been selected to proceed to a contribution agreement until March 31, Applicants may also continue to contribute to their portion of the project costs until March 31, 2019, though no Program funding will be available after March 31, Further clarifications on Program funding will be provided to successful proponents during the contribution agreement negotiation process. In all cases, until a written contribution agreement is signed by both parties, no commitment or obligation exists on the part of NRCan to make a financial contribution to any project, including any expenditure incurred or paid prior to the signing of such contribution agreement. 6

7 3.3 Eligible Proponents Eligible proponents will be legal entities validly incorporated or registered in Canada, including electricity and gas utilities, companies, industry associations, research associations, aboriginal and community groups, Canadian academic institutions, and provincial, territorial, regional and municipal governments and their departments and agencies. 3.4 Canadian Environmental Assessment Act 2012 The Canadian Environmental Assessment Act, 2012 (CEAA) is the legal basis for the federal Environmental Assessment (EA) process for most projects in Canada, except for projects in the Mackenzie Valley, the Yukon and in Nunavut, where other processes and legislation may apply. The CEAA outlines the responsibilities, requirements and procedures for the environmental assessment of projects and establishes a process for assessing the potential environmental effects of projects in which the Government of Canada has a decision-making responsibility. Proponents should clearly indicate in their project proposal if a federal environmental assessment is required, as additional information may be requested by the Program. 3.5 Funding Financial support for projects is constrained by the total amount available for this component, the timeframe of the program, and project selection criteria. Collaboration and leveraging are strongly encouraged, and these will be included among the selection criteria. The Program will provide for Eligible Expenditures, set out in Section 3.9. Inkind contributions from the proponent and their partner(s) will be accepted on a case by case basis to count towards the proponent s portion of the project costs. In-kind support must be verifiable and directly support the project. Further details for estimating verifiable in-kind support are in Appendix 2: Costing Memorandum. 3.6 Maximum and Minimum Amount Payable per Project Demonstrations The Program may pay up to 50% of Total Project Costs per demonstration project. The minimum funding requested per project is five million dollars ($5,000,000.00), and will be limited to the maximum available to the Program Front End Engineering and Design (FEED) Studies The Program may pay up to 50% of Total Project Costs per FEED study. The minimum funding requested per FEED study is three hundred thousand dollars ($300,000.00). 3.7 Basis and Timing of Payment Contribution agreements will set out the required terms for payment, made upon receipt of proper documentation as defined in the contribution agreement. 7

8 Final payment will not be made until all project activities have been completed by a proponent and are deemed acceptable to NRCan. To ensure appropriate project oversight, a percentage of the contribution will be withheld until all conditions of the contribution agreement have been met. The percentage withheld will be determined based on the nature of the project and its risk level, and will be stated in the contribution agreement. Proponents under the demonstration component of the Program may be audited one or several times either at project completion or at NRCan s discretion during the project. Auditors will call and potentially visit each proponent on site at the beginning of the project to explain the auditing process, and review project financial controls. 3.8 Stacking of Assistance Prior to signing contribution agreements, on an annual basis, and upon project completion, proponents will be required to disclose all sources of funding on individual projects, including contributions from other federal, provincial/territorial, and municipal governments and industry sources. Total Canadian government assistance (federal, provincial/territorial, regional and municipal governments) must not exceed 75% of Total Project Costs, except in the case where the recipient is a provincial/territorial, regional, or municipal government or their department or agency, in which case, the total Canadian government assistance authorized may be up to 100%. For greater clarity, a recipient that is a provincial/territorial, regional, or municipal government or their department or agency will be required to contribute at least 25% of the Total Project Costs from either its own resources or other non-canadian government partners. If the proposed total Canadian government assistance exceeds the limits set out above, Canada reserves the right to reduce the Program contribution to the project until the stacking assistance limit is met. If total Canadian government assistance exceeds the limits set out above upon project completion, Canada reserves the right to recover the excess contribution from the proponent. Note that the government assistance referred to in these stacking limits does not include loans from governments or Crown agencies. For example, loans to the project from governments or Crown agencies would not be included in this calculation; however, if a preferential interest rate is obtained through government loans, the cost savings due to the preferential rate would be included. Clarifications will be provided on a case-by-case basis. 8

9 3.9 Eligible Expenditures and Non-permissible Costs Eligible Expenditures for an approved project under the Program must be directly related to, and necessary for, the implementation and conduct of a project as defined in Schedule A of a contribution agreement, and will include: salaries and benefits for employees on the recipient s payroll, for actual time spent by the employees on the project; professional, scientific, technical and contracting services; reasonable travel costs, including meals and accommodation; printing services; data collection services, including processing, analysis and management; licence fees and permits; field testing services; purchase, installation, testing and commissioning of qualifying equipment, materials and products, including diagnostic and testing tools and instruments; laboratory and field supplies and materials; and overhead expenses, provided they are directly related to the conduct of the project and can be attributed to it. Overhead costs will be negotiated and agreed to on an individual basis with project proponents before signing a contribution agreement. They will not exceed 15% of eligible expenditures. Costs ineligible for reimbursement from the Program (but permitted as part of the proponent s contribution to the total project costs) will include: The reimbursable portion of Federal and Provincial Taxes In kind costs Costs not allowed to be counted toward total project costs (non-permissible costs) will include: Land Costs Legal Costs Proposal preparation costs All costs associated with the protection of IP Costs incurred before the proposal submission due date, or after the Project Completion Date. Note: More details on costing are included in Appendix 2: Costing Memorandum 3.10 Reporting Requirements For demonstration projects, proponents will submit regular updates to NRCan summarizing the project progress and expenses incurred. Regular communication between NRCan and the proponents will be implemented to monitor progress. Note that the Program requires an additional 5 years of reporting by proponents beyond the project end date. 9

10 3.11 Repayable Contributions The Contribution may be conditionally repayable within five years after Project Completion if the project generates profit. The requirements that may trigger repayments will be detailed in the Contribution Agreement (CA), along with the process for repayment. Prior to signing a CA, the proponent will be required to submit a financial ProForma that shows the expected financial performance of the project. This should include all major line items for both revenue and expenses using generally accepted accounting principles, between the Project Completion Date then annually for five years thereafter. Following the Project Completion Date, proponents will be required to provide a financial statement on the profitability of their project, (as described in the previous paragraph), using generally accepted accounting principles, on an annual basis. If a profit is generated, then the amount to be repaid will be: profit times the proportion of Program funding to Total Project Cost up to Canada s Contribution Other Terms and Conditions All Intellectual Property (IP) that arises in the course of a project funded through a contribution agreement shall vest in, or be licensed to, the proponent. The proponent will grant to Canada a non-exclusive, irrevocable, world-wide, royalty-free licence in perpetuity to use project reports and modify such reports and documents for non-commercial governmental purposes. No Member of the House of Commons shall be admitted to any share or part of the contribution agreements, or any resulting benefit. The Proponent will comply with the Conflict of Interest Act, the Conflict of Interest and Post- Employment Code for Public Office Holders. Funding may be cancelled or reduced in the event that departmental funding levels are reduced by Parliament to a point where the Program could not meet its existing commitments. Agreements will include provisions to this effect. Proponents will be required to acknowledge the financial support of Canada in all public information produced as part of the project. As part of project monitoring requirements, NRCan will have the right to visit and inspect all project sites, upon providing a reasonable notice to project proponents. 10

11 4 Confidentiality and Security of Information The Access to Information Act, (the Act ) governs the protection and disclosure of information, confidential or otherwise, supplied to a federal government institution. This Act is a law of public order; as such the government of Canada, including NRCan, cannot contract out of it. Paragraph 20(1) (b) of the Act states that: a government institution [such as NRCan] shall refuse to disclose any record requested under the Act that contains financial, commercial, scientific or technical information that is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party. Pursuant to Paragraph 20(1) (b) of the Act, NRCan will protect the applicant s confidential information supplied to NRCan from disclosure if: a) the applicant s information supplied to NRCan contains financial, commercial, scientific or technical information; and b) the applicant consistently treats such information in a confidential manner. Further, NRCan will protect the applicant s confidential information in its possession to the same extent as the applicant protects said confidential information in its own establishment: if the applicant chooses to send the proposal or other confidential information to NRCan by , NRCan will respond to the Proposal by . Similarly, if the applicant s correspondence is through regular mail, NRCan s response will be in like manner. However, in all cases, NRCan will use correspondence to the applicants for all non-confidential matters. For more information on this subject, a careful reading of the entire section 20 of the Access to Information Act is greatly encouraged. 11

12 5 Application Schedule and Process 5.1 Application Schedule The following is the current schedule for the application and review process: Final date for submission of Project Proposals September 7, 2016 Project Selection by Federal Expert Committee Fall 2016 Applicants notified of NRCan decision Late Fall 2016 Negotiation of contribution agreements Winter 2016 Anticipated contribution agreement signing Winter 2016/Spring 2017 The above schedule is subject to change. Any changes will be communicated to applicants via the addresses provided during the submission of the information form at the time of request for Applicants Package, as well as updated on the Program website. 5.2 Submitting a Project Proposal Proposals must be submitted by providing a completed proposal template (included in the Applicants Package), without which they will not be considered. The completed template must be submitted as a Word file and in addition, the applicant must separately print and sign the attestations page, scanning and sending the signed version as a PDF. Printed and mailed versions of the proposal and attestations will be accepted, but electronic versions are preferred. An applicant may provide supporting material for any aspect of the proposal. Applicants are required to submit A SINGLE COPY of the above documents postmarked by 23:59 EDT, September 7, It is the applicant s responsibility to retain proof of the time that the documentation package was sent to NRCan. This may be required in the event that NRCan does not receive the documentation package by the deadline for reasons that are beyond the control of the sender. As per Section 4 above, NRCan recognizes that is not a secure means of communication, and NRCan cannot guarantee the security of confidential information sent via e- mail while it is in transit. Nonetheless, applicants who regularly use to communicate confidential information within their own organizations may choose to submit their documentation packages by to: NRCan.EnergyInnovation- Innovationenergetique.RNCan@Canada.ca. Applicants may also submit their documentation by courier or registered mail to: Energy Innovation Program Oil and Gas Clean Tech Program Office of Energy Research and Development Natural Resources Canada 580 Booth St., 14 th floor Ottawa, ON K1A 0E4 12

13 Where applicants submit A SINGLE COPY of the required files by courier or registered mail, we request that A SINGLE COPY of the required files in an electronic version on a memory stick be included in the package, clearly marked with the name of the organization and the title of the project. If you are submitting by courier, it is recommended that you inform us by that you are doing so. 5.3 Supporting Documents and Requests for Supplementary Information If you are providing supporting material, we request that it be in electronic format, preferably PDF. However, please note that the maximum total size of attachments is 9 MB. If your electronic submission would exceed the maximum, we suggest you submit A SINGLE COPY of the material by courier or registered mail, on a memory stick, clearly marked with the name of the organization and the title of the project. We request that you restrict additional material to that which is directly relevant to, and in support of, your project proposal. The Program may request supplementary information at various points in the review process. Please note: up to three years of financial statements may be requested during the selection process from the applicant in order to assess project and applicant financial risk. Financial review will be done in confidence by financial analysts contracted by the program. These requests to the applicant will be made via , and responses should be by , courier or registered mail. Any additional material and documentation provided in response as attachments should be in electronic format, preferably PDF. The Program may also request presentations by the applicants, either in person or by teleconference, during the review process. 13

14 6 Selection Criteria 6.1 Selection Criteria Project Proposals Applicants must address all of the criteria below in their project proposals, providing supporting information for all assertions. Note that the descriptions of the individual criteria below are indicative of the factors considered by reviewers, but are not meant to be all inclusive. Applicants are urged to submit all information they feel would be relevant in addressing the criteria in their proposals. Project proposals will be rated and ranked on a comparative basis, against other proposals being reviewed, based on the following criteria and on an overall assessment of individual project proposals Mandatory Criteria Proposals will be evaluated using the following mandatory criteria: Mandatory Criteria Is the applicant an eligible recipient of funding under this RPP? Is the project located in Canada? Does the project end before March 31, 2019? Does the total funding meet all of the criteria as laid out in the proposal template? Is the proposal complete, with all requested documentation? Does the project meet the scope of the RPP as defined in Section 7? Does the proposal include a signed attestation? Yes/No Yes/No Yes/No Yes/No Yes/No Yes/No Yes/No Evaluation Criteria Proposals that meet the mandatory criteria listed above will then be reviewed and ranked using the criteria below; each of the three themes are given equal weight: Relevance How well does the project technology and concept meet the objectives of the Program as outlined in Section 2? How well does the project as proposed align with the program s expected outcomes (short, medium, and long term) as defined in Section 2.1 and in Appendix 3? How well does the project align with the scope statement set out in Section 7? Risk What is the ability of the project manager, the technical and scientific team, and partner organizations to deliver the project over the lifetime of the project? What is the complexity of the project? (i.e. number of project steps, number and magnitude of project unknowns and uncertainties). Is the project shovel-ready? Projects that are ready to start as soon as EIP funding is confirmed will be preferred. 14

15 What is the quality of the project plan in terms of risk management strategies, achievable timelines, and clear go/no-go decision points as part of well-planned project management? What is the financial risk of the project (i.e. financial strength of the applicant and partners, adequate evidence of co-funding, including evidence that such co-funding has been secured, solid and reasonable budget for the planned project activities)? Impact Receptor capacity and interest: Is there evidence of adequate and abiding receptor capacity and interest in using the results of the demonstration project? What is the funding leverage from partners? Projects with higher proportions of funding from the proponent and partners compared to the Program contribution will be preferred. Projects with a greater portion of co-funding in cash versus in kind will be preferred. What is the potential impact of the technology should the project be successful? Will there be new codes and standards developed or policies implemented? Does the technology address a significant gap that will lead to a technical advancement needed to meet other objectives (such as environmental and/or economic objectives?) Economic and social impact: What is the economic and social impact should the project be successful? Is there a market opportunity for export of the technology? Does the project have replication potential elsewhere in Canada? Will the project contribute to the training of highly qualified personnel and/or job creation for Canadians? Environmental impact: What is the environmental impact should the project be successful? Will there be GHG emissions reductions associated with the project s success? Does the potential for replication increase the environmental benefits? Are there any other environmental benefits associated with the project? What is the quality of the proposed knowledge transfer plan in terms of stakeholder engagement, knowledge dissemination, and publicly available materials? Other Criteria In addition to the above criteria, other departmental priorities including regional balance may be considered in the final project selection. 15

16 7 Scope for Project Proposals The Program s objective is to support energy technology innovation to produce and use energy more cleanly and efficiently. The objective of this call for proposals is to demonstrate and test pre-commercial technologies (technology readiness levels 6-8) 2 which will result in reduced greenhouse gases (GHG) emissions from the oil and gas sector. Examples of technologies could include, but are not limited to the following: next generation oil sands extraction (e.g., low-temperature solvent-based extraction) that could reduce GHG emissions from in-situ or mining operations, while at the same time reducing water use and significantly lowering production costs; advanced emissions detection, monitoring and mitigation systems (e.g. sensors) that could result in reduced methane and other emissions leakages from upstream natural gas production and processing; alternative low-carbon heat or power technologies (e.g., molten carbonate fuel cells, cogeneration, biomass to energy) that would reduce the GHG intensity of in-situ steam generation, or provide energy to the electricity grid; alternative and/or energy efficient steam generation (e.g., direct contact steam generation systems, boiler blowdown reduction technologies, rifle tubes) that have the potential to reduce GHG emissions and water use in unconventional oil and gas operations; heat and/or water recovery from flue gas (e.g., from Steam-Assisted Gravity Drainage schemes) piloting in oil sands operations; energy efficient in-situ technologies (e.g. low-grade heat recovery) applicable to upstream oil and gas operations; cleaner technologies for liquified natural gas production; and advanced technology solutions and/or infrastructure for carbon dioxide conversion into valuable, useful materials. Although this call for proposals targets technology demonstrations, front-end engineering design (FEED) studies leading to demonstration projects could also be considered for funding.. 2 See Appendix 4 Technology Readiness Levels for definitions. 16

17 Appendix 1: Proposal Template Please note the following when completing the proposal template. 1. The proposal template was sent to you by as a Microsoft Word file entitled EI OGCT Proposal Template, along with this Applicant s Guide. 2. Unless otherwise specified, the proposed project or the project or the proposal in this template refers to the proposed project submitted in response to the RPP process undertaken by the Program. 3. Completion and submission of this proposal template does not imply that the proposed project will be approved for co-funding by the Program. 4. Applicants, their partners and collaborators must submit all information required under this request. 5. The completed proposal must be submitted by , courier or registered mail by 23:59 p.m. EDT, September 7, Please refer to Section 5.2 Submitting a Project Proposal for the submission procedure. Submissions sent after that time will not be accepted. It is the applicant s responsibility to retain proof of time the documentation package was sent to NRCan. This may be required in the event that NRCan does not receive the documentation package by the deadline for reasons that are beyond the control of the sender. 17

18 Appendix 2: Costing Memorandum 1- Eligible Expenditures Eligible Expenditures for an approved project under the Program must be directly related to, and necessary for, the implementation and conduct of a project as defined in Schedule A of a contribution agreement, and will include: salaries and benefits for employees on the recipient s payroll, for actual time spent by the employees on the project; professional, scientific, technical and contracting services; reasonable travel costs, including meals and accommodation; printing services; data collection services, including processing, analysis and management; licence fees and permits; field testing services; purchase, installation, testing and commissioning of qualifying equipment, materials and products equipment and products, including diagnostic and testing tools and instruments; laboratory and field supplies and materials; and overhead expenses, provided they are directly related to the conduct of the project and can be attributed to it. Salaries: Salaries include wages for all personnel with direct involvement in the project such as engineers, scientists, technologists, draftsmen, researchers, laboratory, experimental and shop labour. All eligible personnel must be employees on the Proponent s payroll. Payment in terms of shares, stock, stock options and the like are not eligible. The amount invoiced shall be actual gross pay for the work performed and shall include no markup for profit, selling, administration or financing. The eligible payroll cost is the gross pay of the employee (normal periodic remuneration before deductions). Normal periodic remuneration rates are the regular pay rates for the period excluding premiums paid for overtime or shift work. The payroll rate does not include any reimbursement or benefit conferred in lieu of salaries or wages. When hourly rates are being charged for salaried personnel, the hourly rates shall be the periodic remuneration (annual, monthly, weekly, etc.), divided by the total paid hours in the period including holidays, vacation, paid sickness time. Labour claims must be supported by suitable records such as time sheets and records, and be held for verification at time of audit. Management personnel are required to maintain appropriate records of time devoted to the project. Benefits: Benefits are defined as a reasonable prorated share of expenses associated with the direct labour cost such as the employer s portion of Canada Pension Plan, Quebec Pension Plan and Employment Insurance, employee benefits such as health plan and insurance, Worker s Compensation, sick leave and vacation plus any other 18

19 employer paid payroll related expenses. Those items which have no relationship to the project or which have been charged on an indirect basis are non-eligible. The determination of the fringe benefits amount shall be in accordance with generally accepted cost accounting principles. In general, fringe benefits rate provided in the project estimate shall be computed once during the life of the project and agreed on prior to the signing of the Agreement. If retroactive adjustments are made, these must be indicated on claims for progress payments for NRCan approval. Overhead expenses: With regard to Overhead Expenses, they may include: administrative support provided directly to the project by the proponent s employee(s), valued on the same basis as professional staff time; routine laboratory and field equipment maintenance, based on the actual cost to the proponent that is directly related to the project; heat, hydro, and office operating costs (e.g. faxes, telephone), provided that they are directly related to the project. Overhead costs will be negotiated and agreed to on an individual basis with project proponents before signing a CA. They will not exceed 15% of Eligible Expenditures. Materials: Materials include those consumed in carrying out the project, including those utilized in the production and operation of models, prototypes and pilot plants. Only utilities consumed to operate equipment or processes are eligible and may be metered and reported separately from the total utility cost. Utilities used for buildings are not eligible. Materials purchased solely for the project and issued from the Proponent s inventory are eligible. All materials shall be charged to the project at the net price excluding GST after deducting all trade discounts and similar credits. Surplus materials shall be credited to the project at the original purchase price. Equipment: Equipment consists of equipment acquired or constructed exclusively for the project. In order to be eligible, such equipment must be identified in the project cost estimate, and approved by the Minister. All such equipment shall be charged to the project at the net price (excluding GST) after deducting all trade discounts and similar charges. Where such equipment is obtained from another division of the Proponent or from a related company, the eligible expenditures shall not exceed fair market value and shall not include any markup for profit, administration, selling or financing expense. Sub-Contractors and Consultants: The nature of goods or services to be acquired shall be set out in the proposal estimate. The amount eligible from a sub-contractor or a consultant shall be the actual contract amount. Testing Services: Eligible testing services are those conducted by testing organizations or accredited laboratories, such as the Canadian Standards Association, Underwriters Laboratories and must be essential to the success of the project. Testing 19

20 services shall be charged at actual cost. Regulatory costs, where required may be eligible e.g. testing to comply with Environmental Standards. All such costs should be identified in the original proposal cost estimates. Travel, Meals and Accommodation costs: Unless stated otherwise in the Contribution Agreement between the NRCan and the proponent, Treasury Board rates that are in effect at the time of signing the Contribution Agreement shall be used in reimbursing the following expenses: Travel, food and lodging costs to meet with NRCan officials. Travel, food and lodging costs necessary for other project activities, e.g. field trials and demonstrations at locations away from the proponent=s usual location; project planning and review meetings between the principal proponent and its partner(s). 2- Ineligible Costs Costs ineligible for reimbursement from the Program (but permitted as part of the proponent s contribution to the total project costs) will include: The reimbursable portion of Federal and Provincial Taxes In kind costs (See Section 4) 3- Non-permissible Costs (1) Land Costs (2) Legal Costs (3) Proposal preparation costs (4) All costs associated with the protection of IP (5) Costs incurred before the proposal submission due date, or after the Project Completion Date. 4- In-kind Support The Program accepts In-Kind contributions (defined below) as part of Total Project Costs, subject to the definitions and limitations described in this section. IMPORTANT NOTE Proposed in-kind contributions that are deemed acceptable by NRCan officials must be supported by a formal commitment from the project proponent to provide them, prior to any commitment on Program funding to the proposed project being made. 20

21 Purpose The purpose of this section is to identify the kinds of non-cash contributions ( in-kind support ) that are acceptable as part of the overall funding for the project from the project proponent 3, and to provide guidance on how to put a value on those contributions. Definitions In-kind support - a cash-equivalent contribution in the form of an asset 4 for which no cash is exchanged but that is essential to the project and that would have to be purchased by the project proponent on the open market, or through negotiation with the provider, if it were not provided by the project proponent. Fair market value - the average dollar value the project proponent could get for a contributed asset in an open and unrestricted market, between a willing buyer and a willing seller (the proponent) who are acting independently of each other. As a guide, it should approximately represent the original cost minus the depreciation. Most favoured customer - a customer given the deepest discount from the normal selling price for a good or service sold to it by the project proponent. Eligibility of in-kind contributions To be eligible as an in-kind contribution: The contributed asset must be from one of the categories identified below under the heading Categories of Eligible In-kind Support It must be essential to a project=s success and would otherwise have to be purchased by the project proponent Its value must be determinable and verifiable Its valuation must be confirmed by NRCan officials or its auditors, and agreed upon by the project applicant and NRCan. Assessing the Value of In-kind Contributions Two different approaches to the valuation of in-kind support are possible: Using the fair market value, as described above. Using the incremental cost the cost to the project applicant or its partners and collaborators of providing the contributed asset over and above normal operating costs. 3 Unless otherwise indicated, project proponent in this section refers to the project applicant and its partners and collaborators 4 AAsset in this section means a useful and valuable good, service or other support provided to the project. 21

22 Categories of Eligible In-kind Support 1: Salaries and Benefits This category addresses the provision of the project proponent s employees time to undertake work, such as research, technology development and assessment, and expert analysis that is wholly and directly in support of the project. Services of an employee of the project proponent shall be valued at the employee's regular rate of pay (plus an amount of fringe benefits that is reasonable, allowable, and allocable, but exclusive of overhead costs), provided these services are consistent with the duties for which the employee is normally paid. 2: Professional, Scientific and Contracting Services This category addresses the provision of analytical and technical services. Analytical and technical services include routine laboratory and field technical services such as data collection, laboratory analyses and measurements, and field measurements, exclusive of equipment maintenance. These services may be provided by a component of the project proponent s overall organisation, or provided to the project proponent by a third party. The value of analytical and technical services provided by or to the proponent should be the lesser of the project proponent s internal rate 5 for the service if that service is provided internally (i.e., within the project proponent=s organisation), or the incremental cost to the project proponent if it is provided by a third party. 3: Provision of Equipment and Laboratory and Field Supplies and Materials This category includes equipment, laboratory supplies and field supplies that are provided by or to the project proponent, and the provision of access to, and use of, proprietary software and databases owned by or provided to the project proponent. Values assessed for equipment and laboratory and field supplies and materials provided to the project must meet the following criteria: The value of supplies and materials shall not exceed the selling price to the provider s most favored customer at the time of provision. The value of equipment shall not exceed the fair market value of equipment of the same age and condition at the time of provision. If the equipment is special purpose, one-of-a-kind, its value shall not exceed the cost to the provider of its design, testing and manufacture. The value of access to, and use of, proprietary software and databases should be the incremental costs to the project proponent of providing that access and use, such as staff time involved, including providing any required instruction on their use. Costs associated with developing the software or databases are ineligible as an in-kind contribution. 5 Internal rate means the rate that would be charged by the component of the project proponent that provides the service to the component of the proponent that receives it. 22

23 4. Travel, Meals and Accommodation costs Unless stated otherwise in the Contribution Agreement between the NRCan and the proponent, Treasury Board rates that are in effect at the time of signing the Contribution Agreement shall be used in assigning a value to the following expenses. Travel, food and lodging costs to meet with NRCan officials. Travel, food and lodging costs necessary for other project activities, e.g. field trials and demonstrations at locations away from the proponent=s usual location; project planning and review meetings between the principal proponent and its partner(s). 5. Overhead expenses With regard to Overhead Expenses, they may include: administrative support provided directly to the project by the proponent s employee(s), valued on the same basis as professional staff time (as described under category 1); routine laboratory and field equipment maintenance, based on the actual cost to the proponent that is directly related to the project; heat, hydro, and office operating costs (e.g. faxes, telephone) telephone, provided they are directly related to the project. Overhead costs will be negotiated on an individual basis with project proponents. They will not exceed 15% of eligible expenditures. 23

24 Appendix 3: Expected Program Outcomes The following short-term outcomes are expected during the Program period: Academia, industry and public sector collaborations for the advancement and demonstration of clean energy technologies; the outputs that contribute to this outcome include collaborations (e.g. contracts, agreements, memoranda of understanding, partnerships etc.) established to research, develop and demonstrate clean energy technologies. Increased availability of scientific and technical knowledge to advance the development of technology; the outputs that contribute to this outcome include knowledge products (e.g. technical papers, workshops and codes, standards and regulations) informed by research, development and demonstration. The following medium-term outcomes are expected 1-5 years following the Program period: Further investment in the development of new knowledge and technologies by academia, industry and the public sector to meet economic and environmental challenges The long-term outcome (greater than 5 years following the Program end) is: Environmental and economic and benefits from the advancement of clean energy technology. 1- Guide to Outputs and Outcomes Output Outputs are the products of the project. They are classed into two groups: Interim Outputs are not generally intended for dissemination beyond the project team and NRCan. They are indicators of progress in the project, in logical steps. Examples are project status reports, working papers, test reports, draft technical reports and analyses, and beta-version software products (including databases) for limited distribution for testing purposes. Some interim outputs (e.g. progress reports) may be required under the terms of the contribution agreement, should the project be approved for Program funding. Final Outputs are the products to be delivered at the end of the project that are intended for dissemination to, and use by, the intended beneficiaries of the project (including NRCan) - the stakeholders. Examples: technical reports and analyses; engineering analyses; prototype /early-stage technologies and systems developed and demonstrated; technology assessments; new measurement techniques and protocols; 24

25 pilot installations; software products. Intended final outputs will be identified in the contribution agreement. Outcome Outcomes are the consequences attributed, in whole or in part, to the project. They are the changes or impacts to which the project leads. Outcomes are classed as short-term, medium-term and long-term (sometimes referred to as immediate, intermediate, and final, respectively). Short-term Outcome: Short-term (less than 1 year after completion of the project) flow directly from the project s final output(s). Example: new knowledge is made available, e.g. operating parameters, lessons learned regarding the implementation of an energy project, information on commissioning energy systems, how barriers to deployment of the energy system were overcome, etc. Medium-term Outcome: Medium-term outcomes (typically 1-5 years after completion of the project) flow from the short-term outcomes. Examples: the project has been in full operation for some time; greenhouse gas reductions have been documented; CO 2 credits have been claimed; other benefits have been achieved; the project is intended to be replicated; lessons learned regarding cost reductions, operations, etc. Long-term Outcome: Long-term outcomes (typically more than 5 years after completion of the project) represent the raison d être of the project. They flow from the medium-term outcomes: for example, from the wide scale deployment and operations of a new technology leading to large and sustained reduction of greenhouse gas emissions from an industrial process. 25