Department of Energy Seeks Feedback on Manufacturing Capital Connector Initiative to Connect Applicants to Private Sector Capital
As part of the Biden-Harris Administration’s Investing in America Agenda, the U.S. Department of Energy (DOE) today released a Request for Information (RFI) to solicit feedback for an initiative to facilitate the investment necessary to build out the U.S. manufacturing supply chain. This initiative, the Manufacturing Capital Connector (MCC), as proposed by the Office of Manufacturing and Energy Supply Chains (MESC), would connect companies applying to DOE-administered clean energy manufacturing programs to a range of capital providers seeking high-quality projects. The initiative would work with private capital providers to ensure they have a solid understanding of clean energy manufacturing opportunities seeking support from DOE or other federal programs, and an understanding of DOE’s energy supply chain priorities.
The proposed MCC may particularly benefit manufacturing companies applying for programs such as the Qualifying Advanced Energy Project Credit (48C), which covers critical materials processing and recycling, clean energy manufacturing and recycling, and industrial greenhouse gas emissions reductions, and to private sector investors interested in these sectors. Participation in the MCC is voluntary and applicants of the 48C program do not receive special consideration during the 48C program application process by participating.
The 48C program, originally enacted by the American Recovery and Reinvestment Act of 2009, provides $10 billion under the Inflation Reduction Act to expand U.S. manufacturing capacity and to secure domestic supply chains for critical materials for clean energy technology by providing an investment tax credit (ITC) on the qualified investment of a §48C manufacturing project. $4 billion of the $10 billion must go to energy communities, which include certain census tracts where a coal mine or coal-fired power plant closed. Projects that meet the prevailing wage and apprenticeship requirements may obtain the maximum 30% credit rate. Selections are made through a competitive evaluation of the technical, commercial, and workforce and community engagement attributes of each project. Unlike many other DOE-administered grant and loan programs, an applicant must provide the upfront capital for development and construction, with costs offset by the tax credit once a project is complete and facility is placed in service.
Given the scale of DOE’s energy supply chain investments, including the 48C credit program and its focus on historical energy communities, DOE is exploring innovative models to facilitate, expedite and streamline companies’ efforts to secure capital and private sector investors’ efforts to identify investable projects. The MCC would strive to improve the timing, magnitude, and cost of capital, and leverage the work companies may have already done when applying to DOE programs in the commercial due diligence process required by capital providers. For companies interested in new or additional sources of capital, the MCC would represent a voluntary program for Federal program applicants. Applicants that choose to use an MCC participating capital provider would not receive any preferential treatment in the application process for doing so over other sources of financing. The RFI issued today seeks comment on how capital providers and manufacturing companies could participate in the MCC initiative.
Learn about the mission of DOE’s Office of Manufacturing and Energy Supply Chains (MESC) to catalyze investments in America’s energy future in support of the re-shoring, skilling, and scaling of U.S. manufacturing across energy supply chains.