ITC vs. PTC vs. Cash Grant

Renewable Project Finance Options: ITC, PTC, or Cash Grant?

Norbert Richter, Power Magazine

(Click here to review the white paper from The National Renewable Energy Laboratory

Dozens of institutional investors in U.S. renewable energy projects pulled out of the market when the nation’s liquidity reserves dried up late last year. Some left the renewable market sector in search of more lucrative investment opportunities. Others found themselves unable to take advantage of the attractive tax credits because they themselves lacked profits against which to use the credits. The American Recovery and Reinvestment Act of 2009, approved February 13, changed the investor ground rules — again.

The American Recovery and Reinvestment Act of 2009 (ARRA) gives investors, owners, operators, and financiers a choice of government credits that may help push forward renewable projects that otherwise might be turned down. The purpose of this article is to provide a summary of the ARRA as it affects federal support for renewable energy projects as well as an explanation of how the renewable investment rules of the road have changed with the stimulus incentive package.

Large insurance companies and investment banks that engage with project developers provide the bulk of renewable energy project financing. The ARRA offers to those financiers a number of very useful incentives for renewable energy projects that can be tailored to individual project needs. By using complex financial models and structures that are designed to leverage the federal government’s support for renewable technologies, investors can use accelerated depreciation and tax credits to offset tax liabilities. Now, with the expanded variety of production tax credits (PTC), investment tax credits (ITC), and cash grants to choose from, investors must consider the benefits of each incentive for their respective projects (see sidebar).

Renewable Project Tax Credit Options The American Recovery and Reinvestment Act of 2009 (ARRA) gives developers of renewable power generation projects the option to select an investment tax credit, a production tax credit, or a cash grant. Previously, there was no cash grant option, the tax credits were directly linked to particular technologies, and renewal was always problematic. The rules have changed. The production tax credit (PTC) was originally authorized by the Energy Policy Act of 1992 to provide a 10-year, inflation-adjusted tax credit based on the energy produced by qualified wind, closed- and open-loop geothermal, biomass, and small hydroelectric projects, among other technologies. The PTC has been renewed several times since the original legislation. Generally, wind and closed-loop geothermal projects received the entire credit of $21/MWh (as of 2008) and other eligible technologies received half the credit. The PTC rules also continue to require that electricity sales be to an unrelated party, and limitations related to eligibility with other public sector grants, tax-exempt bonds, and other federal tax credits remain. The ARRA extends the credit for wind projects placed in service prior to the end of 2012 and for other technologies through 2013. The investment tax credit (ITC) continues to provide a tax credit for commercial energy projects such as solar, fuel cell, and small wind up to 30% of the project’s qualifying costs and for other geothermal, microturbine, and combined heat and power projects up to 10% of the project’s qualifying costs. The ITC for fuel cells and microturbines has a cap; the others do not. Also, the ITC must be taken in the year that the project enters commercial operation, but it vests over a five-year period. If the project is sold within the first five years of operation, the Internal Revenue Service will recapture a portion of the credit. What’s new is that the ARRA extends the credit for projects placed in service prior to the end of 2016, although credits for geothermal projects have no expiration date. The solar tax credit is currently slated to drop to 10% at the end of 2016. Perhaps the most significant new element is that those eligible for either the PTC or ITC may elect to receive a cash grant of equivalent value. The grant is excluded from gross income of the company, and the depreciable basis of the property must be reduced by one-half of the grant amount. Generally, the PTC or ITC make more economic sense for companies that can use the entire credit.

Good News for Renewables

The ARRA has several finance-based provisions that renewable stakeholders can now consider. These changes will influence how financing decisions are made on both qualitative and quantitative issues. The key changes include these:

• The PTC in-service deadline is extended through 2012 for wind projects and through 2013 for open- and closed-loop biomass, geothermal, municipal solid waste, qualified hydroelectric, and marine hydrokinetic facilities.

• Project financiers may now elect the ITC in lieu of the PTC. The ARRA allows PTC-qualified facilities installed in 2009 through 2013 (2009 through 2012 in the case of wind) to elect a 30% ITC in lieu of the PTC. If the ITC is chosen, the election is irrevocable and requires the depreciable basis of the property to be reduced by one-half the amount of the ITC.

• Project financiers may also elect a cash grant in lieu of the ITC. This new program provides grants that cover up to 30% of the cost basis of qualified renewable energy projects that are in service in 2009 – 2010 or that commence construction during 2009 – 2010 and are in service prior to 2013 for wind, 2017 for solar, and 2014 for other qualified technologies. The grant is excluded from gross income, and the depreciable basis of the property must be reduced by one-half of the grant amount.

• The ITC-subsidized energy financing penalty is removed, allowing projects that elect the ITC to also utilize "subsidized energy financing" (such as tax-exempt bonds or low-interest loan programs) without suffering a corresponding tax credit basis reduction. This provision also applies to the new cash grant option.

• Bonus depreciation of 50% is extended (that is, the ability to write off 50% of the depreciable basis in the first year, with the remaining basis depreciated as normal, according to the applicable schedules) to qualified renewable energy projects acquired and placed in service in 2009.

• The loss carrryback period is extended from two to five years for small businesses (those with average annual gross receipts of $15 million or less over the most recent three-year period). This carryback extension can only be applied to a single tax year, which must either begin or end in 2008.

• ITC dollar caps are removed, eliminating the preexisting maximum dollar caps on residential small wind, solar hot water, and geothermal heat pump ITCs. The dollar cap on the commercial small wind 30% ITC is also eliminated, and credits may be claimed against the Alternative Minimum Tax.

• The existing loan guarantee programs to cover commercial projects are expanded to include support of up to $60 billion to $100 billion in loans, depending on the risk profiles of the underlying projects.

• Clean renewable energy bonds (CREB) get more funding: $1.6 billion in new CREBs is added for eligible technologies owned by governmental and tribal entities, municipal utilities, and cooperatives. Combined with the $800 million of new CREB funding added in October 2008, new CREB funding totals $2.4 billion.

Pick Your Poison

Cash flow model studies funded by the Department of Energy have been developed to help quantify the benefit of PTC and ITC incentives. Given installed project costs and expected capacity factors — along with assumed federal and state tax rates — the models calculate the present value of the ITC, PTC, and cash grant at nominal discount rates of 5%, 7.5%, and 10%. Depending on the project type and constraints, your tradeoff choice between the federal incentives may be clear or marginal.

For example, a wind project that uses a discount rate of 7.5%, costs $2,000/kW installed, and with an expected capacity factor of 30% results in a 1.3% net value advantage for using the ITC instead of the PTC. Using the same assumptions, but with a project cost of $1,700/kW and an expected capacity factor of 40%, yields a 10.4% increased value for the PTC.

Generally, wind projects with lower installed costs and higher capacity factors find that the PTC provides greater benefit than the ITC. Because a higher capacity factor results in more production, the PTC seems to have higher project value for projects that can operate near the plant’s rated output for more hours each year.

Consider another example of an open-loop biomass project, the same discount rate, a capacity factor between 60% and 90%, and a project installed cost ranging from $3,000/kW to $5,000/kW. Using these parameters and several other assumptions (depreciation schedules and PTC applicability to biomass projects), calculations show that the ITC produces more financial benefits for the project than the PTC.

More Details to Consider

The relative value of each federal credit is among the most important considerations when deciding among the PTC, ITC, and cash grant. However, there are other qualitative considerations that may affect a manager’s decision, such as those that follow, especially when the quantitative differences between the PTC and ITC are slim.

Subsidized Energy Financing. The stimulus package removed the "double-dipping" penalty for the ITC, but not for the PTC. As a result, any PTC-eligible project that can secure "subsidized energy financing" may be better off electing to take the ITC (or equivalent cash grant) rather than sticking with a diminished PTC. Prior to the stimulus bill, the values of both the ITC and the PTC were reduced proportionally (with the PTC reduction limited to a maximum of 50%) by the amount of a project’s installed costs that was financed using "subsidized energy financing" (such as government-sponsored low-interest loan programs).

Option to Elect Equivalent Cash Grant. The ARRA not only enables PTC-eligible projects to elect a 30% ITC, but it also allows projects eligible for a 30% ITC to elect a cash grant of equivalent value instead. The availability of a U.S. Treasury – backed cash source might drive some PTC-leaning projects toward the 30% cash grant option, even if the PTC promises a higher expected value.

Owner/Operator Requirement. The ITC does not require the owner and operator to be the same entity, which opens the door to a variety of leasing structures, including sale/leasebacks and inverted pass-through leases. With the exception of biomass projects, the project owner must also operate the project in order to claim the PTC.

Performance Risk. Receiving ITC or cash grants is not dependent on project performance, whereas the PTC is dependent on asset output. The certainty offered by the ITC over the performance risk inherent in the PTC — even if the PTC promises a higher expected value — may make the ITC more attractive.

Power Sale Requirement. The ITC does not impose a power sale requirement, making it a more widely applicable incentive. In order to be PTC eligible, the qualifying renewable power must be sold to an unrelated party.

Tax Credit Demand. Tax equity investors rely on having a tax base that can fully absorb all of a project’s tax benefits over the coming decade before they invest in a 10-year PTC project. Even though depreciation deductions still occur for a multi-year period, the ITC greatly reduces the need for future tax shelter because the full credit is realized in the project’s first year. This also means that to fully absorb the ITC, an investor must have a larger tax base (compared to the PTC) during the first year of the project. Should a project elect to take the 30% cash grant instead of the ITC, the importance of tax equity investors and the tax credit demand is reduced (though it may still be needed in order to maximize allowable depreciation deductions).

Liquidity. The fact that the ITC, or equivalent cash grant, is selected in the project’s first year leads to a relatively more illiquid investment. Potential buyers of the project no longer have access to the credit once the project owner realizes the ITC. Consequently, the ITC vests linearly over a five-year period, forcing the investor to hold on to the project for at least five years in order to fully realize the ITC value. With the PTC, credits are realized in real time over a 10-year period as the project generates power. The sale of a PTC project can then occur at virtually any time (ignoring the influence of depreciation recapture), whereupon any remaining PTCs transfer to the new owner.
—Norbert Richter (norbert.richter@duke.edu) is an industry consultant specializing in renewable energy project evaluation and finance.

For More Information

An excellent reference source on the American Recovery and Reinvestment Act of 2009 and the modeling techniques described in this article is found in "PTC, ITC, or Cash Grant? An Analysis of the Choice Facing Renewable Power Projects in the United States" published in March by Lawrence Berkeley National Laboratory and the National Renewable Energy Laboratory. The entire report is available at http://eetd.lbl.gov/EA/EMP/reports/lbnl-1642e.pdf.

Feds Fast-Track Utility-Scale Solar

U.S. works to speed solar energy development in the West

Interior Secretary Ken Salazar signs an order that sets aside some 676,000 acres of federal land -- more than half in California -- for study and environmental reviews.

By Julie Cart - LA Times
June 30, 2009

The Obama administration on Monday announced that it would put solar energy development in the West on a fast track, with Interior Secretary Ken Salazar signing an order that sets aside more than 1,000 square miles of public land for two years of study and environmental reviews.

Although the clean-energy initiative identifies some 676,000 acres of federal land for study, more than half -- 351,000 acres in the Mojave Desert -- are in California. According to maps released by the Interior Department, the solar project areas abut the border of Joshua Tree National Park, the Mojave Preserve and two national wildlife refuges in the southeastern part of the state.

• 

  Making way for solar

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The proposed California solar-generating areas are projected to have the annual capacity to produce 39,000 to 70,000 megawatts of electricity at full development -- enough to serve millions of homes. There are three large solar projects undergoing environmental review in the state.

President Obama has promised to promote the use of federal land for the production of alternative energy and has set a goal of obtaining 10% of the nation's electricity from renewable sources by 2010. Salazar vowed to have 13 "commercial-scale" solar projects under construction by the end of 2010.

Federal land managers have already announced plans to establish areas of concentrated wind and geothermal energy harvesting. The Bureau of Land Management has gotten about 470 renewable energy project applications. Those include 158 active solar applications, covering 1.8 million acres.

Monday's announcement in Las Vegas opens up land in six Western states to leasing by private companies. "We are putting a bull's-eye on the development of solar energy on our public lands," Salazar said.

Conservation groups reacted to the announcement with praise but cautioned that even so-called green projects could conflict with protected lands and sensitive species.

"We support the identification of the best places for renewable energy on public lands," said Alex Daue of the Wilderness Society. "We can't have a repeat of the oil and gas industry, where it's spread wide across the landscape anywhere they want. We need a focused look at places where there's the least conflict and highest opportunity for success."

In California, the Mojave Desert is already the scene of intense interest from energy companies and a land rush to apply for solar leases. Environmentalists are monitoring maps so that leasing doesn't take place in wilderness, areas of importance for wildlife and other resources, and high-value recreation sites. The Mojave is home to all of that, including national parks, threatened and endangered species and one of the West's most popular off-road-vehicle recreation areas.

Salazar said federal agencies had already ruled out solar leasing on protected lands and would examine potential effects on wildlife before allowing projects to proceed. The two-year environmental study will cost $22 million, he said.

julie.cart@latimes.com

Treasury Grant Guidance

July 10, 2009

Treasury Issues Guidance on Applications for Grants in Lieu of the ITC and the PTC

Renewable Energy World, Portland, OR

The U.S. Treasury Department today issued much-anticipated guidance concerning applications to receive cash grants in lieu of income tax credits for certain renewable energy projects. Although the guidance includes a sample application form, Treasury stated that it will not accept applications until August 1.

Overview of the Grants

The American Recovery and Reinvestment Act of 2009 (ARRA), which was enacted in February, permits an applicant to receive a grant from Treasury in lieu of claiming investment tax credits (ITCs) or production tax credits (PTCs). To qualify, the property must be placed in service in 2009 or 2010 or, if construction begins in 2009 or 2010, must be placed in service by the end of 2012 (for wind), 2013 (for biomass, geothermal and other resources) or 2016 (for solar).

The grant functions similarly to a refundable tax credit. The amount of a grant generally is equal to the amount of the ITC for which the owner of the project otherwise would have been eligible (i.e., generally 30% of the qualified cost of the project). Receipt of the grant is not includible in the gross income of the recipient. The tax basis of the property for depreciation purposes generally is reduced by one-half of the amount of the grant (i.e., the tax basis for depreciation generally would equal 85% of the qualifying costs of the property).

Application Procedures

An application generally must be submitted after the property has been placed in service and before October 1, 2011. ARRA directs Treasury to make payment to a qualified applicant within 60 days of receiving a completed application.

For property not placed in service in 2009 or 2010 but for which construction begins in 2009 or 2010, an application must be submitted after construction commences but before October 1, 2011. An applicant who applies before the project is placed in service must submit, within 90 days after the property is placed in service, supplemental information sufficient for Treasury to make a final determination of eligibility.

Eligible Applicants

An applicant must own or lease the property and must have originally placed the property in service. Federal, state, and local governments, tax-exempt entities, cooperative electric companies, and certain partnerships and other pass-through entities with such persons as direct or indirect partners or owners are not eligible for the grants.

NOTE: The guidance specifically endorses the use of "blocker"corporations. Therefore, a person who would otherwise not be eligible to receive the grant may set up a U.S. corporation to hold its interest and thereby qualify to receive the grant.

Eligible Property

•	Timing. Qualified property generally must be originally placed in service in 2009 and 2010. Property placed in service after 2010 and on or before the applicable credit termination date, however, may qualify for a grant if construction began in 2009 or 2010. Property that satisfies this placed-in-service requirement may be qualified property even if it is an addition to or expansion of a qualified facility placed in service before 2009. Construction generally is considered to begin when physical work of a significant nature begins. Physical work does not include preliminary activities such as planning or designing, securing financing, exploring, or researching. Pursuant to a safe harbor created in the Treasury guidance, an applicant may treat physical work of a significant nature as beginning when the applicant incurs or pays more than 5 percent of the total cost of the property excluding the cost of any land and preliminary activities. NOTE: This 5 percent safe harbor will eliminate considerable uncertainty regarding what it means to "begin construction."
•	Units of Property. For purposes of determining whether property has been placed in service or construction has begun, the owner of multiple units of property may elect to treat them as a single unit. For example, the owner of a wind farm may elect to treat multiple turbines and other equipment (e.g., control equipment) as a single unit rather than treat each turbine as a separate unit. NOTE: This is an extremely favorable rule. It will permit an applicant to "batch" together in one application an entire facility, such as a wind farm. At the same time, it will allow an applicant who cannot complete construction on an entire facility before the placed-in-service deadline to qualify for a grant.
•	Original Use. The original use of the property must begin with the applicant. For purposes of determining whether this requirement is met, Treasury will apply an "80-20" test. If the cost of the used parts contained within a facility is not more than 20 percent of the total cost of the facility, an applicant will not fail to be considered the original user of property because the facility contains used parts. In addition, for purposes of determining whether the original use requirement is met, the special sale-leaseback rules applicable to the ITC also will apply to the grant. Pursuant to these rules, if a developer originally places property in service, sells the property, and leases back the property within three months after the date the property was originally placed in service by the developer, then the owner-lessor generally will be considered the original user of the property and the property generally will be considered to be placed in service not earlier than when it is first used pursuant to the lease. NOTE: Sale-leaseback transactions offer certain advantages, including financing for the entire cost of the project. In addition, the price for which the facility is sold to the lessor is often higher than the cost of constructing the facility, allowing a higher grant to be claimed.
•	Required Documentation. An applicant must submit supporting documentation demonstrating that the property is eligible property, has been placed in service, and, if placed in service after 2010, that construction began in 2009 or 2010. Relevant documentation includes, among other things, (i) engineering design documents stamped by a licensed professional engineer, (ii) a commissioning report provided by a third party that certifies that the equipment has been installed, tested, and is ready and capable of being used for its intended purpose, and (iii) an interconnection agreement (for properties interconnected with a utility).
•	Specified Energy Property. A grant will be paid only with respect to "specified energy property." Specified energy property includes only tangible property, not including a building, that is an integral part of the facility and for which depreciation (or amortization in lieu of depreciation) is allowable. This includes only tangible property that is both used as an integral part of the activity performed by qualified facility and located at the site of the qualified facility. Property is an integral part of a qualified facility if the property is used directly in the qualified facility, essential to the completeness of the activity performed in that facility, and located at the site of the qualified facility. NOTE: The Treasury guidance contains a favorable interpretation of what it means to be an "integral" part of a facility.

Eligible Basis

An applicant must submit with the application a detailed breakdown of all costs included in the basis of the qualifying property. For property with a cost basis in excess of $500,000, an applicant must submit an independent accountant's certification attesting to the accuracy of all costs claimed as part of the basis. All costs that must be capitalized into the basis of property under general tax principles will be included.

Leased Property

The owner of a project that is eligible for a grant may make an irrevocable election to have the lessee of the property receive the grant. The election is made by a written agreement with the lessee and generally will follow rules already applicable to the ITC.

Recapture

The grant must be repaid to Treasury if the applicant sells the property to a disqualified person or the property ceases to qualify as specified energy property within five years from the date the property is placed in service. The amount subject to repayment is 100 percent if the disqualifying event occurs in the first year and decreases by 20 percent each year thereafter. For this purpose, "disqualified person" generally includes a person who would not be eligible for the grant if that person had placed the property in service originally.

Selling the property to an entity other than a disqualified person does not result in recapture if the property continues to qualify as a specified energy property and the purchaser of the property agrees to be jointly liable with the applicant for any recapture. An applicant will remain jointly liable to the Treasury for the recapture amount even if the applicant no longer has control over the property.

If a lessor elects to have the lessee apply for the grant and subsequently sells the property to a disqualified person, the lessee will be liable to Treasury for the recapture amount even if the lessee maintains control over the property. If the lease is terminated and possession of the property is transferred by the lessee to the lessor or any other person, the lessee will be liable to Treasury for the recapture amount if the use of the property changes during the recapture period so that it no longer qualifies as specified energy property.

An applicant is not required to post a bond as a condition of receiving payment under the grant program, and receipt of payment does not create a lien on the property in favor of the United States. However, funds that must be repaid to Treasury under these rules are considered debts owed to the United States. These debts are not considered tax liabilities.

NOTE: Treasury has limited the situations in which recapture will be triggered. In addition, Treasury will not take a security interest in the project or in the project company. This will permit developers and their lenders to avoid complex inter-creditor agreements as well as the need to provide additional security to indemnify lenders against the possibility of recapture.

If you have questions about today's Treasury Department guidance and grants in lieu of ITCs or PTCs, contact:

Chris Heuer at (503) 294-3206 or ckheuer@stoel.com
Greg Jenner at (612) 373-8857 or gfjenner@stoel.com
Carl Lewis at (206) 386-7688 or cslewis@stoel.com
Kevin Pearson at (503) 294-9622 or ktpearson@stoel.com
Adam Kobos at (503) 294-9246 or ackobos@stoel.com

IRS Circular 230 notice: Any tax advice contained herein was not intended or written to be used, and cannot be used, by you or any other person (i) in promoting, marketing or recommending any transaction, plan or arrangement or (ii) for the purpose of avoiding penalties that may be imposed under federal tax law.

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Government 30% Renewable Energy Grant Clearinghouse

Today the Department of Treasury released Grant Program Guidance, Terms and Conditions, and a Sample Application form for the renewable energy project Grant made available by way of Section 1603 of the American Recovery and Reinvestment Tax Act of 2009. Treasury is not accepting applications at this time, but has provided the guidance to give developers time to prepare for the commencement of the program.

Link to Treasury's Energy Grant Page with Associated Documents

Link to the Database for State Incentives for Renewable & Efficiency's (DSIRE) Treasury Grant Summary Page

www.treasury.gov/recovery

Central Contractor Registration Site

DOE Loan Guarantee Program




We at Starlight Capital Advisors are working with lenders who are tailoring project finance programs to work in conjunction with the Treasury Grant. We invite you to contact us to discuss your clean energy project finance needs.

Renewable Energy Industry Awaits Stimulus Rules

Renewable Energy's Power Outage
Stalled Stimulus Programs Deter Investment; 'Artificially Slowed Recovery'

By YULIYA CHERNOVA

The U.S. government stimulus package passed in February promised to reinvigorate the renewable-energy industry with new capital and programs, but the prospect of large flows of government money to the industry is holding up private-sector investment.

New incentive programs haven't yet been defined, and uncertainty about program rules has deterred investors from backing companies that also may get government money. At the same time, companies are holding off from accepting private capital because of the possibility of getting it more cheaply from the government.

"It artificially slowed the recovery," Matt Cheney, chief executive of Renewable Ventures, the U.S. subsidiary of Fotowatio SL, a Spanish developer of renewable-energy projects, said of the stimulus plan.

SolarCity had one of two large project-financing deals to close in the first half. Here, installing solar panels in Westminster, Calif., in October.
The Orange County Register/Zuma Press


Three new stimulus programs were hailed by analysts as likely to have the biggest effect in boosting renewable energy: a cash incentive from the U.S. Treasury for 30% of the cost of a renewable energy project, loan guarantees for renewable energy projects, and loan guarantees for renewable energy manufacturing.

None of these incentives has yet been defined with specific rules and none of the programs are yet accepting applications, though both the U.S. Treasury Department and the U.S. Department of Energy, which administers the loan-guarantee programs, promise to issue rules and open up to applications soon, possibly in July.

Keith Martin, a partner at law firm Chadbourne & Parke LLP who has advised on tax and project finance in renewable energy, said the absence of those rules is chilling project finance.

One uncertainty, he said, is what will happen when a project changes hands and whether, for example, the ownership change would prompt the government to reclaim its money. Typically, renewable-energy projects are structured so that investors own 95% and then "flip" the project back to its developers after 10 years. Many backers of such projects are "tax equity" investors who use tax credits available from the federal government to offset their taxable income.

Though a number of tax-equity deals "looked in May like they would push over the finish line, negotiations are stretching out," Mr. Martin said, a situation that he ties directly to questions surrounding government programs.

A similar uncertainty haunts project lenders, Mr. Martin said. These bankers are worried about how the government would handle a situation in which a bank forecloses on a project within five years. "Will it come in and take part of the collateral?" Mr. Martin said.

Very few large project-financing deals that weren't carryovers from last year actually closed in the first half of 2009. The ones that did include a $100 million commitment from Wells Fargo & Co. to finance SunPower Corp.'s 2009 projects and an undisclosed amount of tax equity finance for SolarCity Inc.'s solar projects from U.S. Bancorp. These financings worked under the assumption that the underlying projects won't take advantage of the new stimulus provisions, according to the developers involved.

For companies that need the money, on the other hand, government debt and capital are tantalizingly cheap.

"We will not close on anything until we finally hear from the DOE on the loan guarantee," said Keshav Prasad, vice president of business development at Signet Solar Inc.

Signet applied for a loan guarantee under the federal government's previous set of applications in February. The company will need at least $200 million to proceed with its goal to build a thin-film manufacturing facility in New Mexico. Signet is talking to private-equity investors, said Mr. Prasad, in parallel to working with the Department of Energy on its application.

Write to Yuliya Chernova at yuliya Chernova@dowjones.com