Are clean energy development grants right for your business?

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Grants are great ways to maximize and leverage your cash being used to develop new energy technologies and for job creation actions by your company. Following the grant process requirements are key to insuring your best possible chances of obtaining one.

 

 

Photo source: McCombs.edu.texas.com

The energy business, both fossil fuel and renewable clean energy sectors, run with the assistance of an ongoing series of varying state and federal financial incentives. Such incentives include federal and state tax credits, depreciation allowances, relaxation or exemption to certain environmental regulations and grants for technology development leading to job creation. Grants are an ongoing part of the energy industry. State grants in particular are more often than not aimed at creating long term job opportunities. These grants can be very helpful in your early stages of development for new energy technologies. While obtaining additional funding is generally considered to be a good thing, determining if you should apply for a energy grant most often depends on the terms and conditions contained within it.

Here are some factors to take into consideration before you apply for grant opportunity:

Do the grant objectives align with your company objectives?

Grants are designed by government entities to spur specific development in specific areas of commercialization and business operations deemed important by the government entity or agency issuing the grant. While at times a number of grant opportunities may appear to be available in the state you operate in, it is not a given they will align with what your company is currently doing or considering for the future. For example if your company is working on improvements in how to install a PV solar system and you find a grant providing financial incentives for the installation of PV solar systems, don’t assume you automatically qualify for the grant. Call the issuing agency and ask them as they have grant project managers in place for this reason among the other duties they perform. Making sure you qualify not only improves your chances of potentially receiving a grant award, it saves you a huge amount of time and work if you don’t.

Know and understand the grant’s cash contribution and match in kind definitions.

Virtually all government grants designed for “for profit” entities require some level of cash contribution and/or match in kind contributions as part of their funding formula and it is important to understand their terms as found in the grant notification document. Grants will often match the amounts of direct cash you will spend for the term of the grant. They may or may not allow you count funding you have spent before the grant filing date. Still others will allow such things as indirect labor, the purchase of equipment or the need for sub-contractors. Each grant is different. The big mistake often made is too simply assume if a grant award is say $1 million dollars, this is what the company will receive. But often only if the company has made or is making that financial commitment on or about the time of the grant term period. Grants often use the term, “maximum awards up to $$$” so a $1 million dollar grant maximum per awardee means the government may award an amount under the stated maximum.

State grants, by necessity and often state law, come with strings attached including revenue sharing and claw back provisions.

If you are considering applying for a technology development grant in one state but believe you may move your operations to another state in the near future, understand you may be required by the issuing state to pay back all or part of the grant award. This could be in the form of a revenue sharing at a certain percentage for a multiple year time period. Issuing states are most interested in funding those firms who will most likely stay in state or plan to come to their state to conduct ongoing business.

When in doubt, follow what the main grant document states.

Grants are typically long and detailed documents, often more than 100 pages in length containing several attachments and worksheets. Due to the fact several departments within a government agency contribute to the terms and conditions of the grant, there may be, by accident, different number headings and term definitions between the various attachments and addendum heading requirements to the main grant document contents. The differences can be small but important and can result in inadvertently using the wrong page numbers or section heading numbers. This may lead the grant reviewers to find your filing as not in compliance or deficient and end up with your filing being disqualified. It pays to call the agency contacts listed on the grant when in doubt no matter how small the discrepancies in documents might appear.If you unable to contact the issuing agency before the grant deadline, go by the terms of the main grant document, not attachments to the document. If there is confusion you can always say you followed the main issuing document for guidance as a defense against automatic disqualification.

If it really is confidential information on your part, make sure you understand what protections or lack thereof are involved when filing.

Grants come from taxpayer funding. As such grant filing and their contents can become subject to public disclosure and/or Freedom of Information Requests. If you truly have proprietary information in your grant and you want it keep confidential, then you will most likely need to state this and request this information be exempted from public disclosure by the agency issuing the grant application. Remember however this is two edge sword because more often than not grants with exemptions may be placed in lower award priority to grants filed without exemption requests.

Grant deadlines really are deadlines.

Its a rare case when a party is allowed to file a grant after the grant’s stated deadline. In order to maintain order and fairness, issuing agencies have to issue and follow strict rules regarding deadlines for filings. Never assume you have more time for your filing than what the grant deadline states.

Playing by the rules is the best bet to win a grant.

The urge to, “call someone who knows someone who can call someone” may come up during various times of the grant application process. This is generally well intentioned and well meaning however it can lead to a grant being disqualified. Government agencies issuing the grants must follow specific rules and regulations and they are on the look out for any attempts of undue influence on their decision making award process. Contacting the issuing agency for specific answers to specific filing questions is OK but keep in mind anything beyond requests for technical assistance could be construed in the wrong way.

If you are awarded a grant, there will most likely be regular reporting back to the issuing agency.

The main grant document will tell what the reporting requirements are in the event you are awarded a grant. They can be monthly or quarterly, almost always yearly and can extend out for several years after the grant term is concluded. Planning on who in your firm will do the reporting and a process in place to insure reports are accurate and timely prevents confusion and concerns on the part of the issuing agency.

In closing, energy technology grants are an effective means for bootstrapping your early on development initiatives and when successfully awarded, greatly improve the profile of your company in the local marketplace. Investors keep an eye on companies who are successful in receiving grant awards for their technologies as it tells the investor others see the company’s value proposition as meaningful. Grants are worth the time and effort to go after when it makes sense for your company, you qualify and you commit to following the full intent and terms and conditions of the grant award process.

Best regards,

Bob Magyar

Bob is the Managing Director of Navitus Strategies dedicated to assisting companies in the business development, financing and market acceptance of their clean energy technologies. He is highly experienced in the area of government grants having secured several million in grant awards for his various clients. He can be reach at: bmagyar@navitusstrategies.com or 267-614-3145. 

 

 

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