Energy Innovation Program

Off-Site Construction Challenge – Applicant guide

Contents

1. Introduction and objectives

1.1 Office of Energy Research and Development

Leveraging over fifty years of experience and unique science and technology expertise, the Office of Energy Research and Development (OERD) leads the Government of Canada’s efforts in energy innovation and invests in the most impactful energy research, development, and demonstration (RD&D) projects that maximize environmental and economic outcomes. OERD’s programs target the following four missions to realize a clean energy future and a sustainable natural resources sector: improve energy efficiency and processes to reduce emissions from energy end-use; accelerate electrification and maximize benefits of renewable heat and power; develop cleaner fuels pathways; and reduce reliance on diesel in rural, remote, and Indigenous communities. It invests in a wide range of organizations, including businesses, industry, non-profits, academia, other levels of government, and Indigenous organizations and funds energy R&D in federal labs and research centres.

1.2 Energy Innovation Program Off-Site Construction Challenge

Accelerating the pace of the housing supply is a national priority, and it goes hand in hand with ensuring that homes are affordable, resilient, and environmentally sustainable. This commitment was made clear in Budget 2025, with the launch of Build Canada Homes (BCH). BCH aims to accelerate and finance large-scale housing projects and catalyze the construction industry in adopting modern methods of construction.

In alignment with these priorities, Natural Resources Canada’s (NRCan) OERD is launching the Off-Site Construction Challenge (“the Challenge”) under the Energy Innovation Program. While off-site construction (OSC) can accelerate the pace of housing construction by streamlining production in controlled environments, reducing costs with replicable designs, and lowering environmental impacts, the integration of high-performance building components and systems into OSC can also help achieve higher whole-building energy performance. As such, OERD is challenging the industry to use innovative OSC methods to build more energy efficient and resilient buildings.

1.3 Challenge statement

“Build fast, build well: Challenging Canada’s residential construction sector to modernize the ways it builds energy efficient homes using off-site construction solutions.”

1.4 Objectives

The Challenge aims to:

  • Build fast by driving industry adoption of more productive construction approaches that use standardized and replicable OSC methods
  • Build well by bringing together key partners to demonstrate the potential for OSC methods to drive innovation in support of energy efficient, durable homes, and cost-effective housing solutions

1.5 Challenge description

The Challenge comprises 2 phases, each providing funding to successful applicants:

  • Phase 1 will select a group of finalists who will be awarded funding of up to $180,000 to facilitate the collaborative design and planning of highly energy efficient Multi-Unit Residential Buildings (MURBs) that integrate OSC methods.
  • Phase 2 will select a grand prize winner who will be awarded funding of up to $10 million to support the demonstration of their designed building through construction.

Phase 1 is open to eligible recipients (Section 2, Eligible Recipients) and will require applicants to describe their team and plan to design a MURB using OSC methods. Applicants will be evaluated by a technical review committee and undergo an internal investment review. A group of finalists will be selected to receive grant funding to carry out their design activities. Finalists will undergo due diligence and will need to successfully complete this step prior to signing a grant agreement and receiving the funding. Finalists may begin working, at their own risk, on their design activities while they advance through due diligence. Finalists will be required to complete their design activities to proceed to Phase 2 and compete for the grand prize.

Phase 2 is only open to the finalists selected from Phase 1 and will require the finalists to submit the outputs (Section 3.4, Additional Mandatory Criteria for Phase 2) from their design activities, as well as their full project proposal (FPP) outlining their construction plan. Finalists will be evaluated by a technical review committee, and a jury of industry experts. A winner will be selected to receive contribution funding to support their construction demonstration activities.

The graphics below provide an overview of the process.

  • Phase 1 – Design grant

    • Intake (Jan 26, 2026 – Mar 27, 2026)

      • Application window; open to Eligible Recipients requesting up to $180,000

    • Evaluation (Spring 2026)

    • Project Selection (Spring 2026)

      • Finalists selected and notified they have been invited to due diligence
      • At their own risk, finalists may begin design activities while proceeding through due diligence

    • Grants Awarded (Summer 2026)

      • Finalists awarded grant funding upon successful completion of due diligence

    • Design Activities (Spring 2026 – Spring 2027)

      • Finalists complete Phase 1 activities

  • Phase 2 – Grand Prize

    • Intake (Spring 2027)

      • Application window; finalists submit design outputs and full project proposal (FPP) requesting up to $10 million

    • Evaluation (Spring 2027)

    • Project Selection (Spring 2027)

      • Winner selected and notified they have been invited to due diligence
      • At their own risk, finalists may begin demonstration activities while proceeding through due diligence

    • Demonstration (Spring 2027 – Spring 2031)

      • Winner awarded contribution funding to carry out demonstration project

1.6 Expected outcomes

The Challenge aims to support Canada’s building sector through various short-, medium-, and long-term outcomes. In the short term, the Challenge will generate knowledge on the benefits of OSC methods as a tool to achieve highly energy efficient housing at competitive costs and increased productivity, which can be shared widely within the sector. In the medium-term, it will promote the development and integration of high-performance building envelope OSC products. In the long-term, the Challenge will showcase the potential of modern methods of construction to increase productivity and accelerate construction of energy efficient housing at scale, which will support long-term housing affordability by driving down the cost of construction.

2. Eligible recipients

2.1 Eligible Canadian recipients

Eligible Canadian recipients will be:

  1. Legal entities validly incorporated or registered in Canada including:
    • for profit and not for profit organizations
    • community groups
  2. Provincial, territorial, regional and municipal governments and their departments and agencies where applicable.
  3. Indigenous:
    • communities or governments
    • tribal Councils or entities that fulfill a similar function (for example, general councils, land claim organizations)
    • national or regional Indigenous councils, or tribal organizations
    • for-profit or not-for-profit organizations (majority owned and controlled by Indigenous people)

For the purposes of this Applicant Guide, the term “Indigenous” is understood to include Inuit, Métis, and First Nations individuals, or any combination thereof.

2.2 Eligible applicant organizations

In addition to being an eligible Canadian recipient as outlined in Section 2.1 above, all applicants must be a housing provider, developer, or builder who meet the following criteria:

  • Will be the owner of the building that will be constructed.
    • The applicant must confirm that they will own the building in the provided Confirmation of Applicant Contribution Letter template.
  • Will be the owner of the land planned for development, hold a long-term lease, or have explicit permission to build on the land.
    • Supporting documentation such as a property tax bill or copy of the long-term lease agreement must be provided. Note, if the property tax bill number is not available, alternative documents may be accepted in some scenarios (for example, federal lands, First Nations on-reserve).

2.3 Project partners

Partners are defined as organizations providing in-kind or financial contributions to the project.

Applicants are permitted to work with partners on their project that do not qualify as eligible applicants, such as academic institutions, federal government labs, or other federal entities. The funding from NRCan must not be used to pay for the federal government's own internal operations, or towards the acquisition of land, buildings, works, machinery and equipment or construction or creation of assets for the federal government.

Applicants will be required to submit the provided letter of contribution template for each identified partner, confirming that they are supporting the project and in what capacity. Note that the strength of the letters of contribution will be considered during review.

3. Eligible projects

Phase 1 is open to projects proposing to design a MURB that provides high energy performance, cost-effectiveness, and replicability using OSC.

Applicants must describe how their proposed project aligns with all ten of the following mandatory criteria to be considered eligible.

The mandatory criteria are:

  1. Innovation
  2. Building characteristics
  3. Right and ability to develop
  4. Housing types
  5. Off-site construction
  6. Required team members
  7. Design approach
  8. Energy and thermal performance
  9. Standardization, repeatability, and replication
  10. Building information modelling (BIM)

A detailed description of each criterion is in Section 3.1.

3.1 Mandatory criteria

Challenge-specific definitions are provided in Appendix 2, section 1 of this guide. Additional Energy Innovation Program definitions are provided in Appendix 2, section 2.

3.1.1 Innovation

Applicants must explain the main innovation(s) of their MURB design and how the proposed design exceeds the applicant’s current design and construction practices (business as usual). Examples of areas of innovation could include: energy technology integration, energy efficiency measures, higher levels of energy performance, OSC envelope component innovation, type of OSC products used, percentage of OSC content, factory automation, transportation, installation, level of factory finish, cost reductions, design and construction productivity gains, and first-of-its-kind application in the applicant’s geographic area.

3.1.2 Building characteristics

Applicants must design one MURB that aligns with Part 3 of the National Building Code of Canada (NBCC), comprising a minimum of 20 housing units and a minimum of four (4) storeys* above grade.

  • The non-residential area must not exceed 30% of the gross floor area or total lending value.
  • Alternative solutions proposed under the NBCC will be allowed to accommodate mass timber solutions.
  • *Exceptions to the minimum number of storeys may be made under the following circumstances:
    • In Indigenous, Northern or remote applications, where local regulations impose restrictions on building height or due to local cultural considerations.
    • Where zoning regulations for infill lots impose a maximum allowable building height.

3.1.3 Right and ability to develop land

Applicants must demonstrate that they have the right and ability to develop the proposed project site by confirming land ownership, long-term lease of site, or explicit permission to build on the land at the time of Phase 1 application.

3.1.4 Housing types

Applicants must design a MURB targeting the following transitional housing, non-profit co-operatives, and rental housing types:

  • Transitional housing
  • Supportive housing (rental)
  • Community housing (rental)
  • Housing co-operatives (non-profit)
  • Affordable housing (rental)
  • Mixed-income housing (rental)
  • Market rate housing (rental)

3.1.5 Off-site construction

Applicants must use OSC methods from the start of the design process, using at least one of the following OSC technology types (definitions in Appendix 2):

  • Volumetric (3D) Modular (may include mass timber solutions)
  • Panelized (2D) Systems (may include mass timber solutions)

To be considered eligible, the OSC technology option(s) used must include both insulation and control layers (that is, air, water, vapour) when shipped to site. The insulation and control layers must be installed at the factory.

Minimum OSC content requirement: At minimum, 90% of vertical above-grade wall assemblies that separate conditioned spaces from the exterior environment must be constructed using one of the eligible OSC technology types described above.

3.1.6 Required team members

Applicants must identify, at a minimum, project team members who will fill each of the following roles. The listed team members must be involved in the project from the start of the design process and be confirmed at the time of Phase 1 application. These roles can be fulfilled from within the applicant’s organization or by other organizations:

  • Canadian OSC manufacturer (definition in Appendix 2)
  • OSC Integrator (definition in Appendix 2)
  • Architect/designer
  • Enclosure consultant
  • Energy modeller

The experience of each required team member as well as their role in the project must be clearly articulated. All roles filled in Phase 1 must be maintained in Phase 2 or replaced by someone with comparable experience.

Applicants are permitted to have additional team members not listed above such as engineers, project managers, etc.

3.1.7 Design approach

Applicants must adopt an integrated design process (IDP) approach as defined in Appendix 2.

Applicants must describe how the project will be analyzed and designed to minimize the risk of overheating in the housing units.

3.1.8 Energy and thermal performance

Applicants must provide a whole-building design solution that targets the following energy and thermal performance requirements:

  • Whole-building energy performance: Must meet or exceed Tier 3 of the National Energy Code of Canada for Buildings (NECB) 2020 (that is, minimum 50% better than Tier 1). (Refer to Appendix 1 for alternative compliance options).
  • Enclosure thermal performance: Above-grade opaque enclosure assemblies (walls, roofs, and exposed floors,) must meet the minimum effective thermal performance values listed in Appendix 1 for the climate zone corresponding to the building location.
  • Whole-building air tightness: Must meet a normalized air leakage rate of ≤ 1.00 L/s at 75 Pa per m2 of building enclosure area when tested under pressurized and depressurized conditions in accordance with the “building envelope” test approach of ASTM E3158, “Standard Test Method for Measuring the Air Leakage Rate of a Large or Multizone Building,” and NECB 2020, 3.2.4.2. Enclosure area includes all surfaces separating the conditioned space from the exterior, above and below ground.
  • Modelling approach and analysis: Must explain how hourly whole-building energy modelling will be used to identify the energy efficiency measures, calculate energy and GHG reduction, and demonstrate the design meets the required energy performance target.

The basic requirements for the energy simulation programs are that they provide whole-building energy analysis (that is, they include all energy end uses), provide hourly analysis, and have been independently verified to be compliant with ASHRAE Standard 140. Accepted energy simulation software includes but is not limited to: DOE-2 based modelling programs (eQUEST, CanQUEST, Energy Pro, Visual DOE), IES, HAP, TRACE, EnergyGauge, and Energy Plus. Note, the energy analysis must be undertaken by a qualified professional with energy modeling experience, such as a Professional Engineer, Architect, Certified Engineering Technologist (CET), or Certified Energy Manager (CEM).

Refer to Appendix 1: Energy Performance for additional guidance on all energy and thermal performance requirements.

3.1.9 Standardization, repeatability, and replication

Projects must be designed for standardization, repeatability and replication to enable future measurable cost reductions and construction productivity gains. This could involveFootnote 1:

  • Developing a set of standardized building components and assemblies (that is, a “kit of parts” such as wall panels, floor panels, bathrooms, service pods, etc.).
  • Developing standardized design configurations (for example, grid dimensions, floor-to-floor heights, structural options, accessibility ratios, suite layouts/mixes, connection details).
  • Creating a repeatable design template based on a kit of parts and standard design configurations, resulting in blueprints that define layouts, unit mixes, and amenity/service space requirements for a particular use-case. Architects, designers, and/or manufacturers can then adapt and modify them to suit the specific needs and constraints of each future project.
  • Replication by applying and re-applying each design/blueprint across projects at other sites, with multiple blueprints often existing within one typology.

Note: Standardized building envelope assemblies must meet the mandatory thermal performance requirements stipulated under the mandatory performance criteria.

3.1.10 Building Information Modelling

Applicants must use Building Information Modelling (BIM) in the design, manufacturing, and construction phases of the project.

3.2 Additional evaluation considerations

NRCan reserves the right to prioritize projects at Phase 1 selection that:

  • adopt “made in Canada” materials, technologies, and solutions
  • advance an all-electric building (that is, building does not use fossil fuel energy sources)
  • address other environmental considerations (for example, embodied carbon, GHG emissions, resiliency to regional climate threats)
  • advance inclusion, diversity, equity, and accessibility (IDEA) commitments of Accessibility and Participation (definition in Appendix 2)

In addition, NRCan may consider the regional distribution of applications in project selection.

3.3 Ineligible projects

Projects that include any of the following characteristics are ineligible and will not be considered in the Challenge:

  • private ownership (for example, condominiums)
  • student housing
  • rental housing with rates that are above the market-rate rent amount for the location of the project
  • housing that aligns to Part 9 of NBCC, including the following housing archetypes:
    • single family
    • duplex
    • semi-detached
    • townhouse / row house
    • low-rise MURBs (3 storeys or less in building height, and having a building area not exceeding 600 m2)

3.4 Additional mandatory criteria for Phase 2

The following sub-sections highlight mandatory requirements for finalists to consider when designing their projects. Upon selection, finalists will receive additional details.

3.4.1 Phase 2 application package

Finalists must provide:

  • full project proposal (a template will be provided to finalists)
  • 2-page project case study summary (which will be shared publicly to highlight project features)
  • Outputs from the Phase 1 design work, including:
    • Detailed design drawings (architectural, structural, mechanical, and electrical)
    • Specifications
    • Building Information Model (BIM)
    • Class B cost estimate
    • Comprehensive energy modelling report (details in Appendix 1)
    • Total Cost of Building Ownership (TCBO) analysis (definition in Appendix 2)
    • Estimated annual energy cost for each housing unit type in the building
    • Evidence that approvals are in place to develop the site*
    • Pitch presentation

*Note: To be considered in Phase 2, finalists must demonstrate that site is ready to develop. This includes confirming that the site is zoned correctly, is (or can be) serviced by required local utilities, has any required right-of-way approvals, has undergone any required environmental assessments, and has any other required approvals in place. For previously contaminated sites, remediation efforts need to be complete. If any of these requirements are not met at the time of Phase 2 application, finalists must provide a detailed explanation and timeline to address the outstanding item(s).

3.4.2 Whole-building airtightness requirements

Finalists must include provisions in the design documents that allow the level of air tightness in Section 3.1.8 to be achieved and verified (details in Appendix 1).

3.4.3 Knowledge dissemination plan

Finalists must include a knowledge dissemination plan that provides for sharing valuable technical or techno-economic data to inform NRCan, in addition to a plan to disseminate non-confidential information and project learnings with the public and/or key stakeholders.

3.4.4 Measurement and verification

Finalists must have a plan for collecting at least two years of post-construction monitored data for the overall building and key energy end-uses. This data must be shared with NRCan.

4. Funding

The Challenge will use different funding mechanisms at each phase.

Phase 1 – Grant agreement for finalists

Applicants to Phase 1 may request up to a maximum of $180,000, up to 100% of total project costs, over a maximum period of ten months (Spring 2026 to March 31, 2027 inclusively). This funding will be in the form of a grant. There is no upper limit to the total project cost.

Phase 2 – Contribution agreement for grand prize winner

Finalists in Phase 2 may request up to a maximum of $10 million, up to 100% of total project costs, over a maximum period of four years (April 1, 2027, and March 31, 2031 inclusively). The funding will be in the form of a contribution. There is no upper limit to the total project cost. The Program may consider providing advanced payments to mitigate project risks associated with upfront OSC deposits.

The maximum contribution, maximum government stacking percentage, and project duration are outlined in the table below:

Phase

Challenge Contribution Percentage

(% of Total Project Cost)

 Maximum Contribution

Maximum Government Stacking Percentage

(% of Total Project Cost)

 Funding duration
Phase 1 100% $180,000 (Grant) 100% 10 months, until March 31, 2027
Phase 2 100% $10 million (Contribution) 100% 4 years, until March 31, 2031

5. Application process

5.1 How to apply

To apply, applicants must complete and submit their Phase 1 application via the applicant portal by 1pm ET on March 27, 2026.

Applicants are responsible for ensuring that they meet the eligibility criteria and that their application is fully completed and successfully submitted by the deadline.

Please note that due to the volume of inquiries received and to ensure the fairness of the process, the Program team will not have meetings or calls with individual applicants during the intake period. Questions about the Challenge or the process should be directed to: eipbuildings-piebatiments@nrcan-rncan.gc.ca

Access the applicant portal

The Government of Canada’s official guidance on Artificial Intelligence (AI) recognizes that generative AI may be a valuable tool to applicants in the preparation of funding applications. In accordance with this guidance, applicants are responsible for ensuring that information included in their applications is true, accurate and complete and that references are appropriately cited. Generative AI in the development of an application for the program should be used for support purposes only such as improving efficiency, assisting non-native English and French speakers, and streamlining the application writing process.

5.2 Grant and contribution agreement

Any funding under the Challenge will be contingent upon the execution of a grant and/or contribution agreement. Until a written 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 agreement.

The grant and/or contribution agreement is with the applicant only, not partners, collaborators, or vendors. While the Program does not oversee or otherwise have involvement in the contracts or other arrangements made between partners, collaborators, or vendors, applicants need to advise NRCan if there are any changes to these contracts or other arrangements such that NRCan can review for potential impacts to the scope of the project and the intended benefits, investments, and activities in Canada as well as to the legal risk relating to but not limited to intellectual property.

More information on NRCan grant and/or contribution agreements will be made available to successful applicants following notification of the proposal results.

5.3 Timelines

The following timelines are anticipated for the Challenge. NRCan, at its sole discretion, reserves the right to modify these anticipated timelines.

Steps Dates
Open for Phase 1 Applications January 26, 2026
Deadline for Phase 1 Applications March 27, 2026
Notification of Phase 1 Results Spring 2026
Due Diligence for Grant Agreement Spring 2026 – Summer 2026
Drafting and Signing of Grant Agreement Spring 2026 - Summer 2026
Phase 1 Design Work Spring 2026 – Spring 2027
Deadline for Phase 2 Submission Spring 2027
Notification of Phase 2 Results Spring 2027
Due Diligence for Contribution Agreement Spring 2027 – Summer 2027
Drafting, and Signing of Contribution Agreement Spring 2027 - Summer 2027

5.4 Service standards

NRCan maintains a suite of service standards on the expected timelines for each phase of program delivery.

Please see Service standards for NRCan’s programs for more information.

6. Terms and conditions

Grants and contributions have different terms and conditions, which can be found in the appendices.

Applicants to Phase 1 should refer to the terms and conditions in Appendix 3.

Finalists invited to Phase 2 should refer to the terms and conditions in Appendix 4.

Appendix 1: Energy performance

1. Guidance for the demonstration of compliance with energy performance targets

The Program will accept three approaches for an applicant to demonstrate that their design could achieve the mandatory minimum energy performance level (equivalent to NECB Tier 3):

  1. Meet or exceed Tier 3 of the National Energy Code of Canada for Buildings (NECB) 2020 (that is, minimum 50% better than Tier 1) using the Performance Path outlined in Part 8.
  2. Meet or exceed Tier 3 of the NECB 2020 (that is, minimum 50% better than Tier 1) using the Energy Use Intensity (EUI) performance compliance path outlined in 8.4.4. of NECB 2025.
  3. Accepted third party building standards and certifications.

Meet or exceed NECB 2020 Tier 3 NECB: Part 8 Performance Path

Projects may demonstrate that the design can achieve the energy performance target for this Challenge using the performance compliance path (Part 8) of NECB 2020. The building design must demonstrate at least a 50% energy use reduction when compared to the NECB 2020 reference building. Project teams can apply the following energy modelling considerations:

  • Fuel switching: Performance improvements over a baseline building permitted under NECB 2020 and local codes and regulations are allowed. The baseline building design may be modelled with natural gas space heating and domestic hot water heating systems (if permitted by code) and the proposed actual building design may be modelled with any code-compliant alternative system needed to achieve the requisite energy and greenhouse gas savings. The reference building must also be reasonable or commonly built for the jurisdiction and permitted by local code.
  • Onsite Solar Photovoltaic (PV) systems: PV systems may be considered when they form part of an overall approach that includes energy efficiency and conservation measures designed to reduce building energy consumption and GHG emissions; however, PV systems will not be accepted as a sole means used to meet the whole building energy requirement. The maximum energy savings provided by PV systems will be capped at 15% of the total energy reduction. To be considered, the PV system must be installed to supply energy directly to the building (that is, behind the meter installation) and all components of the system must be owned by the building operator.
  • Air leakage rate: The reference building air leakage rate shall be the prescribed default rate stated in NECB 2020, 8.4.3.3. 3) and 4). The proposed model can use the air leakage rate targeted for the project design if provisions are included in the drawings and specifications to construct the building to this level of air tightness.
  • Low-flow water fixtures: A reduction in hot water consumption/demand can be claimed for the design when lavatories, kitchen faucets, and showerheads that reduce hot water use as compared to the maximum flow rates permitted in NECB 2020 section 6.2.
  • Energy efficient appliances: A reduction in energy use can be claimed for the design when ENERGY STAR appliances are used in the building design.

Source: The conditions listed above have been adapted from the Frequently Asked Questions responses provided by the CMHC for MLI Select

Meet or exceed NECB 2020 Tier 3 NECB: Energy Use Intensity Performance Compliance

Projects may demonstrate that the design can achieve the energy performance target for this Challenge using the Energy Use Intensity (EUI) performance compliance path outlined in 8.4.4. of NECB 2025. For this option, the building design must demonstrate at least a 50% reduction to the EUI values listed in Table 8.4.4.1.

Third party building standards and certifications

The following third-party energy efficiency building standards and certifications will be considered as equivalent to the minimum energy target for this Challenge:

  • BC Step Code Part 3, Step 4
  • Canada Green Building Council, Zero Carbon Building Standard certification (v4 Design) (using either Passive or Renewable Energy Approach)
  • Passive House Institute (PHI), Certified Passive House (version 10) (Classic, Plus or Premium levels of certification)
  • Passive House Institute US (Phius), Certified Passive Building (version 25) (CORE 2024 or ZERO 2024 levels of certification)

Finalists choosing one of these alternative certification compliance paths must provide a commitment to obtain building certification; however, they do not need to have achieved certification at the time of Phase 2 application.

Where compliance is sought using one of the Passive House certification options, it is acceptable for teams to use the accompanying software to carry out the energy and GHG emission reduction analysis (that is, PHPP 10 for PHI and WUFI Passive for Phius).

2. Enclosure thermal performance

Above-grade opaque enclosure assemblies (walls, roofs, and exposed floors) must meet the minimum effective thermal performance values listed in the table below for the climate zone corresponding to the building location.

In the following table, HDD refers to the Heating Degree Days of Building Location, Celsius Degree-Days

Assembly type Metric Units HDD Zone 4 <3000 HDD Zone 5 3000–3999 HDD Zone 6 4000–4999 HDD Zone 7A 5000–5999 HDD Zone 7B 6000–6999 HDD Zone 8 ≥7000
Walls Maximum U-Value W/m²·K 0.261 0.239 0.216 0.194 0.171 0.149
Walls Minimum R-Value hr·ft²·°F/Btu 21.8 23.8 26.3 29.3 33.2 38.2
Roofs Maximum U-Value W/m²·K 0.148 0.140 0.124 0.109 0.105 0.099
Roofs Minimum R-Value hr·ft²·°F/Btu 38.5 40.4 45.7 52.1 53.9 57.4
Exposed Floors Maximum U-Value W/m²·K 0.174 0.158 0.140 0.124 0.109 0.105
Exposed Floors Minimum R-Value hr·ft²·°F/Btu 32.7 36.1 40.4 45.7 52.1 53.9

The maximum overall thermal transmittance values specified above are the area-weighted average thermal transmittance, or U-value, of the overall assembly, including insulation, sheathing, interior and exterior finish materials and air films, and taking into account thermal bridging due to framing members, in accordance with the calculation procedures of NECB 2020, article 3.1.1.7. The U-value for above-ground walls also applies to the perimeter areas of intersecting interior walls and to the above-ground portion of foundation walls, except as provided in NECB sentence 3.2.2.2.(3). Refer to NECB 2020, A-3.2.2.2.(1).

Trade-offs between the thermal performance requirements above will only be permitted within each above-ground opaque building assembly category. Vertical above-ground portions of the building envelope are only permitted to be traded off against other vertical above-ground portions of the building envelope. Horizontal above-ground portions of the building envelope are only permitted to be traded off against other horizontal above-ground portions of the building envelope. Trade offs must be calculated using the method listed in NECB 2020, 3.3.1.2.

3. Whole-building air tightness

Finalists must confirm that the building will be designed to meet the minimum whole-building air tightness mandatory criteria.

As part of the Phase 2 application package, finalists must include provisions in drawings and specifications that:

  • clearly identify the air control layer (location and material) for all enclosure assemblies
  • detail the air control layer connections to ensure air barrier continuity
  • detail the air sealing products and techniques
  • state the whole building air tightness target for the project
  • include the air tightness verification and testing requirements for progress testing (if applicable) and final testing

The winner will be required to carry out whole-building air tightness testing in accordance with ASTM E3158, “Standard Test Method for Measuring the Air Leakage Rate of a Large or Multizone Building,” after construction is complete. A final air tightness report must be submitted that indicates the final air leakage rate result and follows the reporting requirements of ASTM E3158.

4. Energy modelling report

Finalists must demonstrate that the building design meets or exceeds the minimum energy target by providing a report as part of the Phase 2 application package. The report must include the following:

  • A brief executive summary that:
    • Compares the annual energy and GHG emission reduction of the proposed design over the base case, expressed as percent savings.
Total Annual Energy Consumption

Proposed Design

(kWh/year)

Reference Building*

(kWh/year)

Savings*

(%)
Without onsite solar PV energy generation
With onsite solar PV energy generation (if applicable)
Total Annual GHG Emissions

Proposed Design

(kgCO2/year)

Reference Building*

(kgCO2/year)

Savings*

(%)
Without onsite solar PV energy generation
With onsite solar PV energy generation (if applicable)

*For projects using alternate compliance options 2 or 3, the “Reference Building” and “Savings” columns do not need to be completed.

  • States the NECB 2020 energy performance Tier that was achieved (for compliance options 1 and 2)
  • Lists the key energy conservation measures used to achieve the stated energy and GHG emission reductions.
  • A summary of the overall energy modelling results of the proposed design including:
    • Total Energy Use Intensity (TEUI), total (kWh/m2·a) (with and without onsite solar PV energy generation)
      • TEUI, gas (kWh/m2·a)
      • TEUI, electricity (kWh/m2·a)
    • TEDI (kWh/m2-a)
    • GHGI (kg CO2e/m2-a)
  • A breakdown of the energy use and GHG emissions for each major energy end use (for example, space heating, space cooling, domestic hot water, fans, pumps, ventilation, lighting, equipment, appliances, etc.).
  • An overview of the key physical and operational features of the base case and proposed building or completed building that illustrates the improvements to the building envelope, space conditioning, hot water, lighting and other systems, energy recovery and renewable energy systems to achieve the Challenge minimum energy performance.
  • Input and output files for the energy consumption modelling for the base case and proposed project or completed project. The files must detail monthly energy consumption for the whole building and by major end use (space heating, hot water, lighting, equipment, systems, etc.).
  • Any supplemental calculations for energy contributions of renewable energy systems, other systems and conditions not included in the energy and GHG modelling.
  • GHG calculations, methodology, and assumptions.
  • The anticipated summer and winter seasonal peak demand (or ‘peak power’). Peak demand must represent the highest winter and summer electrical demand requirements on the grid, reflecting any peak-shaving impacts from demand management strategies, including onsite power generation or energy storage. Peak demand must be reported in kilowatts (kW).

Source: Adapted from the CMHC MLI Select Required Documentation Guide

Appendix 2: Definitions

1. OSC Challenge specific definitions

Accessibility: How the project’s direct and indirect benefits are accessible to a wide range of stakeholders. This could include, but is not limited to, applicant’s internal IDEA policies, project building plans that follow Canadian Mortgage and Housing Corporation’s (CMHC) definition of accessibility in multi-unit residential innovative new builds, and CMHC's definition of affordability. Further consideration can include impact on communities such as how the project will address issues related to reducing the energy burden of communities and benefits of energy resiliency for vulnerable populations (for example, seniors and youth) and addressing community housing needs.

Business As Usual (BAU): Current design and construction practices, representative of roughly 80% of the MURB projects the applicant has developed.

Canadian OSC Manufacturer:

  1. Any entity that performs the manufacturing activities within Canada, regardless of whether it is a subsidiary of a foreign company or not; or
  2. A manufacturer that is Canadian-owned and operated, meaning the organization is incorporated in Canada and controlled by Canadian interests.

Class B Cost Estimate: Based on drawings and outline specifications from the design development phase, which include the preliminary design of all major systems and subsystems, as well as the results of all site/installation investigations, this estimate shall provide for the establishment of realistic cost objectives and be sufficient to obtain effective project approval.

This cost estimate shall be based on measured quantities of all items of work and prepared in elemental format. The level of accuracy of a Class B cost estimate shall be such that no more than a 10% design allowance is required.

Source: “Doing Business with PWGSC Documentation and Deliverables Manual” (January 31, 2019), Public Services and Procurement Canada

Construction Cost: The total cost of the work to the client to construct all elements of the project designed or specified by, or on behalf of, or as a result of coordination by, the architect, consisting of the construction contract price, cost of changes to the work during construction, construction management fees or other fees for the coordination and procurement of construction services, and all applicable taxes, except value-added taxes, which shall be excluded. Construction cost excludes the compensation of the architect and consultants, land cost, land development charges and other professional fees.

Source: “Chapter 4.2: Construction Project Cost Planning and Control”, Royal Architectural Institute of Canada

Design Development Phase: In this phase, the design is refined from a schematic concept into precise technical specifications for construction. It involves elaborating on the approved schematic design to determine exactly "how" the building will be constructed and operate, focusing on materials, systems, and interdisciplinary integration to meet project requirements and prepare for the construction documents stage.

Geographic Area: Defined as the municipality(ies) or territory(ies) that the project site(s) is(are) situated in, and bordering municipalities/territories.

Integrated Design Process (IDP): A collaborative, whole-systems process to building planning and design that can help realize high performance buildings that contribute to sustainable communities. The process:

  • is designed to allow the client and other stakeholders develop and realize clearly defined and challenging functional, environmental, and economic goals and objectives;
  • includes a multidisciplinary design team that has or acquires the skills required to address all design issues flowing from the objectives;
  • focuses on the design, construction, operation, and occupancy of a building over its complete life cycle; and
  • proceeds from whole-building system strategies working through increasing levels of specificity to achieve more optimally integrated solutions.

“Made in Canada”: Products with a Canadian content of at least 51%, accompanied by a qualifying statement indicating that the product contains imported content. The last substantial transformation of the product must have occurred in Canada.

Source: Competition Bureau Canada, “Product of Canada” and “Made in Canada” Claims

Market Rate Housing (Rental): Rental housing where the rent rate is defined as 76-100% of the median before-tax household income for the location of the project using the methodology outlined by Housing, Infrastructure and Communities Canada and featured in the Build Canada Homes Affordability tool:

Market rate rent can be assessed as the average for the building, not for each individual apartment. It is expected that the rates will change over the life of the project, with the final rates established at the end of construction based on the most current median before-tax household income data at that time.

Off-Site construction (OSC): Volumetric (3D) Modular Construction and Panelized (2D) Systems.

Off-Site construction (OSC) content: The cost of Volumetric (3D) Modular Construction and/or Panelized (2D) Systems expressed as a % of Construction Cost.

Off-Site Construction (OSC) Integrator: Also referred to as the OSC coach, the OSC Integrator joins a project at the beginning of design and leads the project team throughout the full project timeline on all aspects impacting the successful execution of OSC elements of the building. Their involvement helps to optimize the project design and schedule for OSC, how the factory builds OSC components, how OSC components are shipped to site, and how they are assembled onsite. The OSC Integrator ensures the roles of the project team are clear and that milestones are sequenced to fully realize the benefits of OSC.

The OSC Integrator can be an independent consultant, experienced contractor, or OSC manufacturer that offers this level of service.

Panelized (2D) Systems: This OSC method involves fabricating flat structural elements like walls, floors, and roofs in a factory setting. These panels are then brought to the construction site for assembly. The complexity can range from basic frames to fully insulated and finished panels. Panels can be constructed using wood (including mass timber), steel, concrete or composite systems. For this Challenge, panels must be delivered to site with the insulation and environmental control layers (air, water, and vapour) installed in the factory.

Source: Adapted using language from “Canadian MMC Definition Framework”, University of New Brunswick Off-site Construction Research Centre

Participation: How the project includes local and/or equity-seeking stakeholders, in the planning, design, and implementation as well as in key decision-making processes. This can include, but is not limited to, partnerships, composition of the project team, hiring practices, training opportunities, ownership of the project, and community engagement/consultation plans.

Total Cost of Building Ownership (TCBO) Analysis: A lifecycle cost analysis of a building based on all major construction, operating, maintenance, and renewal costs.

It takes into account factors such as capital cost, energy consumption and cost, GHG emissions, useful life, current age, annual maintenance cost, replacement cost, borrowing costs, and other costs that may be relevant to a given project (for example, insurance costs, taxes, etc.). The TCBO also includes the escalation to these costs over the analysis period. A TCBO analysis quantifies these variables over a fixed timeframe (for example, 60 years) and provides an estimate of the annual cost of operating the building in each year of the analysis, plus the cumulative cost of owning and operating the building for the chosen duration. The time frame used typically corresponds to the anticipated or planned life of the building.

Performing multiple TCBO analyses based on different design solution packages (for example, different levels of insulation or different mechanical systems) allows a direct comparison of the upgrades being considered. Energy modelling is a critical component of a TCBO analysis to provide an estimate of the energy consumption and resulting energy cost for the various design solution packages.

Volumetric (3D) Modular Construction: This OSC method involves fabricating fully enclosed, box-like units in a factory setting. These modules are transported to the site and assembled to form buildings. The level of factory work can vary, from basic structure-only units to fully finished rooms with interior fittings and exterior finishes. Modules can be constructed using wood (including mass timber), steel, concrete or composite systems. For this challenge, modules must be delivered to site with the insulation and environmental control layers (air, water, and vapour) installed in the factory.

Source: Adapted using language from “Canadian MMC Definition Framework”, University of New Brunswick Off-site Construction Research Centre

2. Energy Innovation Program definitions

Contribution Agreement: A funding agreement subject to performance conditions and audit, and where the funding is subject to being accounted for through regular reporting. The agreement requires final reporting on results achieved.

Dissemination: The sharing of findings and lessons learned.

Diversity: The acceptance and respect of various human dimensions including race, gender, sexual orientation, ethnicity, socio-economic status, religious beliefs, age, physical abilities, political beliefs or other ideologies.

Due Diligence Process: A process where short-listed applicants undergo an evaluation of the project’s finances, technical risk, and team risk, as well as legal and regulatory considerations.

Due Diligence Start Date: The date on which the proponent was notified that it succeeded to the Due Diligence stage.

Eligible Expenditure Period: Recipients will be allowed to start incurring Eligible Expenditures from the date a Recipient’s project has been conditionally approved (and pending a due diligence review) or April 1 of the fiscal year in which the contribution agreement is signed and ending on the contribution agreement completion date. Retroactive expenditures will be limited to 30% of NRCan’s contribution.

Eligible Expenditures: 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.

Equity: A condition or state of fair, inclusive and respectful treatment of all people based on their distinct identities and needs; removing systemic barriers to ensure all members are fully supported and have opportunities to advance. Equity does not mean treating people the same without regard for individual differences.

Grant Agreement: A funding agreement subject to pre-established eligibility criteria and is not subject to being accounted for through regular reporting nor subject to audit.

IDEA: Inclusion, diversity, equity, and accessibility.

Inclusion: The extent to which diverse members of a group (society/organization) feel valued and respected.

Indigenous Applicant or Recipient: Community, government, or organization governed by Indigenous individuals. This includes but is not limited to Band Councils, Tribal Councils, incorporated for-profit and not-for-profit Indigenous controlled organizations, self-governing Indigenous entities.

Indigenous Individuals: Includes Inuit, Métis, and First Nations individuals, or any combination thereof.

Indigenous-Owned Project: A project led by an applicant with 51% or greater Indigenous ownership who hold a controlling interest in project activities.

Northern Communities: Communities located north of the limit of isolated permafrost – approximately 50° north latitude.

Profit: In relation to the project, net operating profit as determined by Generally Accepted Accounting Principles.

Project: The Applicant’s proposal, as submitted to NRCan.

Remote Community: Defined as a community not currently connected to the North American electrical grid nor to the piped natural gas network and which is a permanent or long-term (5 years or more) settlement with at least 10 dwellings. Includes all Northern Remote Communities.

Total Project Cost: 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.

Appendix 3: Grant terms and conditions

1. Project location

While some materials can be sourced from outside of Canada, all project activities for Phase 1 and Phase 2 must take place within Canada. Manufacturing of OSC components must also take place in Canada. The project must have significant tangible benefits to Canada and preference will be given to projects with benefits, investments, and activities in Canada by applicants, partners, collaborators, or vendors.

Under the Impact Assessment Act (IAA) 2019, NRCan is required to assess whether projects that it may fund, carried out in whole or in part on federal lands or outside Canada, are not likely to cause significant adverse environmental effects. Please ensure when filling out the “Project Locations” section of the application form that you disclose all relevant locations, referencing Sections 81 – 83 of the IAA. For further information, please see Appendix 3, section 8.3.

2. Intellectual property (IP) requirements

Projects are not required to have generated IP prior to applying; applicants may continue to work on IP during the course of the project. Projects can use IP that already exists from outside of Canada, as long as it is licensed to the applicant for use in Canada. A successful grant agreement with NRCan will require that all IP that arises over the course of a project be vest in, or be licensed to, the funding Recipient. If no IP is required or expected to be generated over the course of the project, applicants will be required to justify this position if invited to Phase 2.

3. Funding and support

3.1 Funding definitions

Collaboration and leveraging are strongly encouraged for all project components, and these will be included in the selection criteria. Stacking of funding (that is, total government support for a project) will be supported to a maximum of 100% of the Total Project Cost.

Total Project Cost refers to the total cost of the project and includes both Eligible Expenditures (defined in Appendix 3, section 4.1) and Ineligible Expenditures (defined in Appendix 3, section 4.2). (Total Project Cost) = (Eligible Expenditures) + (Ineligible Expenditures). Total Project Cost does not include non-permissible expenditures (defined in Appendix 3, section 4.3).

Contribution Percentage (% of Total Project Cost) refers to the maximum percentage of Total Project Costs which can be funded by the grant. The balance is to be funded by the Recipient or from other sources.

Maximum Contribution refers to the maximum amount of funding offered by the grant. This amount cannot exceed total project costs.

Maximum Government Stacking Percentage (% of Total Project Cost) refers to the maximum level of total Canadian government funding (stacking) authorized by this grant. Prior to signing a grant agreement, a Recipient will be required to disclose all anticipated sources (Canadian and non-Canadian) of funding for the proposed activities, including approved in-kind funding, clearly identifying contributions from other Canadian government sources (federal, provincial, territorial, and municipal, including federal laboratories). This stacking limit must be respected when assistance is provided. In the event that actual total government assistance to a Recipient exceeds the Eligible Expenditures, NRCan will adjust its level of contribution (and seek reimbursement, if necessary) so that the stacking limit is not exceeded. Eligible Expenditures are defined in Appendix 3, section 4.1. Note that other programs may have different stacking limits for federal funding, and it is the responsibility of the applicant to ensure that they are within the eligible range for their project across all funding programs they apply to.

3.2 In-kind Contributions

In-kind Contribution means a cash-equivalent contribution in the form of an asset 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.

The Challenge accepts In-kind Contributions as part of the Total Project Cost, subject to the definitions and limitations described in Appendix 3, section 5.3. As per Appendix 3, section 4.2, in-kind support is ineligible for reimbursement.

4. Eligible, ineligible, and non-permissible expenditures

4.1 Eligible expenditures

Eligible Expenditures for an approved project must be directly related to, and necessary for, the implementation and conduct of a project and will include:

  • Membership fees for NRCan in Canadian and international organizations
  • Salaries and benefits for employees on the payroll of the Recipient for the actual time spent by the employees on the project
  • Professional, scientific, technical and contracting services
  • Capital expenditures such as the purchase, installation, testing and commissioning of qualifying equipment, materials and products, including diagnostic, testing tools and instruments
  • Travel expenditures, including meals and accommodation, based on National Joint Council

Rates, adjusted to reflect costs in Northern and remote areas where appropriate

  • Other expenses including:
    • printing services and translation
    • data collection services, including processing, analysis and management
    • facility costs for seminars, conference room rentals etc. (excluding hospitality)
    • honoraria
  • Overhead expenditures, provided they are directly related to the conduct of the project and can be attributed to it. Overhead expenditures can be included in the total project costs to a maximum of 15% of eligible expenditures. Overhead expenditures include:
    • administrative support provided directly to the project by the Recipient's employee(s), valued on the same basis as professional staff time
    • routine laboratory and field equipment maintenance, based on the actual expenditure to the Recipient
    • heat, electricity, and other office operating costs (for example, faxes, telephone, Internet access, rent)
    • A predetermined overhead percentage (based on evidence provided by the recipient of expected overhead expenditures at the time of grant negotiation), may be set and subsequently applied to each claim, in order to avoid unnecessary administrative burden to funding recipients
    • GST, PST or HST, net of any tax rebate to which the Recipient is entitled

4.2 Ineligible Expenditures

Costs ineligible for reimbursement from the Challenge (but permitted as part of the proponent’s contribution to the Total Project Cost) will include:

  • all costs incurred within the Total Project Cost period but outside the Eligible Expenditure Period are considered as Ineligible Expenditures
  • overhead expenses exceeding 15% of Eligible Expenditures may be included as Ineligible Expenditures and count towards the proponent’s portion of the Total Project Cost provided that the sum of overhead expenses (Eligible plus Ineligible) does not exceed 15% of the Total Project Cost
  • the reimbursable portion of Federal and Provincial Taxes
  • in-kind costs

From time to time, the Challenge may determine that some of the proponent’s project costs will not be eligible for reimbursement but may be included towards the proponent’s contribution to the Total Project Cost. These costs will be considered Ineligible Expenditures and should be included in the Ineligible Expenditures section of the budget. The Program will provide guidance to the proponent as required.

4.3 Non-permissible expenditures

The Program uses transfer payments to provide financial assistance in the form of Grants and Contributions to other organizations or individuals selected as eligible recipients to undertake their activities or projects. These funds cannot be used for the federal government's own internal operations, or towards the acquisition of land, buildings, works, machinery and equipment or construction or creation of assets for the federal government.

Additionally, expenditures ineligible either for reimbursement or for inclusion as part of the Total Project Cost (non- permissible costs) include:

  • Purchase of land

4.4 Collaboration with federal laboratories

Projects in collaboration with federal laboratories are eligible, but no preference will be given to projects with federal participation. Applicants will be required to clearly articulate in the application how the collaboration will address specific technical R&D challenges and ensure relevancy and alignment between industry and federal interests. The roles and responsibilities of the parties and the terms of the collaborator’s participation in the project must be clearly identified and may require a separate agreement. Federal lab costs should be included under the partners and budget section of the Phase 1 and Phase 2 applications.

5. Costing memorandum

5.1 Salaries and benefits

5.1.1 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.

5.1.2 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 employer paid payroll related expenses. Items such as salary bonuses and other salary incentives, stock options or vehicle use, 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.

5.1.3 Professional, technical, and scientific contracting services

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.

5.1.4 Travel, meals, and accommodation costs

Unless stated otherwise in the grant agreement between NRCan and the proponent, National Joint Council Rates that are in effect at the time of expenditure incurrence, adjusted to reflect costs in Northern and remote areas, where appropriate, 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, for example, 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)

5.2 Capital expenditures

5.2.1 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.

5.2.2 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.

5.2.3 Other expenses
5.2.3.1 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 services shall be charged at actual cost. Regulatory costs, where required may be eligible for example, testing to comply with Environmental Standards. All such costs should be identified in the original proposal cost estimates.

5.2.3.2 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 (for example, 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 grant agreement. They will not exceed 15% of Eligible Expenditures.

5.3 In-kind Contributions – costing memorandum

5.3.1 Purpose, definitions, eligibility, and value

Important note:

The Program accepts In-kind Contributions (defined below) as part of the Total Project Cost, subject to the definitions and limitations described in this section. As per Appendix 3, section 4.2, in-kind support is ineligible for reimbursement.

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.

5.3.1.1 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, and to provide guidance on how to put a value on those contributions.

5.3.1.2 Definitions for this section

In-kind Contribution: A cash-equivalent contribution in the form of an asset 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.

Collaborators: Organizations that are involved in the implementation of the project without providing in-kind or financial contributions to the project.

Project Proponent: Refers to the funding Recipient and its partners and collaborators.

Asset Section: A useful and valuable good, service or other support provided to the project.

Internal Rate: 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.

5.3.1.3 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.
5.3.1.4 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
5.3.2 Categories of eligible in-kind support
5.3.2.1 Salaries and benefits

This category addresses the provision of the project partner’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.

The value of services of an employee of the project’s partner provided to the proponent should be at Fair Market Value for the type of service provided and that these services are consistent with the duty for which the employee is normally paid.

5.3.2.2 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 organization 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 for the service if that service is provided internally (that is, within the project proponent's organization), or the incremental cost to the project proponent if it is provided by a third party.

5.3.2.3 Travel, meals, and accommodation costs

Unless stated otherwise in the grant agreement between the NRCan and the proponent, National Joint Council Rates that are in effect at the time of expenditure incurrence, adjusted to reflect costs in Northern and remote areas, where appropriate, 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, for example, 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)
5.3.2.4 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 (for example, faxes, telephone) telephone, provided they are directly related to the project
  • overhead costs will be negotiated on an individual basis with project proponents. The total of overhead expenses (Eligible and Ineligible) will not exceed 15% of Total Project Cost

6. Due diligence assessment

All applicants selected for funding will undergo a due diligence assessment, which will include four main components: financial, technical, legal and regulatory due diligence. Selected applicants will have two months to fulfill all due diligence requirements. Note that if regulatory obligations are triggered, more time would be required to complete the due diligence assessment.

As part of financial due diligence, selected applicants will be asked to complete a detailed budget and statement of work template which will be thoroughly assessed by the assigned NRCan project team. Applicants may also be selected by NRCan for a 3rd party financial audit or be asked to provide their three major financial statements (Cash Flow, Income & Balance Sheet) to evaluate the organization’s financial health. Applicants will be asked to provide documentation to support budget estimates.

Technical due diligence will be assessed by reviewing the applicant’s detailed budget and statement of work template. A panel of science and technology advisors will evaluate project complexity, feasibility and timelines.

Applicants will be asked to provide legal proof of registration in Canada as part of the legal due diligence. Within the detailed budget and statement of work, there are sections dedicated to permits and conflict of interest, which are also part of the legal due diligence performed by NRCan.

Regulatory due diligence encompasses obligations under the Impact Assessment Act and the legal duty to consult with Indigenous peoples set out in section 35 of the Constitution Act, 1982. During the due diligence phase, NRCan must assess any regulatory obligations it may have for each project and complete all federal requirements related to these Acts before funding can be disbursed. As per sections 82 and 83 of the Impact Assessment Act, NRCan must not provide financial assistance for a project to be carried out, in whole or in part, on federal lands/outside Canada, unless the project is not likely to cause significant adverse environmental. As per section 35 of the Constitution Act, 1982 Canada has a legal duty to consult with Indigenous peoples when contemplating funding a third party to carry out a project that might adversely impact potential or established Aboriginal or treaty rights. NRCan is responsible to evaluate each project to understand how and when a project could adversely impact these rights. The full project proposal, detailed budget, and statement of work template contain questions and information that are specifically used to assess NRCan’s regulatory obligations and will help inform how to fulfill this requirement.

Applicants undergoing due diligence will be notified whether their project passes the due diligence assessment. Applicants whose projects pass the due diligence assessment will be invited to work with NRCan to draft, sign, and execute a grant agreement. NRCan reserves the right to review and subsequently terminate the due diligence process if there is a change in partners, collaborators, or vendors without a clear rationale and indication that it does not change the scope of the project and the intended benefits, investments, and activities in Canada, and an attestation that there is no legal risk relating to but not limited to intellectual property.

7. Other terms and conditions

Approved projects may be subject to one or more external audits (Recipient audits) to ensure that the terms of the contribution are respected. The requirements for Recipient audits will be determined on a risk-based assessment on a project-by-project basis. This process is described in the Performance Measurement and Risk Strategy for the Program.

The conditions related to the disposition of assets acquired by the Recipient with funding provided by NRCan shall be identified in the grant agreement.

8. Regulatory, reporting, and other requirements

8.1 Inclusion, diversity, equity and accessibility (IDEA) workplaces and policies

NRCan recognizes the importance of a diverse and inclusive workforce for the resilience of Canada’s economy and the benefit of Canadian society. To better understand applicants’ approaches to creating more equitable and inclusive workplaces and policies, NRCan is collecting voluntary information that will be aggregated and anonymous. This information will be used to inform future outreach, program development, and efforts to promote IDEA in the clean energy sector.

8.2 Duty to consult

NRCan has a legal duty to consult with Indigenous groups when a contemplated Crown conduct, such as the provision of funding, may have adverse impacts on existing or potential Indigenous or Treaty rights. Federal departments and agencies are responsible for understanding how and when an activity could have an adverse impact on Aboriginal or treaty rights, and consultation should occur prior to the federal government taking any action.

While applicants to the Program are not required to consult with Indigenous groups as part of the application process, they will be required to report at Phase 2 if they have already conducted consultation or engagement activities in relation to the project proposal or as part of their ongoing operations or corporate commitments.

8.3 Impact Assessment Act

As per the Impact Assessment Act, NRCan is required to assess whether RD&D projects carried out, in whole or in part, on federal lands are likely to cause significant adverse environmental effects. At Phase 2, applicants will be asked to identify if the project will be carried out in whole or in part on federal lands. If so, an environmental assessment may be required during due diligence for successful applicants.

8.4 Information sharing permissions

During the application process, applicants will confirm whether they provide permission for NRCan to share their application with other relevant funding organizations. For projects that may not obtain funding under the Program, this will allow the Program to provide the opportunity for maximum exposure and guidance across other federal funding programs or providers.

8.5 Trusted Partners

To facilitate co-funding with provincial/territorial and industry funders, NRCan is working in collaboration with a network of other funding organizations across Canada. By giving NRCan the authority to share your proposal with our “Trusted Partners” (TP), you allow NRCan to explore possible co-funding opportunities, referrals, or follow-on funding opportunities.

Please note that NRCan will only share these applications with TPs where NRCan has a non-disclosure agreement in place and for the purposes of referring proposals for funding consideration or exploring the possibility of co-funding.

8.6 Contact us

For any questions regarding the Challenge, please contact NRCan at eipbuildings-piebatiments@nrcan-rncan.gc.ca. During regular operations, NRCan will strive to respond within two business days.

8.7 Other conditions

  • No Member of the House of Commons shall be admitted to any share or part of the grant agreements, or any resulting benefit.
  • Where appropriate, projects will be subject to appropriate environmental assessments prior to the release of any funds.
  • 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. 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.

8.8 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:

  • The applicant’s information supplied to NRCan contains financial, commercial, scientific or technical information; and
  • The applicant consistently treats such information in a confidential manner.

Accordingly, 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 e-mail, NRCan will respond to the Proposal by e-mail. 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 e-mail correspondence to the applicants for all non-confidential matters.

NRCan recognizes that e-mail 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 e-mail to communicate confidential information within their own organizations may choose to interact with the program via the program’s email address: eipbuildings-piebatiments@nrcan-rncan.gc.ca

For more information on this subject, a careful reading of the entire section 20 of the Access to Information Act is greatly encouraged.

9. Disclaimer

NRCan reserves the right to alter or cancel any call for expressions of interest, call for proposals, challenges, funding amounts and/or deadlines associated with any program component, or to cancel any application process at its sole discretion. Any changes will be communicated to registered applicants via the NRCan website.

Any costs incurred for the submission of applications at Phase 1 or Phase 2 are at the project applicant’s own risk. In all cases, any funding under any submission, review and assessment process will be contingent upon the execution of a grant agreement.

Until a written grant 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 grant agreement.

Appendix 4: Contribution terms and conditions

1. Project location

While some materials can be sourced from outside of Canada, all project activities for Phase 1 and Phase 2 must take place within Canada. Manufacturing of OSC components must also take place in Canada. The project must have significant tangible benefits to Canada and preference will be given to projects with benefits, investments, and activities in Canada by applicants, partners, collaborators, or vendors.

Under the Impact Assessment Act (IAA) 2019, NRCan is required to assess whether projects that it may fund, carried out in whole or in part on federal lands or outside Canada, are not likely to cause significant adverse environmental effects. Please ensure when filling out the “Project Locations” section of the application form that you disclose all relevant locations, referencing Sections 81 – 83 of the IAA. For further information, please see section Appendix 4, section 9.3.

2. Intellectual Property (IP) requirements

Projects are not required to have generated IP prior to applying; applicants may continue to work on IP during the course of the project. Projects can use IP that already exists from outside of Canada, as long as it is licensed to the applicant for use in Canada. A successful contribution agreement with NRCan will require that all IP that arises over the course of a project be vest in, or be licensed to, the funding Recipient. If no IP is required or expected to be generated over the course of the project, applicants will be required to justify this position if invited to Phase 2.

3. Knowledge dissemination

Applicants will be asked to describe the knowledge products that will be produced as part of the project and how these products will be disseminated. Knowledge dissemination, including the sharing of project insights, successes, and barriers, is a key element of clean technology innovation. Applicants are required to participate in knowledge dissemination activities either during the project or after project completion. Applicants may choose to allocate a portion of their funding toward these activities, so long as they occur during the reimbursement period as outlined in section 4. Applicants are required to provide NRCan with copies of their knowledge products (for example, summary report, slide deck, data, infographics) as part of regular reporting expectations outlined in Appendix 4, section 8.

4. Funding and support

4.1 Funding definitions

Collaboration and leveraging are strongly encouraged for all project components, and these will be included in the selection criteria. Stacking of funding (that is, total government support for a project) will be supported to a maximum of 100% of the Total Project Cost.

Total Project Cost refers to the total cost of the project and includes both Eligible Expenditures (defined in Appendix 4, section 5.1) and Ineligible Expenditures (defined in Appendix 4, section 5.2). (Total Project Cost) = (Eligible Expenditures) + (Ineligible Expenditures). Total Project Cost does not include non-permissible expenditures (defined in Appendix 4, section 5.3).

Challenge Contribution Percentage (% of Total Project Cost) refers to the maximum percentage of funding provided by the Challenge for Total Project Cost (cannot exceed the Maximum Contribution). The balance is to be funded by the Recipient or from other sources.

Maximum Contribution refers to the maximum amount of funding provided by the Challenge for Total Project Cost and must also align with the contribution percentage limitations.

Maximum Government Stacking Percentage (% of Total Project Cost) refers to the maximum level of total Canadian government (federal, provincial, territorial, and municipal) funding authorized by this Challenge. Prior to signing contribution agreements, a Recipient will be required to disclose all anticipated sources (Canadian and non-Canadian) of funding for the proposed project, including approved in-kind funding, clearly identifying contributions from other Canadian government sources (federal, provincial, territorial, and municipal, including federal laboratories). This stacking limit must be respected when assistance is provided. In the event that actual total government assistance to a Recipient exceeds the Eligible Expenditures, NRCan will adjust its level of contribution from the Challenge (and seek reimbursement, if necessary) so that the stacking limit is not exceeded. Eligible Expenditures are defined in Appendix 4, section 5.1. Note that other programs may have different stacking limits for federal funding, and it is the responsibility of the applicant to ensure that they are within the eligible range for their project across all funding programs they apply to.

4.2 In-kind Contributions

In-kind Contribution means a cash-equivalent contribution in the form of an asset 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.

The Challenge accepts In-kind Contributions as part of the Total Project Cost, subject to the definitions and limitations described in Appendix 4, section 6.3. As per Appendix 4, section 5.2, in-kind support is ineligible for reimbursement.

5. Eligible, ineligible, and non-permissible expenditures

5.1 Eligible expenditures

Eligible expenditures for an approved project must be directly related to, and necessary for, the implementation and conduct of a project and will include:

  • salaries and benefits for employees on the payroll of the Recipient for the actual time spent by the employees on the project
  • training and workshops
  • professional, scientific, technical and contracting services
  • travel expenditures, including meals and accommodation, based on National Joint Council Rates, adjusted to reflect costs in Northern and remote areas, where appropriate.travel expenditures, including meals and accommodation, based on National Joint Council Rates, adjusted to reflect costs in Northern and remote areas, where appropriate.
  • capital expenditures such as the purchase, installation, testing and commissioning of qualifying equipment, materials and products, including diagnostic, testing tools and instruments, and original equipment manufacturer equipment warranty (including extended warranties, where deemed appropriate to mitigate risk and lack of capacity)
  • other expenses related to the project or activity including:
    • laboratory and field supplies, and materials
    • printing services and translation
    • data collection services, including processing, analysis and management
    • facility costs for seminars, conference room rentals etc. (excluding hospitality)
    • construction Insurance
    • accreditation
    • license fees and permits
    • honoraria
    • training
    • field testing services
  • Overhead expenditures, provided they are directly related to the conduct of the project and can be attributed to it. Overhead expenditures can be included as Eligible Expenditures to a maximum of 15% of Eligible Expenditures. Overhead expenditures include:
    • administrative and corporate support provided directly to the project by the Recipient's employee(s), valued on the same basis as professional staff time
    • routine laboratory and field equipment maintenance, based on the actual expenditure to a Recipient
    • office operating expenses directly related to the conduct of the project (for example, faxes, telephone, photocopies, internet, SAT phones, and office equipment)
    • costs associated with further distribution of funding
    • a predetermined overhead percentage (based on evidence provided by the Recipient of expected overhead expenditures at the time of contribution agreement negotiation), may be set and subsequently applied to each claim, in order to avoid unnecessary administrative burden to funding Recipients
  • GST, PST or HST, net of any tax rebate to which the Recipient is entitled

5.2 Ineligible Expenditures

Costs ineligible for reimbursement from the Challenge (but permitted as part of the proponent’s contribution to the Total Project Cost) will include:

  • all costs incurred within the Total Project Cost period but outside the Eligible Expenditure Period are considered as Ineligible Expenditures
  • overhead expenses exceeding 15% of Eligible Expenditures may be included as Ineligible Expenditures and count towards the proponent’s portion of the Total Project Cost provided that the sum of overhead expenses (Eligible plus Ineligible) does not exceed 15% of the Total Project Cost
  • the reimbursable portion of Federal and Provincial Taxes
  • in-kind costs

From time to time, the Challenge may determine that some of the proponent’s project costs will not be eligible for reimbursement but may be included towards the proponent’s contribution to the Total Project Cost. These costs will be considered Ineligible Expenditures and should be included in the Ineligible Expenditures section of the budget at Phase 2. The Program will provide guidance to the proponent as required.

5.3 Non-permissible expenditures

The Program uses transfer payments to provide financial assistance in the form of Grants and Contributions to other organizations or individuals selected as eligible recipients to undertake their activities or projects. These funds cannot be used for the federal government's own internal operations, or towards the acquisition of land, buildings, works, machinery and equipment or construction or creation of assets for the federal government.

Additionally, expenditures ineligible either for reimbursement or for inclusion as part of the Total Project Cost (non- permissible costs) include:

  • purchase of land

5.4 Collaboration with federal laboratories

Projects in collaboration with federal laboratories are eligible, but no preference will be given to projects with federal participation. Applicants will be required to clearly articulate in the application how the collaboration will address specific technical R&D challenges and ensure relevancy and alignment between industry and federal interests. The roles and responsibilities of the parties and the terms of the collaborator’s participation in the project must be clearly identified and may require a separate agreement. Federal lab costs should be included under the partners and budget section of the Phase 1 and Phase 2 applications.

6. Costing memorandum

6.1 Salaries and benefits

6.1.1 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.

6.1.2 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 employer paid payroll related expenses. Items such as salary bonuses and other salary incentives, stock options or vehicle use, 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.

6.1.3 Professional, technical, and scientific contracting services

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.

6.1.4 Travel, meals, and accommodation costs

Unless stated otherwise in the contribution agreement between NRCan and the proponent, National Joint Council Rates that are in effect at the time of expenditure incurrence, adjusted to reflect costs in Northern and remote areas, where appropriate, 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, for example, 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)

6.2 Capital expenditures

6.2.1 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.

6.2.2 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.

6.2.3 Other expenses
6.2.3.1 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 services shall be charged at actual cost. Regulatory costs, where required may be eligible for example, testing to comply with Environmental Standards. All such costs should be identified in the original proposal cost estimates.

6.2.3.2 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 (for example, 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 contribution agreement. They will not exceed 15% of Eligible Expenditures.

6.3 In-kind Contributions – costing memorandum

6.3.1 Important note

The Program accepts In-kind Contributions (defined below) as part of the Total Project Cost, subject to the definitions and limitations described in this section. As per Appendix 4, section 5.2, in-kind support is ineligible for reimbursement.

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.

6.3.2 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, and to provide guidance on how to put a value on those contributions.

6.3.3 Definitions for this section

In-kind Contribution: A cash-equivalent contribution in the form of an asset 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.

Collaborators: Organizations that are involved in the implementation of the project without providing in-kind or financial contributions to the project.

Project Proponent: Refers to the funding Recipient and its partners and collaborators.

Asset Section: A useful and valuable good, service or other support provided to the project.

Internal Rate: 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.

6.3.4 Eligibility of In-kind Contributions

Applies to Phase 1 & Phase 2: Finalists and Grand Prize Winners

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
6.3.5 Assessing the value of In-kind Contributions

Applies to Phase 1 & Phase 2: Finalists and Grand Prize Winners

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
6.3.6 Categories of eligible in-kind support
6.3.6.1 Salaries and benefits

Applies to Phase 1 & Phase 2: Finalists and Grand Prize Winners

This category addresses the provision of the project partner’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.

The value of services of an employee of the project’s partner provided to the proponent should be at Fair Market Value for the type of service provided and that these services are consistent with the duty for which the employee is normally paid.

6.3.6.2 Professional, scientific and contracting services

Applies to Phase 1 & Phase 2: Finalists and Grand Prize Winners

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 organization 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 for the service if that service is provided internally (that is, within the project proponent's organization), or the incremental cost to the project proponent if it is provided by a third party.

6.3.6.3 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
6.3.6.4 Travel, meals, and accommodation costs

Unless stated otherwise in the contribution agreement between the NRCan and the proponent, National Joint Council Rates that are in effect at the time of expenditure incurrence, adjusted to reflect costs in Northern and remote areas, where appropriate, 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, for example, 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)
6.3.6.5 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 (for example, faxes, telephone) telephone, provided they are directly related to the project
  • overhead costs will be negotiated on an individual basis with project proponents. The total of overhead expenses (Eligible and Ineligible) will not exceed 15% of Total Project Cost

7. Due diligence assessment

All finalists selected for funding will undergo a due diligence assessment, which will include four main components: financial, technical, legal and regulatory due diligence. Selected applicants will have two months to fulfill all due diligence requirements. Note that if regulatory obligations are triggered, more time would be required to complete the due diligence assessment.

As part of financial due diligence, selected applicants will be asked to complete a detailed budget and statement of work template which will be thoroughly assessed by the assigned NRCan project team. Applicants may also be selected by NRCan for a 3rd party financial audit or be asked to provide their three major financial statements (Cash Flow, Income & Balance Sheet) to evaluate the organization’s financial health. Applicants will be asked to provide documentation to support budget estimates.

Technical due diligence will be assessed by reviewing the applicant’s detailed budget and statement of work template. A panel of science and technology advisors will evaluate project complexity, feasibility and timelines.

Applicants will be asked to provide legal proof of registration in Canada as part of the legal due diligence. Within the detailed budget and statement of work, there are sections dedicated to permits and conflict of interest, which are also part of the legal due diligence performed by NRCan.

Regulatory due diligence encompasses obligations under the Impact Assessment Act and the legal duty to consult with Indigenous peoples set out in section 35 of the Constitution Act, 1982. During the due diligence phase, NRCan must assess any regulatory obligations it may have for each project and complete all federal requirements related to these Acts before funding can be disbursed. As per sections 82 and 83 of the Impact Assessment Act, NRCan must not provide financial assistance for a project to be carried out, in whole or in part, on federal lands/outside Canada, unless the project is not likely to cause significant adverse environmental. As per section 35 of the Constitution Act, 1982 Canada has a legal duty to consult with Indigenous peoples when contemplating funding a third party to carry out a project that might adversely impact potential or established Aboriginal or treaty rights. NRCan is responsible to evaluate each project to understand how and when a project could adversely impact these rights. The full project proposal, detailed budget, and statement of work template contain questions and information that are specifically used to assess NRCan’s regulatory obligations and will help inform how to fulfill this requirement.

Applicants undergoing due diligence will be notified whether their project passes the due diligence assessment. Applicants whose projects pass the due diligence assessment will be invited to work with NRCan to draft, sign, and execute a contribution agreement. NRCan reserves the right to review and subsequently terminate the due diligence process if there is a change in partners, collaborators, or vendors without a clear rationale and indication that it does not change the scope of the project and the intended benefits, investments, and activities in Canada, and an attestation that there is no legal risk relating to but not limited to intellectual property.

8. Reporting requirements

8.1 Outcome reporting

After entering into a contribution agreement with NRCan, proponents of successfully funded projects will be required to report on a quarterly and yearly basis to ensure that targets and objectives are being met.

As some outcomes may only be realized after funding has ended, ongoing data collection and assessment will be required for a period of five years following the project’s completion date.

The frequency of reporting will be determined based on the risk of the Recipient/project as established by the departmental risk management model but will include, at a minimum, annual reporting.

The reporting requirements for Recipients will be as follows:

8.2 On a regular basis

  • A financial report signed by the Chief Financial Officer or Duly Authorized Officer of the organization which outlines Eligible Expenditures incurred.
  • A project cash flow statement and/or budget.
  • A report using a template supplied by NRCan that shall provide a status of activities in sufficient detail to allow progress to be evaluated and periodic tracking of performance indicators. The report should identify any concerns that NRCan should be made aware of, and explain how they are being addressed.

8.3 At the end of the project

  • It will be considered to be the 'end of the project' once the final (if more than one) reporting, as outlined in the contribution agreement, has been completed to the satisfaction of NRCan. Reports may include: A financial declaration as to the total amount of contributions or payments received from other sources in respect of the Project.
  • A financial declaration as to the total amount of Canadian government funding received in respect of the Project.
  • A project completion report to describe how project activities have contributed to the achievement of the objectives of the project, which may include confidential information for internal government use only, including:
    • a review of the results of the project in comparison to the original deliverables and work plan, with explanations of any deviations
    • a review of the project's performance measures to describe the benefits that have or will accrue as a result of the project including energy efficiency, environmental impact, costs and paybacks, and any other appropriate measures such as productivity and quality improvements
    • a description of the Recipient's knowledge dissemination activities and/or tech transfer activities (where applicable)
    • a final project cost table
  • A public report*, using a template supplied by NRCan, that describes the project and its results, which may be translated by NRCan and made publicly available.
  • Where applicable, copies of any non-proprietary reports requested by NRCan arising from and prepared during the course of the project.

*Alternative means of public reporting that are more context and culturally appropriate may be substituted for Indigenous Recipients.

8.4 For a period of 5 years following the end of the project

Annually, an updated Outcomes Report, using a template supplied by NRCan, to report on short term, intermediate term, and, to the extent possible, long-term outcomes. Regular communication between NRCan and the Recipients will be established to monitor progress.

The first two years of reporting must include post-construction monitoring data for the overall building and key energy end-uses. The energy data can then be used to inform outcomes reporting for the following years.

8.5 Non-repayable contributions

The Grand Prize contribution awarded under Phase 2 of the program will be non-repayable, as they will be for pre-commercial (Technology Readiness Level 1-9) activities and the benefits from the contribution will be accrued broadly rather than to the Recipient. The projects being supported under these programs are pre-commercial in nature and thus not anticipated to generate revenues as the technologies require further adaptation, improvements, and de-risking to be commercially profitable.

This is in accordance with the Directive on Transfer Payments, Appendix E, Section E-15, which permits non-repayable contributions under such circumstances when "the benefits from the contribution accrue broadly rather than to the Recipient". The benefits of these contributions will accrue broadly: the environmental benefits will include more efficient energy usage, increased renewable energy production, reduced impacts on air, water, and soil, among others, and these environmental goods will benefit Canadians as a whole. In the long term, the competitive benefits resulting from the program will also result in more sustainable employment. And economic development opportunities for Canadians, including Indigenous communities, in the natural resource sectors. Primary activities are also intended to provide input into policies, codes, standards, and regulations while enabling the transfer of knowledge and building of capacity through implementing green technologies in Canada. This is of particular importance in Canada's remote communities.

8.6 Other terms and conditions

Approved projects may be subject to one or more external audits (Recipient audits) to ensure that the terms of the contribution are respected. The requirements for Recipient audits will be determined on a risk-based assessment on a project-by-project basis. This process is described in the Performance Measurement and Risk Strategy for the Program.

The conditions related to the disposition of assets acquired by the Recipient with funding provided by NRCan shall be identified in the contribution agreement.

9. Regulatory, reporting, and other requirements

9.1 Inclusion, diversity, equity and accessibility (IDEA) workplaces and policies

NRCan recognizes the importance of a diverse and inclusive workforce for the resilience of Canada’s economy and the benefit of Canadian society. To better understand applicants’ approaches to creating more equitable and inclusive workplaces and policies, NRCan is collecting voluntary information that will be aggregated and anonymous. This information will be used to inform future outreach, program development, and efforts to promote IDEA in the clean energy sector.

9.2 Duty to consult

NRCan has a legal duty to consult with Indigenous groups when a contemplated Crown conduct, such as the provision of funding, may have adverse impacts on existing or potential Indigenous or Treaty rights. Federal departments and agencies are responsible for understanding how and when an activity could have an adverse impact on Aboriginal or treaty rights, and consultation should occur prior to the federal government taking any action.

While applicants to the Program are not required to consult with Indigenous groups as part of the application process, they will be required to report at Phase 2 if they have already conducted consultation or engagement activities in relation to the project proposal or as part of their ongoing operations or corporate commitments.

9.3 Impact Assessment Act

As per the Impact Assessment Act, NRCan is required to assess whether RD&D projects carried out, in whole or in part, on federal lands are likely to cause significant adverse environmental effects. At Phase 2, applicants will be asked to identify if the project will be carried out in whole or in part on federal lands. If so, an environmental assessment may be required during due diligence for successful applicants.

9.4 Information sharing permissions

During the application process, applicants will confirm whether they provide permission for NRCan to share their application with other relevant funding organizations. For projects that may not obtain funding under the Program, this will allow the Program to provide the opportunity for maximum exposure and guidance across other federal funding programs or providers.

9.5 Trusted Partners

To facilitate co-funding with provincial/territorial and industry funders, NRCan is working in collaboration with a network of other funding organizations across Canada. By giving NRCan the authority to share your proposal with our “Trusted Partners” (TP), you allow NRCan to explore possible co-funding opportunities, referrals, or follow-on funding opportunities.

Please note that NRCan will only share these applications with TPs where NRCan has a non-disclosure agreement in place and for the purposes of referring proposals for funding consideration or exploring the possibility of co-funding.

9.6 Contact us

For any questions regarding the Challenge, please contact NRCan at eipbuildings-piebatiments@nrcan-rncan.gc.ca. During regular operations, NRCan will strive to respond within two business days.

9.7 Other conditions

  • No Member of the House of Commons shall be admitted to any share or part of the contribution agreements, or any resulting benefit.
  • Where appropriate, projects will be subject to appropriate environmental assessments prior to the release of any funds.
  • 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. 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.

9.8 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:

  • the applicant’s information supplied to NRCan contains financial, commercial, scientific or technical information
  • the applicant consistently treats such information in a confidential manner

Accordingly, 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 e-mail, NRCan will respond to the Proposal by e-mail. 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 e-mail correspondence to the applicants for all non-confidential matters.

NRCan recognizes that e-mail 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 e-mail to communicate confidential information within their own organizations may choose to interact with the program via the program’s email address: eipbuildings-piebatiments@nrcan-rncan.gc.ca

For more information on this subject, a careful reading of the entire section 20 of the Access to Information Act is greatly encouraged.

10. Disclaimer

NRCan reserves the right to alter or cancel any call for expressions of interest, call for proposals, challenges, funding amounts and/or deadlines associated with any program component, or to cancel any application process at its sole discretion. Any changes will be communicated to registered applicants via the NRCan website.

Any costs incurred for the submission of applications at Phase 1 or Phase 2 are at the project applicant’s own risk. In all cases, any funding under any 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.

 
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