The Department of Energy (DOE) and the U.S. Department of the Treasury on Thursday released the long-awaited guidelines for $3 billion in renewable energy grants created by the American Recovery and Reinvestment Act.
The program will provide direct payments in lieu of 30% tax credits to support bio-mass, solar, wind, and other types of renewable energy production facilities. The DOE estimates that 5,000 projects will receive payments.
“The renewable energy program provides another important avenue for the Recovery Act to contribute to economic development in communities around the country,” Treasury Secretary Tim Geithner said. “It will provide additional stimulus to economies in urban and rural America by helping to develop domestic sources of clean energy.”
The Recovery Act authorized Treasury to make direct payments to companies that create and place in service renewable energy facilities beginning January 1, 2009. Previously, these companies could file for a tax credit to cover a portion of the renewable energy project’s cost; under the new program, applicants would agree to forgo tax credits down the line in favor of an immediate reimbursement of a portion of the property expense.
Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA) released a statement calling on Congress to extend the grant program by one year to make up for the delay in its establishment.
In previous years, the tax credit has been widely used. It is considered a successful incentive for encouraging the development of renewable energy. In 2006, approximately $550 million in tax credits were provided to 450 businesses. However, the rate of new renewable energy installations has fallen since the economic and financial downturns began, as projects had a harder time obtaining financing. The Departments of Treasury and Energy expect a fast acceleration of businesses applying for the energy funds in lieu of the tax credit.
Terms and conditions, guidance, and a sample application are available at the link below.
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