Tax Incentives for Renewable Energy: Treasury Department Issues Guidance on Eligibility Requirements for Grants in Lieu of Tax Credits for Specified Energy Property
Written by Charles H. Purcell, Eric E. Freedman, Dirk Michels, Darcie L. Christopher
On July 9, 2009, the Department of the Treasury ("Treasury") issued detailed guidance (the "Guidance") on the alternative energy grant program that was created by Section 1603 of the American Recovery and Reinvestment Act of 2009 (the "2009 Recovery Act"), which was signed by President Obama on February 17, 2009.
Under the grant program, taxpayers may, in lieu of claiming any available federal investment tax credit or production tax credit, apply to the Secretary of the Treasury for a cash grant payable when "specified energy property" is placed in service. Generally, the term "specified energy property" includes wind facilities, closed- and open-loop biomass facilities, geothermal facilities, landfill gas facilities, trash facilities, certain hydropower facilities, marine and hydrokinetic renewable energy facilities, solar energy property, geothermal energy property, qualified fuel cell property, qualified microturbine property, combined heat and power system property, and geothermal heat pump property.
The grant reimburses the taxpayer for a portion -- from 10% to 30% -- of the cost of such facilities. Although Treasury officials expect to make grants totaling approximately $3 billion under the grant program, Treasury is not limited in the amount of grants it may disburse to qualified applicants.
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