This is the second installment about the provisions found in the recently passed Stimulus Bill. Included is information about Grants and the Loan Guarantee Program.
Grants (federal guidance pending)
Summary
Creates a new program through the Department of Treasury that provides grants equal to 30 percent of the cost of solar property placed in service during 2009 and 2010, in lieu of the section 48 investment tax credit.
The 30% will be calculated on the same "tax basis" that would have been used to calculate any investment tax credit. The section 48 credit applies to commercial and utility-scale projects only, not residential projects.
Property that is not placed in service prior to December 31, 2010 qualifies for the grant program as long as construction begins prior to December 31, 2010 and is placed in service by January 1, 2017.
Congress stated that it intends the grants to "mimic the operation" of the investment tax credit. Therefore unless the Treasury says otherwise, developers can assume that the same rules will apply to grants that would have applied to the investment credit. So the grants will be paid to the same person who would have claimed an investment tax credit on the project.
For example, if the project is owned by a partnership, the partnership is the entity entitled to the grant. Anyone receiving a grant will have to file quarterly reports with the Treasury on how the money was used and estimate the number of jobs created or retained. The grants do not have to be reported as income by the recipients.
How to Take Advantage of This Funding
Applications will be provided by the Treasury Department within the next 30-60 days. Applications must be filed by October 1, 2011. A developer can apply for a cash grant at any time, but the Treasury has up to 60 days after the application is submitted or the project is placed in service to pay the grant, whichever is later. To date, no administrator within Treasury has been assigned to this, however, Sharp is working with SEIA and others to propose a structure and process to implement these grants quickly.
Loan Guarantee Program (federal guidance pending)
Summary
Establishes a temporary Department of Energy (DOE) loan guarantee program for renewable energy projects, renewable energy manufacturing facilities and electric power transmission projects. Appropriates $6 billion to pay the credit subsidy costs, which should support $60 billion worth of loan guarantees.
Eligible renewable projects are those that generate electricity or thermal energy and facilities that manufacture related components. Projects must commence construction by September 30, 2011. Davis-Bacon wage requirements (prevailing federal wage) apply to any project receiving a loan guarantee.
How to Take Advantage of This Funding
The DOE will announce a solicitation for loan guarantee applications after they submit guidelines in approximately 30 days. The application process will closely resemble the current DOE Loan Guarantee Program process.
The Secretary of Energy stated this week that they are streamlining the program and they plan to start approving loan guarantee applications by late April/early May. It usually takes them about 1 year to create a program, so getting the program up and running in 60 days is very fast. They will use an expedited application approval process, so it will probably take 2-4 weeks to approve after the application is received.
Since the Energy Secretary would like to start approving applications in April/May, they would need to have an application available in about a month. We believe this timeline is realistic since the loan guarantee infrastructure is already in place.
Grants (federal guidance pending)
Summary
Creates a new program through the Department of Treasury that provides grants equal to 30 percent of the cost of solar property placed in service during 2009 and 2010, in lieu of the section 48 investment tax credit.
The 30% will be calculated on the same "tax basis" that would have been used to calculate any investment tax credit. The section 48 credit applies to commercial and utility-scale projects only, not residential projects.
Property that is not placed in service prior to December 31, 2010 qualifies for the grant program as long as construction begins prior to December 31, 2010 and is placed in service by January 1, 2017.
Congress stated that it intends the grants to "mimic the operation" of the investment tax credit. Therefore unless the Treasury says otherwise, developers can assume that the same rules will apply to grants that would have applied to the investment credit. So the grants will be paid to the same person who would have claimed an investment tax credit on the project.
For example, if the project is owned by a partnership, the partnership is the entity entitled to the grant. Anyone receiving a grant will have to file quarterly reports with the Treasury on how the money was used and estimate the number of jobs created or retained. The grants do not have to be reported as income by the recipients.
How to Take Advantage of This Funding
Applications will be provided by the Treasury Department within the next 30-60 days. Applications must be filed by October 1, 2011. A developer can apply for a cash grant at any time, but the Treasury has up to 60 days after the application is submitted or the project is placed in service to pay the grant, whichever is later. To date, no administrator within Treasury has been assigned to this, however, Sharp is working with SEIA and others to propose a structure and process to implement these grants quickly.
Loan Guarantee Program (federal guidance pending)
Summary
Establishes a temporary Department of Energy (DOE) loan guarantee program for renewable energy projects, renewable energy manufacturing facilities and electric power transmission projects. Appropriates $6 billion to pay the credit subsidy costs, which should support $60 billion worth of loan guarantees.
Eligible renewable projects are those that generate electricity or thermal energy and facilities that manufacture related components. Projects must commence construction by September 30, 2011. Davis-Bacon wage requirements (prevailing federal wage) apply to any project receiving a loan guarantee.
How to Take Advantage of This Funding
The DOE will announce a solicitation for loan guarantee applications after they submit guidelines in approximately 30 days. The application process will closely resemble the current DOE Loan Guarantee Program process.
The Secretary of Energy stated this week that they are streamlining the program and they plan to start approving loan guarantee applications by late April/early May. It usually takes them about 1 year to create a program, so getting the program up and running in 60 days is very fast. They will use an expedited application approval process, so it will probably take 2-4 weeks to approve after the application is received.
Since the Energy Secretary would like to start approving applications in April/May, they would need to have an application available in about a month. We believe this timeline is realistic since the loan guarantee infrastructure is already in place.
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