by jbs071309b3 — July 15, 2009—The U.S. Department of the Treasury and the U.S. Department of Energy announced an estimated $3 billion for the development of renewable energy projects around the country and made available the guidance both large companies and small businesses will need to submit a successful application.
Funded through the American Recovery and Reinvestment Act, the program will provide direct payments in lieu of tax credits in support of an estimated 5,000 biomass, solar, wind, and other types of renewable energy production facilities.
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.
In previous years, the tax credit has been widely used, note the agencies. 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. The rate of new renewable energy installations has reportedly 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.
To expedite implementation of the program, Treasury and Energy are making available the terms and conditions, guidance, and a sample application on the Treasury Department Web site, so that companies can prepare successful applications in advance of the launch of the Web-based application in the coming weeks.
