The U.S. Department of the Treasury and the U.S. Department of Energy yesterday announced an estimated $3 billion for 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 ITC Grant). The ITC Grant is only available for commercial systems.
The rate of new renewable energy installations has fallen dramatically since the economic and financial downturns began because many projects have had a harder time obtaining financing. The Departments of Treasury and Energy hope the ITC Grant program accelerates the solar development business.
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 were required to file for a tax credit to cover a portion of the renewable energy project’s cost. This tax structure often required developers to partner with a tax equity investor with significant tax appetite on larger projects; leading to the development of the well known “flip-structure” for solar financing. That structure may be set to see significant changes.
The terms and conditions, guidance, and a sample application are all located on the Treasury Department Web site. These resources should assist our partners prepare successful applications when the web-based application are launched in the coming weeks.