Previously, Sol Systems has published on the potential impacts of sequestration on the solar industry. As of March 1st, those impacts have unfortunately become reality. On Monday the 4th, the Treasury released a “Message on Sequestration” clarifying its impact on Section 1603 of the American Recovery and Reinvestment Tax Act of 2009, more commonly known as the cash grant for the 30% investment tax credit (ITC). Due to sequestration, 1603 awards will be reduced by 8.7%, a larger cut than the 7.6% we expected to see as of October. The final grant amount for affected projects is now 27.39%, not the full 30% of the ITC.
Sequestration will affect applicants receiving awards between March 1st and September 30th, 2013. After September, the sequestration rate may be altered subject to congressional action. The date on which the Treasury issues the “Section 1603 Award Letter” to an applicant determines whether or not the grant amount is affected. The date on which the applicant submits an award request to the Treasury is irrelevant. Applicants are reminded to abide by program guidelines in calculating the eligible basis for the project, and are specifically instructed not to alter award claims in an attempt to adapt to the sequestration rate.
Because applicants cannot control when the award letter is issued, Sol Systems expects to see some projects receive unexpected cuts to their cash grant amount. Projects applying for the standard 30% tax credit will not be affected. If you have a project under Section 1603 and are seeking financing, or would like more information on our company, please contact our team at firstname.lastname@example.org or (888) 235-1538 x2. Our team would be happy to discuss your project with you and assess financing opportunities.
About Sol Systems
Sol Systems is a boutique financial services firm that offers investor clients direct access to the renewable energy asset class and provides developers with sophisticated project financing solutions. Founded in 2008, Sol Systems focuses on meeting the most critical needs of the industry, including SREC monetization, capital placement, tax equity, and New Market Tax Credits. To date, the company has arranged financing for thousands of projects and facilitated hundreds of millions in investment on behalf of Fortune 100 companies, private equity, family offices and individuals.