Renewable Energy Cash Grant Program in Danger After Tax Cut Deal

Posted on December 10, 2010 by Caleb Holmes
 
Alternative energy projects in the U.S. that were depending on a renewal of a cash grant program as part of their financing package might be facing some disappointment. The new tax cut extension deal struck between the White House and congressional Republicans will not extend the cash grant election in lieu of the 30% tax credit for projects that generate electricity with renewable energy (solar, wind, geothermal).
 
As part of the American Recovery and Reinvestment Act of 2009, developers of U.S. renewable energy plants were given a choice under the cash grant program. They could take a 30% tax credit for the cost of the investment in the plant, or they could opt for a cash grant in lieu of the credit when the plant is placed in service. The cash grant has been a major incentive to renewable energy projects, since there is no need to bring in investors who can use the tax credit, and since the cash grant can come much earlier than the benefit of the tax credit (because the tax credit is not claimed until the tax return for the project is filed, which could be many months after the project is placed in service). The problem is that the cash grant election is scheduled to come to an end on December 31. It was hoped that this cash grant election in lieu of the tax credit would be extended as part of the tax cut extension deal, but this does not appear to be the case.
 
UPDATE: Language extending the cash grant program was included in the Tax Relief, Unemployment Innsurance Reauthorization and Job Creation Act amendment to H.R. 4853, introduced in the Senate last night.  The language can be found in Section 707 of the Bill.
Tags: , , ,

The American Power Act - First Read (cont.) Renewable Energy

Posted on May 13, 2010 by Reed Rubinstein

The Power Act's Title I, Subtitle D, is titled "Renewable Energy and Energy Efficiency."  In Section 1601, Congress states that "large-scale deployment of renewable energy and substantial improvement in energy efficiency" is critical to "improved energy security", among other things.  However, this part of the Power Act is actually very limited in scope. 

First, Section 1602 of the Power Act authorizes EPA to give allowances to power districts, public utilities, and electrical co-op participating in the Rural Utilities Service loan program to be used to fund no-interest loans to consumers for energy efficiency measures.  This section also creates a permanent funding mechanism for a  "national" nonprofit organization with "significant experience" in providing "advice in legal and regulatory matters affecting electric service and the environment" to provide "verification services."  Second, Section 1603 authorizes EPA to distribute emissions allowances (i.e., permission to consume energy) to State governments to offset their higher energy costs.  One-third of the allowances are to be divided among the States equally, one-third shall be distributed ratably based on population, and one-third distributed ratably based on energy consumption.  The allowances are to be used "exclusively" for energy efficiency purposes, deployment of alternative energy projects, funding "Smart Grid" programs, and interestingly, "Providing the non-Federal share of support" for surface transportation capital projects.

 

Tags: , , ,