US Departments of Treasury, Energy Announce More Than $3B in Recovery Act Funds for Direct Payments for Renewable Energy Projects
The US Departments of the Treasury and Energy announced the availability of an estimated $3 billion for the development of renewable energy projects around the country. Funded through the American Recovery and Reinvestment Act (Recovery 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 two made available the guidance businesses will need to submit a successful application for the funding. Eligible types of renewable energy propertires inlcude:
- Large and small wind
- Biomass (closed-loop and open-loop)
- Landfill gas
- Qualified hydropower
- Marine and hydrokinetic
- Fuel cells
- Combined heat and power
The Recovery Act authorized Treasury to make direct payments to companies that create and place in service renewable energy facilities beginning 1 January 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. This direct payment program allows for an immediate stimulus in local economies.
In previous years, the tax credit has been widely used—in 2006, approximately $550 million in tax credits were provided to 450 businesses. The rate of new renewable energy installations has 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 today making available theterms and conditions, guidance, and a sample application so that companies can prepare successful applications in advance of the launch of the web based application in the coming weeks – yet another tool designed to facilitate the timely flow of program funds to eligible businesses.