Every participant in a renewable energy project will be impacted by Congress’ recent extension of the ARRA Section 1603 program. The program has been an invaluable incentive for developers and users of green initiatives. According to a poll of industry participants, an overwhelming majority of recent projects would have been shelved without the assistance of the program.
What Does the Program Do?
The grant program allows certain project participants to “exchange” their energy tax credits (ITC and PTC) for a grant from the Treasury Department. The grant is generally 30% of the project’s qualifying costs. If the taxpayer elects to receive a grant, it is no longer entitled to receive the ITC and PTC. (See our prior articles concerning tax credits.)
ARRA Section 1603 was most valuable for taxpayers that qualified for the ITC or PTC but which had insufficient tax liability to use the credits. The program allowed such taxpayers to monetize the credits through a grant.
The Prior Deadline
As explained in our recent article concerning governmental incentives for energy projects, the program was scheduled to terminate this past December 31, 2010. Projects that were not in service, or for which construction had not begun, by December 31, 2010, would not qualify for the grant.
As part of Congress’ year-end compromise to extend tax cuts, Section 1603 was extended one additional year. Thus, projects must be placed in service, or construction must begin, by December 31, 2011 For more information about governmental incentives (grants, loans, loan guaranties, tax credits, and accelerated depreciation), please stay tuned to this blog and review our additional resources.
Posted by David R. Cook Jr.