Hydro Review with edits, Pennwell, July 9, 2009
The funds, from the economic stimulus package passed by Congress in February, support the White House goal of doubling U.S. renewable energy production over the next three years.
The money provides direct payments to companies, rather than investment or production tax credits, to support about 5,000 renewable energy production facilities that qualify for production tax credits under recent energy legislation. Treasury and DOE issued funding guidelines for individual projects qualifying for an average of $600,000 each.
Previously energy companies could file for a tax credit to cover a portion of the costs of a renewable energy project. In 2006, about $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,” a statement by the agencies said. “The Departments of Treasury and Energy expect a fast acceleration of businesses applying for the energy funds in lieu of the tax credit.”
Under the new program, companies forgo tax credits in favor of an immediate reimbursement of a portion of the property expense, making funds available almost immediately.
“These payments will help spur major private sector investments in clean energy and create new jobs for America’s workers,” Energy Secretary Steven Chu said.
“This partnership between Treasury and Energy will enable both large companies and small businesses to invest in our long-term energy needs, protect our environment and revitalize our nation’s economy,” Treasury Secretary Tim Geithner said.
Eligible projects have the same requirements as those qualifying for investment and production tax credits under the Internal Revenue Code. As with production tax credits, eligible renewables include incremental hydropower from additions to existing hydro plants, hydropower development at existing non-powered dams, ocean and tidal energy technologies.
Projects either must be placed in service between Jan. 1, 2009, and Dec. 31, 2010, regardless of when construction begins, or they must be placed in service after 2010 and before the credit termination date if construction begins between Jan. 1, 2009, and Dec. 31, 2010. Credit termination dates vary by technology, ranging from Jan. 1, 2013, to Jan. 1, 2017. The termination date for hydropower and marine and hydrokinetic projects is Jan. 1, 2014.
The U.S. Departments of the Treasury and Energy are launching an Internet site in the coming weeks, but are not taking applications at this time. However, to expedite the process, they made a guidance document, terms and conditions, and a sample application form immediately available on the Internet at here.