Key Incentive Programs for Renewable Energy
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One of the questions most frequently asked in connection with renewable energy development is: are there any government incentives that could help finance this project? Basically, two types of incentives are available: tax credits and grants/loan guarantees; both federal and state programs offer benefits. Here’s a quick overview of these programs:
- Tax programs
- Section 45 of the Internal Revenue Code provides a production tax credit (PTC) for production and sale of renewable energy to an unrelated taxpayer. Facilities must be qualified.
- Section 48 of the Code makes available an investment tax credit (ITC) for equipment that uses certain renewable energy sources to generate electricity or heating or cooling. Eligible sources include solar, small wind (less than 100 KW), fuel cells, geothermal, microturbines, and heat pumps. Tax credits range from 10 to 30 percent, and most expire at the end of 2016.
- New section 48C, added by the American Recovery and Reinvestment Act of 2009 (ARRA, also known as the stimulus bill), establishes a 30 percent ITC for qualified tangible personal property placed in service at manufacturing facilities for “qualified advanced energy projects.” Initial rounds of financing for this credit expired in October 2009, but new funding has been proposed.
- ARRA section 1603 authorizes the Treasury Department to pay grants in lieu of tax credits for specified renewable energy property placed in service in 2009 or 2010. More than $3 billion has been disbursed.
- Federal grants and loan guarantees
- Sections 1703 and 1705 of the Energy Policy Act of 2005, as amended by ARRA, offer loan guarantees, administered by the Department of Energy, for innovative (§1703) or commercially available (§ 1705) renewable technologies. Section 1705 applications must be received by August 31, 2010, and the project must be “shovel ready” by September 30, 2011. Other conditions apply.
- The US Department of Agriculture provides grants for rural projects under the Rural Energy for America Program, the Department of Transportation, and Environmental Protection Agency have specialized grants available as well.
- Many states have tax incentives and grant programs in place, but these vary considerably and must be considered individually.
The following resources offer more information: http://www.pepperlaw.com/publications_update.aspx?ArticleKey=1687, http://www.pepperlaw.com/publications_update.aspx?ArticleKey=1838, http://www.epa.gov/renewableenergyland/incentives.htm.
Jane C. Luxton, Esq.
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[...] August 26, 2010, 8:45 AM Filed under: Sustainability | Tags: Renewable Energy As noted in a previous blog entry, one of the key programs established under the 2009 American Recovery and Reinvestment Act (ARRA) [...]
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