President Obama signs stimulus bill to promote renewable energy

Changes have begun to take form in new legislation supporting renewable energy.  A number of new provisions for solar and wind energy have been included in the economic recovery bill, signed into law by President Obama on February 17.

DOE Renewable Energy Grants: Given the economic downturn, many traditional solar project financiers were left without the tax appetite necessary to put the 30 percent solar tax credit to good use. This provision puts solar financing back on track by offering DOE grants as an alternative to the tax credit.  This is a big incentive, because a grant provides immediate cash without having to wait to claim the tax credit.  To be eligible for the program, the project must commence construction in 2009 or 2010.

Clarification on Municipal Solar Finance Programs: Around the country, cities are implementing innovative finance programs that help residents and businesses implement solar technologies. As the tax code was written, there was some uncertainty as to whether participants in these programs could claim the federal solar tax credit. This provision ensures that businesses and individuals can qualify for the full amount of the solar tax credit, even if projects are financed with local development bonds or other subsidized energy financing.

Loan Guarantee Program: This provision is especially helpful for the development of large-scale solar power plants. It establishes a temporary DOE loan guarantee program for renewable energy and electric power transmission projects. The program is available for any renewable project that commences construction by September 30, 2011.  The program provides $6 billion in renewable funding.

Manufacturing Investment Credit: Everyone wants manufacturing jobs, and this provision will help attract solar manufacturing facilities to the US. It provides up to $2.3 billion to fund 30 percent investment tax credit for facilities engaged in the manufacture of advanced energy technologies. Projects must be certified by the Treasury, in consultation with the Secretary of Energy, through competitive bidding.

Solar Water Heating: This provision gives solar hot water heaters the same treatment as solar PV panels. It repeals the $2,000 monetary cap, making solar water heating property eligible for the full 30 percent tax credit.

Grant Program Extended to Wind Power Generation:  New legislation includes a grant program to monetize tax incentives for renewable energy, and provides a three-year extension of the production tax credit.  The bill also includes provisions to promote transmission for renewable energy, and a removal of the cost cap on the small wind investment tax credit of $4,000.  Under the new law, a full 30% grant will be available to offset the cost of installing a system.

In the coming weeks, the implementation rules will be put in place. Check our website regularly for updates.