Green Building Law Update Service

Center for Climate Change Law

Tax Relief Bill Includes Extension of Section 1603 Grant Program

Posted on December 28th, 2010 by J. Cullen Howe

On December 17, 2010, President Obama signed into law an $859 billion tax bill (H.R. 4853) that extends several clean energy tax credits.  The legislation includes a one-year extension of a Treasury Department program, established under Section 1603 of the American Recovery and Reinvestment Act (ARRA), that provides cash grants for qualified renewable energy projects in lieu of tax credits.  The bill also extends a tax credit for home energy efficiency projects, such as the installation of energy-efficient windows, and renewed a tax credit for manufacturers of energy-efficient appliances.  However, the bill did not include an extension of a 30 percent investment tax credit for domestic manufacturing facilities that produce wind turbines, solar panels, and other “advanced energy property,” referred to as Section 48C of the Internal Revenue Code.

As originally drafted, Section 1603 of the ARRA established a program to provide grants in lieu of investment tax credits under Section 48C.  These grants covered up to 30% of the cost basis of qualified renewable energy projects placed in service in 2009-10, or that commenced construction during 2009-10 and are placed in service prior to 2013 for wind, 2017 for solar, and 2014 for other qualified technologies.  The grant program is limited to recipients that would otherwise qualify for an investment tax credit election and is not available to governmental or tax-exempt entities, clean renewable energy bond lenders, or cooperative electric companies.

According to the Treasury Department, applications for these grants for qualified renewable energy projects must be submitted before Oct. 1, 2012.  Eligible properties “must be placed in service in 2009, 2010, or 2011 or placed in service after 2011 but only if construction of the property began during 2009, 2010 or 2011.

Information about the program, including application deadlines and certifications, is available here.

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