U.S. Treasury Grant Program for Renewable Energy Projects Now Open

September 8, 2009
Client Alert Newsletter September 2009

The U.S. Department of the Treasury ("Treasury") has opened a temporary federal grant program for renewable energy projects authorized by Section 1603 of the federal stimulus package. Under this program, eligible entities that place certain qualified renewable energy property in service (or begin construction) in 2009 and 2010 may apply to the Treasury for a grant in lieu of claiming the renewable energy tax credit otherwise available to the entity under Section 48 (the "Investment Tax Credit" or "ITC") or Section 45 (the "Production Tax Credit" or "PTC") of the Internal Revenue Service ("IRS") Code for the same property. Examples of eligible projects include: solar, wind, biomass, landfill gas, microturbines, combined heat and power; and geothermal.

In general, the amount of the grant will be 30 percent of the taxpayer's basis for certain types of qualified property placed in service by the taxpayer (e.g., solar, wind, etc.) or 10 percent of the taxpayer's basis for certain other types of qualified property (e.g., combined heat and power, geothermal). The application deadline for participation in this temporary grant program is October 1, 2011, and applications may only be submitted to the Treasury after the property in question is either placed in service (i.e., the property is ready and available for its specific use) or is under construction (i.e., when physical work of a significant nature begins). The Treasury expects to distribute $3 billion in payments under this program.