Washington, D.C., United States [RenewableEnergyWorld.com] The U.S. Department of the Treasury and the U.S. Department of Energy (DOE) have released guidelines for the long awaited program to award $2.3 billion in tax credits to manufacturers of advanced energy equipment. Authorized by the American Recovery and Reinvestment Act (Recovery Act), this new program will provide tax credits to manufacturers who produce renewable energy equipment.
The Recovery Act created a new tax credit program by authorizing Treasury to provide developers with an investment tax credit of 30 percent for facilities that manufacture particular types of energy equipment. Qualifying manufacturers will produce solar, wind, and geothermal energy equipment as well as fuel cells, microturbines, batteries and grid technology to support the transmission of renewable energy, among others.
The manufacturing tax credit is capped at $2.3 billion, and credits are available for two years or until the cap is reached. Companies can file applications for the first round of credit awards through October 16, 2009, and can expect to learn whether their applications are successful by January 15, 2010.
“Today’s announcement from the Treasury Department and the Department of Energy about guidelines for the renewable energy manufacturing tax credit will put America on track to once again be the global leader in solar manufacturing. This program will attract billions of dollars of investment in manufacturing facilities in the U.S. and will create new jobs in states where they are needed most. We expect solar-related provisions in the stimulus bill like this one to create 110,000 jobs in the solar industry in 2009 and 2010 combined. This news is especially welcome as unemployment hovers near 10 percent nationally,” said Rhone Resch, CEO of the Solar Energy Industries Association.
Mayer Brown energy tax transactions partner Jeff Davis said that companies interested in taking advantage of these tax credits must have all their cards in order to move forward.
“The process for obtaining an allocation of tax credits is somewhat onerous in that it involves many steps, each of which is laden with the possibility of a foot-fault,” Davis said. “The certification process is competitive, and tax credits will awarded by IRS based on how projects are ranked by the Department of Energy. The highest ranked project will receive the full amount requested before the next highest ranked project will receive any award. If you’re applying, you want to be sure your plans are fairly well baked. If you make any significant changes, you will essentially be kicked out of the program. And because the application requires a fair amount of detail, it increases the likelihood that there may be significant changes.”