Solar developers with projects nearing completion by year-end would be well-served by keeping their eye on upcoming deadlines for 1603 Treasury Grant and 50% bonus depreciation – or face leaving money on the table.
With that in mind, here are the key deadlines for this year along with links to relevant resources:
October 1, 2012
1603 Treasury Grant Application Deadline
What It Means: All applications must be received by October 1 whether or not the system has been Placed In Service (PIS). Eligible solar systems will have met the US Treasury Beginning of Construction test prior to December 31, 2011, either by actually beginning construction or safe harboring more than 5 percent of the total cost of the property as outlined in the Program Guidance linked below.
If the energy property has been commissioned and is ready to operate, a PIS application should be submitted. For the energy properties not yet complete by October 1, a Begun Construction application is submitted and the property must be PIS before January 1, 2017, expiration date of the Investment Tax Credit.
Where To Find It:
1603 Program Application Overview
Begun Construction Application
December 31, 2012
50% Bonus Depreciation Expires
What It Means: Eligible energy properties placed in service before December 31, 2012 qualify for 50% bonus depreciation. Note that eligibility requirements are distinct from the 1603 Grant – the system must be commissioned and ready to operate to meet the Treasury definition of PIS – before the end of the year. Unless it is extended into 2013, the allowable deduction reverts back to 20% per the five year MACRS depreciation schedule.
With 50% Bonus Depreciation in 2012
Sample Project Cost: $1,000,000
Depreciable Basis: $850,000
Year 1 Depreciation: $425,000
Avoided Taxes @ 35%: $148,750
Reduction to 20% Depreciation in 2013
Year 1 Depreciation: $170,000
Avoided Taxes @ 35%: $59,500
of construction – or face leaving money on the table reducing returns.
Where To Find It:
Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation (2008-2012)
about bluecrab solar
Chris Cather founded bluecrab solar in spring 2012 to address the financing gap in Maryland on mid-market solar projects. bluecrab provides innovative financing solutions including PPAs and leases as well as shepherds customers through the often-confusing maze of 1603 Treasury and Maryland state grant filings. Based in Annapolis, bluecrab solar has worked closely with the Maryland Energy Administration filing numerous commercial and residential grant applications for the Clean Energy Grant Program on behalf of other solar developers.
For advisory services, project origination, diligence, financing, proposal writing or 1603 and Maryland state grant filings, contact bluecrab solar through Chris Cather at [email protected]
