OVERVIEW
The American Recovery and Reinvestment Act (herein referred to as “ARRA”) passed by the 111th Congress and signed into law by President Obama on February 17th, 2009, is a comprehensive bill to create jobs, restore economic vitality, and strengthen America's middle class through measures that modernize the nation's infrastructure, enhance America's energy independence, expand educational opportunities, preserve and improve affordable health care, provide tax relief, and protect those in greatest need. Learn more on www.recovery.gov.
RENEWABLE ENERGY PRODUCTION / MANUFACTURING
Three-Year Extension of Production Tax Credit (PTC)
ARRA provides a three-year extension of the in-service deadline
for the Production Tax Credit (PTC) for electricity derived from wind,
geothermal, biomass, hydropower, landfill gas, waste-to-energy and marine
facilities. The in-service deadline for wind facilities is now December
31, 2012 (formerly January 1, 2010), and for the other renewable resources
listed above is now December 31, 2013 (formerly January 1, 2011). The law
also allows businesses eligible for the federal PTC to receive a grant
from the U.S. Treasury Department instead of taking the PTC for new
installations.
Click here for a complete explanation of the PTC.
(Source: ACORE, DSIRE)
Residential Renewable Energy Tax Credit
ARRA removes the $2,000 maximum credit limit for all eligible technologies
(except fuel cells) placed in service after 2008, a provision previously
only available to solar PV. A taxpayer may now claim a credit of 30% of
qualified expenditures for a system that serves a dwelling unit located in
the U.S. used as a residence by the taxpayer with the following eligible
technologies: solar hot water, solar PV, wind, fuel cells, geothermal heat
pumps, and other solar electric technologies. Click
here for complete detail on the Residential Renewable Energy Tax Credit.
(Source: DSIRE)
Investment Tax Credit Accessible to All Renewable Energy
ARRA allows businesses eligible for the federal PTC to take the
federal business energy investment tax credit or to receive a grant from
the U.S. Treasury Department instead of taking the PTC for new
installations. The new law also allows taxpayers eligible for the business
energy investment tax credit to receive a grant from the U.S. Treasury
Department instead of taking the business energy tax credit for new
installations. This applies to project developers of wind, geothermal,
biomass and other technologies eligible for the PTC.
Click here for a complete explanation of the ITC.
(Source: ACORE, DSIRE)
Repeals Subsidized Energy Financing Limitation on ITC
ARRA allows businesses and individuals to qualify for the full amount of
the ITC, even if their property is financed with industrial development
bonds or other subsidized energy financing. (Source: ACORE)
Renewable Energy Grant Program in Lieu of Tax Credits
ARRA allows project developers to apply for a grant from the Treasury
Department in lieu of the ITC. The grant will be equal to 30% of costs of
property that is part of a qualified facility, qualified fuel cell
property, solar property, or qualified small wind property, and 10% of all
other property. Grants are available to eligible property placed in
service in 2009 or 2010, or placed in service by the specified credit
termination date, if construction began in 2009 or 2010. Grant
applications must be submitted by 10/1/2011. It will be issued within
sixty days of the facility being placed in service or, if later, within
sixty days of receiving a grant application. It is important to note that
only tax-paying entities are eligible for this grant.
Click here for complete details on the Renewable
Energy Grant Program. (Source: ACORE, ASE, DSIRE)
Manufacturing Tax Credits (Qualifying Advanced Energy Project
Investment Tax Credit)
ARRA establishes a new investment tax credit to encourage the
development of a U.S.-based renewable energy manufacturing sector. In any
taxable year, the investment tax credit is equal to 30% of the qualified
investment required for an advanced energy project that establishes,
re-equips or expands a manufacturing facility that produces any of the
following: Equipment and/or technologies used to produced energy from the
sun, wind, geothermal or "other" renewable resources; fuel cells,
microturbines or energy-storage systems for use with electric or
hybrid-electric motor vehicles; equipment used to refine or blend
renewable fuels; equipment and/or technologies to produce
energy-conservation technologies (including energy-conserving lighting
technologies and smart grid technologies). In total, $2.3 billion worth of
credits may be allocated under the program.
Click here for complete details on the tax credit.
(Source: DSIRE)
Five Year Carry-Back Provision for Operating Losses of Small
Businesses
ARRA extends the carry-back period for net operating losses (NOL) from two
to five years for tax years 2008 and 2009. An eligible NOL includes the
NOL for any taxable year, ending in 2008, or if the taxpayer chooses, any
taxable year beginning in 2008. An election under this provision may only
be taken for one taxable year. (Source: ACORE)
Study of Electric Transmission Congestion
ARRA includes a direct spending requirement for the U.S.
Secretary of Energy to study the transmission issues facing renewable
energy, to be included in the pending study of electric transmission
congestion slated for completion August 2009. (Source: ACORE)
Clean Energy Renewable Bonds (CREBs)
ARRA provides an additional $1.6 billion of new clean energy
renewable bonds to finance solar thermal electric, solar PV, landfill gas,
wind, biomass, hydroelectric, geothermal electric, municipal solid waste,
hydrokinetic power, anaerobic digestion, tidal energy, wave energy, and
ocean thermal projects. CREBs may be issued by electric cooperatives,
government entities (states, cities, counties, territories, Indian tribal
governments or any political subdivision thereof), and by certain lenders.
However, the IRS has not yet announced that it is accepting applications
for the new allocations made in 2008 and 2009, and it has not issued
official guidance detailing how the program will operate.
Click here for complete details on CREBs.
(Source: DSIRE)
Renewable Energy Loan Guarantee Program
ARRA extends the authority of the US Department of Energy to issue loan
guarantees and appropriated $6 billion for this program. Under this act,
the DOE may enter into guarantees until September 30, 2011. Eligible
projects include renewable energy projects that generate electricity or
thermal energy and facilities that manufacture related components,
electric power transmission systems, and innovative biofuels projects
(funding limited to $500 million for biofuels). Davis-Bacon wage
requirements apply to any project receiving a loan guarantee. (Source:
ACORE, DSIRE)
Research and Development, Demonstration Projects
ARRA provides $2.5 billion in direct spending for renewable energy and
energy efficiency R&D, demonstration and deployment activities. (Source:
ASE)
Modified Accelerated Cost-Recovery System (MACRS) + Bonus
Depreciation (2008-2009)
ARRA extends (retroactively to the entire 2009 tax year) the 50% bonus
depreciation provision for eligible renewable energy systems (this
provision was originally established in the Economic Stimulus Act of
2008). To qualify for bonus depreciation, a project must satisfy these
criteria: the property must have a recovery period of 20 years or less
under normal federal tax depreciation rules; the original use of the
property must commence with the taxpayer claiming the deduction; the
property generally must have been acquired during 2008 or 2009; and the
property must have been placed in service during 2008 or 2009 (or, in
certain limited cases, in 2010).
Click here for complete details.
(Source: DSIRE)
Based on information from: American Council on Renewable Energy (ACORE), Alliance to Save Energy (ASE), and Database of State Incentives for Renewables and Energy Efficiency (DSIRE). Last updated: 3/3/09
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