Treasury Announces $2.3 Billion in Tax Credits for Renewable Energy Manufacturers


August 26, 2009
By Phillip L. Jelsma

On August 13, 2009, the Treasury Department and the Department of Energy, announced a program to award $2.3 billion in tax credits to manufacturers of advanced energy equipment, as authorized by the American Recovery and Reinvestment Act (“Stimulus Act”). This program is designed to provide tax credits to manufacturers who produce advanced energy equipment. The Stimulus Act created a new tax credit authorizing the Treasury to provide developers with an investment tax credit of 30% for facilities that manufacture particular types of advanced energy equipment.

Qualifying manufacturers must produce solar, wind and geothermal energy equipment, fuel cells, microturbines and batteries, electric cars, electric grids to support the transmission of renewable energy, energy conservation technologies and equipment that capture and sequester carbon dioxide or reduce greenhouse gas emissions. Eligible property includes storage devices, power conditioning, transfer equipment, and parts related to the functioning of those items. However, it excludes electrical transmission equipment, equipment beyond the electrical transmission stage, such as transformers and distribution lines.

Specified advanced energy property includes:

  1. Property designed for use in the production of energy from the sun, wind, geothermal deposits or other renewable resources;
  2. Fuel cells, microturbines, or an energy source system for use with electric or hybrid-electric motor vehicles;
  3. Electric grids to support the transmission of intermittent sources of renewable energy, including property for the storage of such energy;
  4. Property designed to capture and sequester carbon dioxide and carbon dioxide emissions;
  5. Property designed to refine or blend renewable fuels (but not fossil fuels) or to produce energy conversation technologies (including energy-conversing lighting and smart grid technologies);
  6. New plug-in electric drive motor vehicles, qualified plug-in electric vehicles or components that are designed specifically for use with such vehicles, including electric motors, generators and power control units; or
  7. Other property designed to reduce greenhouse gas emissions as may be determined by the IRS.

Applications are now available on the Energy Department’s website (www.energy.gov/recovery) and are due October 16, 2009. The applications can be filed any time after August 14, 2009. By January 15, 2010, the IRS will either certify or reject applications and notify the certified projects of approval of their amount of the tax credit. All projects must be completed within four (4) years of acceptance.

The IRS issued Notice 2009-72, describing further details on the credit. Applicants must also have a Data Universal Numbering System from Dunn & Bradstreet and register with the Central Contractor Registration (CCR). If the application lacks sufficient information, the Treasury will notify the application, who will have 21 days to provide the information. Generally, the applicant must be either the owner or lessee of property and have originally placed the eligible property in service.

A foreign person is only eligible for the credit if at least 50% of its income is subject to U.S. tax.

Qualified property must be placed in service between January 1, 2009 and December 31, 2010. Construction may begin before 2009, but only property placed in service in 2009 and 2010 qualifies for the tax credit.