WASHINGTON - The U.S. Department of the Treasury and the U.S. Department of Energy (DOE) have announced the availability of an estimated $3 billion for the development of renewable energy projects around the country and are providing guidance to help businesses submit a successful application. Funded through the American Recovery and Reinvestment Act, the program will provide direct payments in lieu of tax credits in support of an estimated 5,000 solar, biomass, wind, and other types of renewable energy facilities.
“The renewable energy program provides another important avenue for the Recovery Act to contribute to economic development in communities around the country,” said Treasury Secretary Timothy Geithner. “It will provide additional stimulus to economies in urban and rural America by helping to develop domestic sources of clean energy. This partnership between Treasury and Energy will enable both large companies and small businesses to invest in our long-term energy needs, protect our environment, and revitalize our nation’s economy.”
The Recovery Act authorized the Treasury Department to make direct payments to companies that create and place in service renewable energy facilities beginning Jan. 1, 2009. Previously, these companies could file for a tax credit to cover a portion of the renewable energy project’s cost. Under the new program, applicants would agree to forgo tax credits down the line in favor of an immediate reimbursement of a portion of the property expense.
Energy Secretary Steven Chu said, “These payments will help spur major private sector investments in clean energy and create new jobs for America’s workers. It is part of our broad effort to double our renewable energy capacity in the next few years and make sure that America leads the world in creating the new clean energy economy of the future.”
In previous years, the tax credit has been widely used, the Treasury Department and DOE said, and it is considered a successful incentive for encouraging the development of renewable energy. In 2006, approximately $550 million in tax credits were provided to 450 businesses. However, the rate of new renewable energy installations has fallen since the economic downturn began, as projects had a harder time obtaining financing. The Treasury Department and DOE expect a fast acceleration of businesses applying for the energy funds in lieu of the tax credit.
For more information on this program and guidance on how to submit an application, visit www.treas.gov/recovery/1603.shtml.