DOE Releases Guidelines for Renewable Energy and Energy Efficiency Funding under the American Recovery and Reinvestment Act of 2009August 20, 2009
The American Recovery and Reinvestment Act of 2009 ("ARRA") provided approximately $787 billion in government spending designed to stimulate the American economy. A significant portion of the ARRA funding was allocated to the United States Department of Energy ("DOE") and other federal agencies for the purpose of supporting renewable energy and energy efficiency projects. ARRA funding for these types of projects is in the form of both tax incentives and direct appropriations. Recently, DOE issued guidelines and applications for three significant renewable energy and energy efficiency funding programs under the ARRA, including: (1) $3 billion in funding for the joint DOE/Department of Treasury Direct Payments In Lieu of Energy Tax Credits Program; (2) $3 billion in funding for State Energy Programs; and (3) $6 billion for the DOE Loan Guarantee Program.
Direct Payments In Lieu of Energy Tax Credits
The ARRA has recently issued guidance providing that any taxpayer that has certain energy property qualifying for a tax credit under sections 45 or 48 of the Internal Revenue Code can apply for a direct grant in lieu of the tax credit. The amount of the grant is generally equal to the amount of the energy tax credit the taxpayer would have received under section 48 (up to 30% of the taxpayer's basis in the qualifying property). Grants allow developers to monetize would-be tax credits without requiring developers to locate and compensate a tax credit investor. Property qualifying for the grants/tax credits generally includes property that produces power from the following energy resources: wind, closed-loop biomass, open-loop biomass, geothermal energy, solar energy, small irrigation power, municipal solid waste, qualified hydropower production, and marine and hydrokinetic renewable energy. To be eligible for the grant, construction must begin on the property no later than the end of 2010, and the property must meet certain placed-in-service deadlines, which depend on the type of property.
Applications are currently being accepted by Treasury. Applicants must register with the Central Contractor Registration prior to receiving any grant payments. In addition to the requirements discussed above, applicants must meet other program requirements to be eligible for grant payments in lieu of tax credits. For full details on the program, please see https://treas1603.nrel.gov/
State Energy Program Funding
The ARRA allocated over $3 billion to provide funding to State Energy Programs for the purpose of investing in renewable energy and energy efficiency technologies and projects. The State of Wisconsin will be receiving approximately $55 million for its State Energy Program and just announced that the first $28 million of those funds are being made available to Wisconsin manufacturing businesses in the form of low-interest loans to support:
- Major renewable energy production projects;
- Manufacturing of clean energy products;
- Advanced manufacturing of clean energy components;
- Retooling to provide component parts and other critical needs for a successful, totally integrated supply chain;
- Improving industrial users' competitiveness through energy efficiency and renewable energy deployment.
Full details of this program can be found at a website set up by the Wisconsin Department of Commerce website: http://commerce.wi.gov/BD/BD-SEP-ARRA.html
DOE Loan Guarantee Program
DOE recently issued both guidelines and applications for its Loan Guarantee Program, which is expected to provide up to $30 billion in loan guarantees and is being funded partly through the ARRA and partly through 2009 DOE appropriations. The first round of applications are due by September 14, 2009, and consists of two separate solicitations for the following types of projects:
- Innovative energy efficiency, renewable energy, and advanced transmission and distribution technologies; and
- Transmission infrastructure investment projects
As demand for funding under these programs will likely far outweigh available resources, we strongly recommend to our clients that they assess their potential to apply for funding under these programs as soon as possible. Godfrey & Kahn's attorneys have been consistently tracking these funding programs under the ARRA and have the expertise to assist your company in applying for funding under any of these programs.