30% Direct Reimbursement from U.S. Government for Renewable Energy Projects
Recently the U.S. government announced that it is accepting applications for a piece of some $3 Billion in government grants to develop renewable energy projects. The grants are intended to make direct payments to companies in lieu of already available tax credits. Ideally, the grants will support around 5,000 renewable energy production facilities, including biomass, solar, wind and others.
“This program will play a major role in encouraging private sector capital to invest in clean energy development, creating new jobs that can’t be outsourced,” said U.S. Energy Secretary Steven Chu said by statement.
The grant money is available through the American Recovery and Reinvestment Act as part of the economic stimulus package. New projects must start construction between now and the end of 2010 to be eligible. Projects are expected to receive $600,000 each on average, though any given company can receive as much funding as they have projects.
Before this announcement energy companies could obtain a tax credit for a portion of renewable energy project costs- this plan allows companies to skip those credits altogether, instead receiving reimbursement for 30% of specific project expenses.
President Barack Obama has repeatedly voiced his belief in renewable energy and his hopes that renewable energy development will help reinvigorate the economy- this program shows that his administration is serious.
The tax credit option had been popular in previous years– $550 million in tax credits were provided to 450 businesses in 2006. The Recovery Act authorized the Treasury to make direct payments to companies as of January 1, 2009. The hope is that direct payments will help companies who are having a hard time securing funding due to the economic crisis. Under the plan, the government will deposit a check into company’s bank account 60 days after an eligible application is submitted.
“[The renewable energy program] 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,” said Treasury Secretary Tim Geithner.
Visit the U.S. Department of the Treasury website to apply for a section 1603 reimbursement in lieu of tax credits.
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