Treasury, Energy Departments Announce More than $3 Billion in Recovery Act Funds for Renewable Energy Projects
July 9, 2009
As part of an innovative partnership aimed at increasing economic development in urban and rural areas while setting our nation on the path to energy independence, the U.S. Department of the Treasury and the U.S. Department of Energy announced on July 9 an estimated $3 billion for the development of renewable energy projects around the country and made available the guidance businesses will need to 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 biomass, solar, wind, and other types of renewable energy production 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 Tim 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 Treasury to make direct payments to companies that create and place in service renewable energy facilities beginning January 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. This direct payment program allows for an immediate stimulus in local economies.
Said Energy Secretary Steven Chu: "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. 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. The rate of new renewable energy installations has fallen since the economic and financial downturns began, as projects had a harder time obtaining financing. The departments of treasury and energy expect a fast acceleration of businesses applying for the energy funds in lieu of the tax credit.
To expedite implementation of the program, Treasury and Energy are today making available the terms and conditions, guidance, and a sample application on the Treasury Department Web site, so that companies can prepare successful applications in advance of the launch of the Web-based application in the coming weeks—yet another tool designed to facilitate the timely flow of program funds to eligible businesses.