On July 9, 2009, the U.S. Treasury Department finally released its much-anticipated procedures on how to apply for cash grants for renewable energy projects under the American Recovery and Reinvestment Act of 2009 (ARRA). Cash grants under the ARRA are equal to 30% of the eligible cost basis of qualifying projects (10% for certain types of projects) and are available as an alternative to Investment and Production Tax Credits.
Eligible Types of Property: The types of energy property eligible for the grants include:
- Closed-loop biomass (including co-firing with coal)
- Open-loop biomass
- Geothermal (some only eligible for 10% grants)
- Landfill gas
- Qualifying hydro
- Marine and hydrokinetic
- Solar electric
- Solar thermal
- Solar lighting
- Fuel cell
- Microturbine (10% grants)
- Combined heat and power (10% grants)
Required in-service and construction dates: To be eligible for the grants, the project must:
- Be placed in service during 2009 or 2010.
- Be placed in service after 2010 but have begun construction during 2009 or 2010.
Deadlines: Applications for cash grants must be made by October 1, 2011. The property must be placed in service before the following "credit termination dates:" January 1, 2013, for wind; January 1, 2014, for biomass, landfill gas, trash, qualified hydro, marine and hydrokinetic, and some types of geothermal property; and January 1, 2017, for solar, fuel cell, microturbine, combined heat and power, small wind and other types of geothermal property.
Application process: The Treasury Department is requiring applications for the cash grants to be submitted via a Web-based application form. Treasury released a sample of the form along with its guidance and procedures. The form requires information about the applicant and its property to demonstrate the property's eligibility and to establish the amount of the grant. Additional documents such as design plans and reports, invoices, contracts, and other documents that establish the in-service and/or construction dates must also be included with the application.
Other features of the grant program: The guidance provides information on the following additional aspects of the cash grant program:
- What constitutes a unit of property for determining in-service and construction dates.
- Determination of the eligible basis (grant amount) of qualifying property.
- Eligibility of property lessees in lieu of property owners.
- Recapture of grant amounts caused by property disposal.
- Tax treatment.
- Reporting requirements (including annual performance reports).
When applications may be submitted: Applications for property placed in service in 2009 or 2010 may be submitted only after those properties are actually placed in service. Applications for properties not placed in service, but for which construction has begun, in 2009 or 2010 may be submitted only after construction commences. For such properties, supplemental information must be submitted, and grants will be awarded, only after they are actually placed in service. In all cases, applications must be made before October 11, 2011.
The Treasury Department is not yet accepting applications, but its guidance is intended to give businesses ample time to prepare their applications. Treasury will post a notice, with further instructions on submitting applications, when it is ready to begin receiving them.