Section 1603 of the American Recovery and Reinvestment Act, which provides cash grants in lieu of tax credits for certain types of qualified energy property, is set to expire at the end of this year.
In 2009, Senator Max Baucus (D-Mont), current Chairman of the Senate Finance Committee, led the passage of Section 1603. Sen. Baucus recently told North American Windpower, “[Extending] Section 1603 is a priority, whether it gets extended in December or January and applied retroactively.” He added, “I'm going to find a place for it.” In addition to Sen. Baucus, Vice President Biden recently spoke out in favor of an extension of the program. Moreover, renewable energy industry groups are similarly pushing for an extension as a vehicle to both create jobs and stimulate growth in the industry.
Section 1603 has been a lifeline to the renewable energy industry. It has spurred the development of new projects throughout the country during a time when the tax equity markets vanished and renewable energy projects otherwise would have been unable to monetize the available tax credits. Nonetheless, extension of the cash grant program is far from certain. The political landscape has changed after the midterm election and the Senate Finance Committee already has a full agenda for the rest of the year.
With the politically uncertain future of Section 1603, many developers are still seeking to qualify for cash grants by the end of 2010.
Foley Partner Jeffery R. Atkin recently led a Web conference on Section 1603 eligibility. An audio recording and materials from “Section 1603 Cash Grants: Guidance for Qualifying Your Project by December 31, 2010” are available at: http://bit.ly/g0MXFZ.