Renewable energy projects shine in the Federal stimulus act
February, 2009
The American Recovery and Reinvestment Act of 2009 (the "Recovery Act") was recently signed into law by President Obama. The Recovery Act contains a variety of financial incentives pertinent to renewable energy projects. The highlights include:
Extension of the Production Tax Credit – The Recovery Act extended the production tax credit (PTC) by three years for wind facilities and four years for biomass, geothermal, hydropower, landfill gas, waste-to-energy, and marine facilities. This has the effect of extending the placed-in-service date for wind facilities through December 31, 2012, and the other qualifying facilities through December 31, 2013. The PTC is available for a 10-year period beginning with the year the facility is placed in service.
Option to Take the Investment Tax Credit – The Recovery Act allows taxpayers eligible for the PTC to take the investment tax credit (ITC) in lieu of the PTC for facilities placed in service in 2009 and 2010. The ITC allows owners of non-solar renewable energy facilities to make an election to earn a 30% investment credit rather than apply the PTC.
Alternately, rather than claiming the ITC or PTC, the facility owner now can choose to receive a grant equal to 30% of the tax basis for the facility from the U.S. Treasury. The facility must be depreciable or amortizable and placed in service in 2009 or 2010. The grant program seeks to address the current renewable energy credit market concerns.
Energy Bonds – Clean Renewable Energy Bonds (CREBs) were originally enacted as part of the Energy Policy Act of 2005. The Recovery Act authorizes an additional issuance of up to an additional $1.6 billion in new CREBS to finance facilities that generate electricity from a variety of renewable resources. The Recovery Act also authorizes the allocation of $2.4 billion in qualified energy conservation bonds, up from the current limit of $800 million.
Extension of Bonus Depreciation – The 2008 temporary recovery of the cost of capital expenditures through bonus depreciation expensing is extended an additional year. The Recovery Act extended first-year bonus depreciation to qualifying property. An owner of qualifying property may deduct 50% of the adjusted basis of the property placed in service in 2009.
Individual Energy Provisions – The Recovery Act authorized a tax credit of up to $7,500 for families that purchase plug-in hybrid vehicles. Additionally, the Recovery Act extends through 2010 and expands tax credits for home energy efficiency related to the purchase of new furnaces, energy-efficient windows, doors, or insulation.
If you are interested in learning more about the energy provisions in the American Recovery and Reinvestment Tax Act of 2009 or determining whether the incentives apply to you or your business please contact the Tax Group at Bullivant Houser Bailey.