Renewable Energy Incentives Survive To Final Stimulus Package
On February 4, I wrote about the renewable energy provisions of the initial stimulus bill from the House of Representatives. For the most part, those provisions emerged unscathed from the bill-writing process. Today, President Obama signed the American Recovery and Reinvestment Act of 2009, which compares to the original House bill with respect to renewable energy as follows:
• The Act provides $16.8 billion (down from $18.5 billion) to promote energy efficiency and renewable energy. No specific allocation is made for renewable energy research and development, but the funds to promote development of advanced battery technologies have increased from $1 billion to $2 billion.
• The Act maintains $4.5 billion to fund "smart grid" research and improvements.
• As in the original bill, the Act authorizes $3.25 billion in loans to the Western Area Power Administration for transmission system upgrades, and gives the Bonneville Power Administration authority to borrow up to $3.25 billion to improve its transmission system in the Pacific Northwest.
• As in the original bill, the Act extends the production tax credit for wind energy to the end of 2013, and for other renewables (including biomass and geothermal) to the end of 2014.
• As in the original bill, the Act terminates a rule reducing the cost basis for government-subsidized renewable energy projects.
As I discussed on February 4, the truly new ground in the Act concerns alternative financing for renewable energy projects. Section 1602 of the original bill survived as Section 1102 of the Act, and allows developers of PTC-eligible facilities the option to take the investment tax credit instead. For wind energy projects to elect the ITC, the credit must be taken by 2012. For all other projects eligible for the PTC, the election must be made by 2013.
Finally, and perhaps most importantly, Section 1721 of the original bill survived as Section 1603 of the Act. That Section allows renewable projects of all types to receive a grant from the Department of Energy of up to 30% of the cost basis of the facility, in lieu of tax credits (either the PTC or the ITC). To qualify for a grant, construction of the project must start by December 31, 2010.
On February 4, I suggested renewable energy advocates had a lot to smile about in the original House bill. Now that the Act bears the President's signature, they can keep on smiling.
Post authored by David Petersen, partner practicing in the Sustainability and Real Estate and Land Use Practice Groups.
