Industrial Energy Provisions within Final Stimulus

• Refundability: The legislation provides “refundability” to alternative energy credits within sections 45 and 48 (both investment and production credits) through a grant program within the Department of Treasury. Eligible combined heat and power (CHP) projects would need to begin construction during 2009 and 2010 and be completed by 2013. Grant applications will be processed within 60 days.
• Bonus depreciation: The legislation extends the bonus depreciation through 2010 and includes CHP, thereby allowing 50 percent of the depreciation value to be taken in the first year and the rest over the following four years.
• Subsidized financing: The bill allows businesses and individuals to qualify for the full amount of Section 48 tax credits (solar, fuel cells, CHP) even if projects are financed with local development bonds or other subsidized energy financing.
• Production tax credits: The legislation extends through 2013 the production tax credits for biomass, geothermal, and other forms of renewable energy; the wind credits are extended through 2012. The House and Senate bills also allow those producers to claim a 30% investment tax credit, now available only for solar and qualified fuel cell projects, instead of the production tax credit, which is tied to kwhs produced.
• Loans: The bill amends an existing DOE loan program to enable developers of renewable energy systems and electric power transmission projects to obtain a direct loan through the Federal Financing Bank or to obtain a government backed loan guarantee if the developer chooses to use a private lender. The loan’s terms will be approximately 3 percent over 30 years for 80 percent of the project’s construction costs. To qualify, the project must begin construction by September 30, 2011. Loan authority is increased to approximately $80-90 billion, and $6 billion is provided to pay a loan’s upfront costs, including application fees, administrative costs, and the credit cost subsidy. Although this temporary program would support biomass CHP, the administration says it will expand the renewable-energy-system definition to include recycled energy. The program will be operational by July 1, 2009.
• Bonds for non-profits: The bill provides $4 billion in bonds for renewable energy and energy efficiency projects by state and local governments and public power institutions that cannot utilize production tax credits.
• Efficiency and renewables: The legislation provides $14.4 billion for the Department of Energy’s efforts on energy efficiency and renewable energy. DOE has decided to devote some $156 million to a grant program (providing 70% funding) for CHP, district heating/cooling, and waste-energy-recovery projects.

14 February 2009