Incentive funding for renewable energy projects is available from Federal, State and Local initiatives. The complexities and details of the various programs have to be carefully studied and are usually negotiated. As the number of sources increase, typically the complexity of the financial architecture does as well. This is not to say that multiple sources cause project funding to become unmanageable, but rather that all the sources may not work for a single project.
The experts proposed for our projects are specialists in their distinct fields and are required to assist in the planning and implementation of any credits, rebates, bond issues or depreciation schedules contemplated to offset costs of the renewable energy installation.
Potential sources include:
1. Federal Tax Incentive Under Stimulus
Through the Treasury Department, the Federal Government offers Renewable Energy Tax Credits. These credits provide up to 30% of total development costs to qualified renewable energy credits in the form of federal tax credits.
As part of The American Recovery and Reinvestment Act of 2009, President Obama signed into law amendments to the Renewable Energy Tax Credits to provide projects with start dates prior to December 31, 2011, to receive payments of 30% of total development costs in lieu of the tax credits. Section 1603 represents a significant change from the normal tax credit structure where third-party investors typically purchase the credits to create equity for projects. These financial structures are expensive to create and Section 1603 streamlines the process for developers of renewable energy projects through the end of 2011.
On September 1st, 2009 the first round of cash assistance was distributed by the Treasury. A total of $500 million was approved for the period with project payments ranging in size from $150,000 to $115,000,000. This recent distribution indicates that the Federal mandate of Section 1603, to deliver funds within 60 days of application, is fully functional and ready to assist in the development of renewable energy projects such as the contemplated in projecst.
As with any Federal assistance programs, there are compliance issues that must be carefully presented and managed by professionals familiar with both the programs and the personnel reviewing the project applications.
2. State & Local Solar and Gas Credits
The States and Munincipalities offer distinct but related programs to give cash incentives for solar power installations.
Awards credits and rebates on systems are based on estimated 20-year total kilowatt production level. These levels are estimated through calculations, which include equipment degradation, overall weather patterns and predictive models for solar output capacity. The output calculations are geared toward photo-voltaic cells currently but are easily converted to a concentrating solar power model. Most utilities have not to date issued rebates or cash incentives for a concentrating solar power installation; however, there have not, to date, been any CSP installations in urban areas which would have applied for or received incentive funding from the utilities.
State Solar Initiatives give customers rebates typically for installations up to 1MW on a production basis paid monthly. These cash rebates are funded after installation and as production of electricity begins. The SSI programs include a wide variety of solar power production designs including CSP installations. The SSI rebates are more complex and can be included, as applicable and available, in our research and modeling.
State gas rebate programs are also administered through utilities. Such programs provide $2.00 per watt of installed natural gas fueled electrical generating equipment (micro turbines). Assumption is that the equipment will receive one-half benefit of the credit due to the fact the system will be operating at least 50% of the time in solar generating capacity. This downgrade is not certain as the dual-fuel system is unique and the full system application has not been made.
3. Advanced Energy Manufacturing Tax Credits
Advanced Energy Manufacturing Tax Credits would extend tax credit equity and funds into manufacturing operations of renewable energy products. While not directly beneficial to projects, our development team expertise in this area may extend to our major equipment suppliers and assist in reducing equipment costs to projects. The 2.3 billion in MTC credits have been made available as part of the 2009 stimulus package as part of Section 48c.