The Time to Go Solar is Now!
US Treasury Department to Issue Solar Grants Equal to 30% of the Cost of Commercial Solar Projects Started in the Next Two Years.

Kingston, NY - February 12, 2009 –

RE: American Recovery and Reinvestment Act of 2009

Here are some of the key features of the stimulus package that benefit solar. In addition to these explicit benefits, there are many areas of spending that could include spending on solar, but aren’t required to. The bill was signed by President Obama on February 17, 2009. We’ve included the section references if there are any areas you would like to see in the specific language of the American Recovery and Reinvestment Conference Report.

- For 2009 and 2010 projects, solar projects that are eligible for depreciation or amortization (typically those owned by corporate tax filers) can receive a 30% upfront cash grant in lieu of the 30% tax credit. The 30% tax credit for individual filers (i.e. residential systems) remains unchanged. The Treasury Department will administer the grant program and is required to pay out each grant within 60 days of the receipt of each application [Section 1603]. The grant is not subject to federal taxes [Section 1104]. There’s no word yet on whether the grant will be assignable. The same eligibility of the investment tax credit applies; in particular, this means that governmental and non-tax paying entities aren’t eligible. Almost all PV applications should be eligible, with the lone exception being swimming pool heating.

- For 2009 projects, corporate tax filers can claim 50% bonus depreciation expense [Section 1201(a)]. The remaining 50% of the depreciation basis is expensed according to the 5-year MACRS schedule. The depreciation basis is still 85% of the total system cost (the total system cost less one half of the 30% federal grant) [Section 1104].

- The cap on solar hot water heating equipment has been removed, making it eligible for the full 30% tax credit (but not the grant) [Section 1122].

- Projects that benefit from subsidized financing will not have their federal grant reduced [Section 1103]. This will put tax-backed municipal loan programs on safer ground.

- A 30% tax credit for factory equipment used in the manufacture of renewable energy equipment (including solar). The total budget for this tax credit is $2.3 billion [Section 1302].

RE: 30 % INVESTMENT TAX CREDIT FOR RESIDENTIAL SYSTEMS

The federal Energy Policy Act of 2005 established a 30% tax credit up to $2,000 for the purchase and installation of residential solar electric and solar water heating property and a 30% tax credit up to $500 per 0.5 kilowatt for fuel cells. Initially scheduled to expire at the end of 2007, the tax credits were extended through December 31, 2008, by the Tax Relief and Health Care Act of 2006.

In October 2008, the Energy Improvement and Extension Act of 2008 extended the tax credits once again (until December 31, 2016), and a new tax credit for small wind-energy systems and geothermal heat pump systems was created. In February 2009, The American Recovery and Reinvestment Act of 2009 removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.

For more detailed information concerning the residential renewable energy tax credit, follow this link to the Database of State Incentives for Renewables & Efficiency (DSIREUSA.org).

Contact: Dave Holt
Tel: 805-625-2121
E-mail: dholt@sunwize.com