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US tax credit application deadline approaching

Final applications for the US renewable advanced manufacturing tax credit program - jointly run by the Treasury Department and the Department of Energy - are due to the DOE and IRS on 16 October 2009.

There are US$2.3 billion in tax credits available as part of the US renewable advanced manufacturing tax credit program, thanks to the American Recovery and Reinvestment Act, which will go to manufacturers of components for wind, solar, geothermal and other projects, and not to the developers of the projects who are trying to get them sited.

But manufacturers of renewable energy components will be competing with manufacturers of car batteries, the cars themselves, electric grid component manufacturers, and factories which turn out greenhouse gas reduction and sequestration technologies.

The application period opened on 14 August 2009. Preliminary applications were due at the US Department of Energy (DOE) by 16 September 2009, followed by final applications being due to DOE and IRS on 16 October. By 15 January 2010, IRS will certify or reject applications, and notify the certified projects with the approved amount of their tax credit. Awardees will receive acceptance agreements from the IRS by 16 April 2010.

Companies can reportedly expect to receive payments within 180 days of filing for the credit. Credits will be allocated until the program funding (US$2.3 billion) is exhausted.

The manufacturing tax credit (MTC) provides a 30% credit for investments in new, expanded, or re-equipped advanced energy manufacturing projects. The US$2.3 billion in MTCs will support total capital investments of almost US$7.7 billion in new renewable and advanced energy manufacturing projects.

The DOE and the Internal Revenue Service (IRS) will review and make determinations on the eligibility and merit of MTC applications. Applicants will receive tax credits based on the expected commercial viability of their project and the ranking of their project relative to other projects. Rankings are based on:

  • expected job creation;
  • reduction of air pollutants and greenhouse gas emissions;
  • technological innovation;
  • ability to have the project up and running quickly.

Technology, geographic & project size diversity, and regional economic development will also be considered when rating projects. Construction of new facilities would have to be completed within four years.

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