When Congress passed the American Recovery and Reinvestment Act – familiarly known as the “stimulus bill” or “ARRA” – in 2009, it specified that funding would expire on September 30, 2011. Any project not “shovel ready” by that date is out of luck, and application deadlines for available money fall due even earlier. Renewable energy funding under ARRA comes principally under Department of Energy loan guarantee programs and Treasury Department grants in lieu of existing tax credits.
Originally, DOE established a cutoff date of August 30, 2010, for part 1 applications for the multi-billion dollar loan guarantee fund for commercial-scale renewable energy projects added under ARRA as Section 1705 of the Energy Policy Act of 2005. Giving away all that money turned out to be harder than expected, however, and under pressure from critics, DOE recently extended its deadlines, but not by much. It is possible further extensions will occur, but for now applications for renewable energy generation projects must be filed by October 5, and for proposals based on manufacture of renewable energy components, by November 30. Further, DOE recently clarified that only large projects will qualify for manufacturing grants: those totaling $75 million or more. Details are available at http://www1.eere.energy.gov/financing/.
Meanwhile, interested parties have secured bipartisan congressional support to extend the Treasury Department program that allows taxpayers to obtain cash grants in lieu of renewable energy tax credits, authorized under Section 1603 of ARRA. Whether this support is sufficient to win passage in the waning pre-election days of a turbulent Congress is an open question. Developers, investors, and other interested parties should monitor these developments closely.
While time may be growing short for the ARRA programs, other sources of federal and state incentive money remain available and continue to play a key role in promoting renewable energy deals.Copyright © 2012 Pepper Hamilton LLP