In 2009 and 2010, solar projects that are eligible for depreciation or amortization, typically corporate tax filers, can receive a 30% upfront cash grant in lieu of the 30% tax credit. 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. The grant is not subject to federal taxes.
The grant system was developed to maintain the growth of the renewable energy sector during the economic downturn. A tax credit is of little value to renewable developers struggling to make a profit and therefore paying little or no income tax.
Solar equipment placed in service in 2009 also qualifies for a “depreciation bonus”. The owner can deduct half its depreciable basis in the equipment immediately. For business, solar subsidies are now worth 56%-58%.
Stay tuned for more details of the revised provisions of the American Recovery and Reinvestment Act. For current information regarding your eligibility for grants and solar tax benefits visit Solar Rebates.