US Clean Energy Payments Reach USD1bn Milestone

by Leroy Baker, Tax-News.com, Washington

24 September 2009

Treasury Secretary Tim Geithner and Energy Secretary Steve Chu have announced a further USD550m in new awards through the Recovery Act's 1603 program, bringing the total to more than USD1bn awarded to date to companies investing in qualifying domestic renewable energy production projects.

Created under Section 1603 of the Recovery Act, the program provides cash assistance to energy producers in place of tax credits. The federal government provides a cash payment in lieu of a tax credit totaling 30% of the qualifying cost of the project. According to the government, for each federal dollar spent in payments, more than two dollars are spent in private sector investments.

This second round of awards, made by the Treasury Department on September 22, comes on top the USD502bn announced by the government on September 1 for investment in private clean energy projects.

"This Recovery Act program is an example of a true federal partnership with the private sector," said Geithner. "Not only are our Recovery dollars meeting an immediate funding need among innovative companies, they are also jumpstarting private sector investment in communities across the country – with benefits for the renewable energy industry and our economy alike."

Companies which have received cash payments in lieu of tax credits through the 1603 program include Ameresco, which is using a landfill at a site in Pittsburgh, California, to provide power to the city of Palo Alto; and Solyndra, which is helping to provide energy to a building in downtown Denver, Colorado, through solar panels on the roof. Another firm, Vestas Americas, has allocated USD1bn for new manufacturing facilities throughout the country with the help of the 1603 program, the Treasury said. These will be operational by 2011.

In total, 25 projects qualified for the cash awards under the second round of disbursements. The largest award was made to Pyron Wind Farm Inc. of Roscoe, Texas, which received just under USD122m. The smallest award was just USD5,850, made to a solar billboard project in Bolivia, North Carolina.

The Recovery Act, signed by President Obama in February, has allocated a total of USD3bn in federal funds to the 1603 program.

Recommended