Treasury Begins Accepting Applications for Advanced Energy Manufacturing Tax Credit

On Thursday, the Treasury Department released guidance and began accepting applications for new Internal Revenue Code § 48C, the Advanced Energy Manufacturing Tax Credit, created by the American Recovery and Reinvestment Act.  The 30% tax credit will provide up to $2.3 billion  “to re-equip, expand or establish” clean energy manufacturing facilities, and is expected to support $7.7 billion in new clean energy investment.

 Eligible facilities will produce any of the following:

·        property designed for use in the production of energy from the sun, wind, geothermal deposits, or other renewable resources;

·        fuel cells, microturbines, or an energy storage system for use with electric or hybrid-electric motor vehicles;

·        electric grids to support the transmission of variable sources of renewable energy, including property for the storage of such energy;

·        property designed to capture and sequester carbon dioxide and sequester carbon dioxide emissions;

·        property designed to refine or blend renewable fuels (but not fossil fuels) or to produce energy conservation technologies (including energy-conserving lighting technologies and smart grid technologies);

·        new plug-in electric drive motor vehicles, or components that are designed specifically for use with such vehicles;

·        other property designed to reduce greenhouse gas emissions as may be determined by the Service.

To obtain the tax credit, a facility must first be certified by the IRS: the initial application period for this certification runs from August 13, 2009 to December 17, 2009.  Applicants must also submit a simple preliminary application to the Department of Energy (DOE) by September 16, 2009,  followed by a more detailed application due by October 16, 2009.  The DOE will rank the projects based on the following criteria:

1.      Direct and indirect domestic job creation;

2.      Impact in avoiding or reducing air pollutants or anthropogenic emissions of greenhouse gases;

3.      Potential for technological innovation and commercial deployment; and

4.      Time from certification to completion.

The DOE will seek to ensure diversity in geography, technology and project size.  These rankings will be submitted to the IRS, and applicants will receive tax credits in order of priority based on these rankings until the $2.3 billion expenditure cap is met.  The IRS expects to notify successful applicants by January 15, 2010.

Owners of facilities that are certified by the IRS will receive the tax credit when the facility enters service. Qualified progress expenditures may  also be available.  To receive the credit, the facility must be placed in service within three years, and must show significant progress toward this goal (including obtaining necessary regulatory approvals) within one year.

For more information on the Advanced Energy Manufacturing Tax Credit, please contact:

William D. Hewitt

whewitt@pierceatwood.com

T: 207.791.1337

Timothy R. Schneider

tschneider@pierceatwood.com

T: 207.791.1433