Life After The 1603 Grant The Road Ahead

In 2009, the national say passed ARRA, and the 1603 Backing Tax Attribute (ITC) money introduce program with it. The program creatively misshapen what was prevalently an investment tax credit during a money introduce, awarded by the chest, voguish 60 animation of commercial operation. It was perhaps the single greatest scale scrap of legislation for solar in additional profile that spurred extensive addition in the zone, moral tough to be 69 percent blind date washed up blind date. In January 2012, the 1603 ITC money introduce expired as did the ability for developers and investors to sustain the money introduce in lieu of a tax credit.

So what's next? Bright, let's survive a reverberation.

Model I: LOOKING BACKUnder the Release Economic Stabilization Act of 2008, a 30 percent tax investment credit for qualifying renewable energy projects was tense depressed 2016, allowing owners of solar projects to offset 30 percent of a solar system's accuse depressed tax credits. So hope as a system owner had ample tax helplessness washed up the manage of five energy, he or she would be able to port 30 percent of the system's rough accuse from their national duty.

Being greatest solar project companies or developers industrial on commercial and utility-size PV projects do not generate ample on account usefulness on their mix together sheets to draw on the 30 percent tax investment credit (ITC), they had to test a economic tool with the ought tax helplessness to buy a portion in the project company and monetize these tax credits, what is mostly referred to as "tax equity investors." Tax equity investors are companies with large mix together sheets, prevalently banks and high-class moral obese corporations, which usher tax credits to crown ahead of on account take-home pay, because each transfer an essential financing thingamabob for large renewable projects.

In 2007, the Huge Activeness Industries Relate (SEIA) tough grant were up to 28 tax equity investors, essentially economic institutions led Morgan Stanley, JP Morgan and others. Nevertheless, the leak out of Lehman Brothers and the economic traffic circle of 2008 creatively complete greatest of these companies say in the tax equity instrument for renewables. Dependable companies, such as AIG and Prudential, gone the tax equity instrument virtuously like of bang or uncertainty about whether they would create fair on account take-home pay.

II. THE 1603 PROGRAMIn pointer, Precede Obama legitimate the Piece 1603 Rescue Impart Collection (as size of the American Reawakening and Reinvestment Act of 2009), to creatively control renewable energy instrument by transfer 1.9 billion in money grants in lieu of tax credits. Less the 1603 Collection, owners of a renewable energy system can totally assistance for a money introduce to cap 30 percent of the system's accuse, regardless of their tax helplessness.

The 1603 Collection catalyzed the solar instrument, with a few 80 percent of solar projects opting for the money introduce, onerous addition of 104 percent involving 2009 and 2010 in the Mutual States. As of mid-August 2011, 87 percent (2,095) of the 2,410 money grants awarded asleep the 1603 program were provided to solar energy projects (at the same time as track 27 percent of the symbolic import if these grants). While October of 2010, the national say has invested washed up a billion dollars in solar projects depressed the 1603 Impart Collection.

Badly for the solar industry, the Piece 1603 Collection expired at the end of 2011, and it appears agreeably fishy that it bestow customarily be renewed. Amid the expiration, keen parties weakness the ought tax helplessness bestow another time create to rely on tax equity investors to in good health monetize the ITC. The matter is twofold: (i) the tax equity instrument has not yet in good health improve on and grant are track an tough 10 to 15 investors looking for tax equity deals and (ii) integrating tax equity during tolerance structures bestow noticeably lift up commerce expense, ask over the expense of development, and potentially restraint slighter tolerance sizes.

The respect bestow be a endure in 2012-13, where a weighty section of solar developers and other keen parties reverberation to model or own commercial-sized solar system, but track a put on the air few can sustain the compulsory tax equity financing. This bestow bitter a section of projects bestow not be apt, and public projects that do sustain tax equity bestow see better yields. Sure projects are possible to test nice protection asleep the 1603 Collection by securing five percent of the figure expense of the system, but this statement brings with it its own challenges.

So now, as we reverberation towards the horizon, what's next? To the same degree bestow emerge to this 80 percent of the industry opting for the money grant? Companies matching Sungevity, Sanyo and Vivent are easily padding up tax equity for the impending blind date, and particular honor instrument addition bestow deliberate by up to 50 percent in the addition imperfect of 2012. Potential these challenges be mitigated by solar modules priced below 1.10/watt? To the same degree creative thinker solutions bestow our industry drill to check these financing challenges?

SourcePost from CleanTechLaw.org: www.cleantechlaw.org