Solar manufacturers promote benefits of IRS tax credit 48C

The American Reinvestment and Recovery Act of 2009 (ARRA) authorizes the Department of Treasury to award $2.3 billion in tax credits for qualified investments in advanced energy projects, to support new, expanded, or re-equipped domestic manufacturing facilities, such as solar PV.  

The Advanced Energy Manufacturing Tax Credit (MTC) was authorized in Section 1302 of ARRA also referred to as Section 48C of the Internal Revenue Code.  The goal of the MTC is to stimulate economic growth, create jobs, and reduce greenhouse gas emissions, to help secure American leadership in the clean energy sector.

The MTC provides a 30% credit for investments in new, expanded, or re-equipped advanced energy manufacturing projects. The $2.3 billion in MTCs will be allocated for advanced energy projects and will support total capital investments of approximately $7.7 billion in new renewable and advanced energy manufacturing projects.

The DOE and the IRS will review and make determinations on the eligibility and merit of MTC applications.  Applicants will receive tax credits based on the expected commercial viability of their project and the ranking of their project relative to other projects. 

 Eligibility includes:

• Technologies that create energy from renewable resources such as solar PV
• Energy storage technologies
• Advanced transmission technologies that support renewable generation
• Renewable fuel refining or blending technologies
• Energy conservation technologies (advanced lighting, smart grid)
• Plug-in electric vehicles & vehicle components  (motors, generators)
• Property to capture and sequester carbon dioxide
• Other property designed to reduce greenhouse gas emissions

The application period opened August 14, 2009.  Preliminary applications are due to DOE September 16, 2009, followed by final applications being due to DOE and IRS on October 16, 2009. 

By January 15, 2010, the IRS will certify or reject applications. Awardees will receive acceptance agreements from the IRS by April 16, 2010.  Credits will be allocated until the program funding ($2.3 billion) is exhausted. Projects must be completed within 4 years of their tax credit acceptance. 

However, the tax credit does not support energy generation projects, but rather the manufacturing facilities that support generation and conservation. One manufacturing company that is promoting this scheme is Spire Solar, which has prompted developers to cite its equipment in applications in order to ensure eligibility.