Stimulus Bill Promises to Buoy Marine Renewables Industry
On Tuesday, February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009, or as it is commonly called, the “stimulus package.” The legislation contains a combination of tax cuts and funding programs that bring unprecedented support to the marine renewables industry.
Despite the legislation’s fast track, OREC managed to ensure parity for marine renewables. In particular, OREC is proud of the legislation’s inclusion of a choice between an investment tax credit (ITC) and production tax credit (PTC), as this is an option that we’ve been pressing since early 2007.
Benefits for marine renewables in the stimulus package include:
The bill extends the deadline to place marine renewables in service through the end of 2013 to qualify for production tax credits. Marine renewables still qualify for only half the PTC that wind receives, however, marine renewables projects have an additional year of PTC eligibility. For all renewables, the PTC credits run for 10 years after a project is placed in service.
Election to Claim ITC
The bill gives wind, geothermal, biomass and marine energy developers the option to forego production tax credits and claim a 30% investment tax credit instead. The investment credit is taken entirely in the year a project is placed in service. The option can be exercised for marine energy projects placed in service during 2009 through 2013.
Finally, developers will have the option to forego tax credits and receive a check from the US Treasury for 30% of the project cost. This option will be available for projects placed in service in 2009 or 2010 or that start construction during 2009 or 2010 and are completed by a deadline. The deadline is 2013 for marine energy projects. It is 2016 for solar, geothermal and fuel cell projects. Thus, to take advantage of the grant option, marine renewables developers must begin to get projects into the water.
Buy American Clause
The bill bars stimulus monies from being used in connection with any “public building or public work” project unless all of the iron, steel and manufactured goods used in the project are made in the United States. Privately-owned renewable energy projects should not be affected. The provision will affect government facilities that are put to public use.
The stimulus creates a new 30% investment tax credit that can be claimed on the cost re-equipping, expanding or building a factory to make products for the green economy. Examples are factories to make blades for wind turbines, pumps for geothermal projects, solar panels, fuel cells and large batteries. However, only $2.3 billion in such credits can be claimed nationwide.
Federal Loan Guarantees
The bill authorizes the US Department of Energy to guarantee loans made to renewable energy and transmission projects in an effort to jump start the stalled debt market. The guarantees will also be available to support loans to pay for construction or expansion of US factories that produce equipment for renewable energy projects. Any projects helped by the new loan guarantees must be in a position to commence construction by September 30, 2011.
Projects that benefit from the guarantees will have to pay contractors and subcontractors at least the prevailing wages for the local area as determined by the US Department of Labor.
For a full analysis of the stimulus package, please refer to the report prepared by OREC members, Chadbourne & Park.