Treasury's Limited Time Offer: Cash Grants for Specified Capital Investments

When tax credits of up to 30 percent of the cost of certain capital projects were not sufficient to spur the desired capital investments, Congress enacted a temporary program to provide taxpayers an election to obtain an immediate cash grant in lieu of those tax credits. The grant program, which is administered through the Department of the Treasury, is expected to pay out more than $30 billion; the total amount available for payout, however, is not capped and may well exceed that amount. Companies, regardless of their industry or size, that are considering making capital investments or that have high energy demands should consider taking advantage of this grant program. In particular, because the technical rules for obtaining the grant are closely tied to provisions of the Internal Revenue Code, tax directors and other tax professionals should be aware of this limited time offer. This Treasury grant is available for investments in projects that generate energy from certain renewable resources including, among others, solar, wind, biomass, and municipal solid waste. While the renewable energy sector has clearly focused on this grant program, many companies wholly outside of the renewable energy sector may similarly take advantage of this program. For example, (1) companies with large, flat rooftop space can utilize currently vacant space to install solar panels to meet their own electricity needs or to sell electricity onto the grid; (2) companies with large energy demands, such as those with manufacturing facilities, can co-locate a renewable energy project to meet the energy needs of the manufacturing facility thereby avoiding purchases of electricity from the grid; and (3) companies with available investment capital can invest in renewable energy projects with experienced renewable energy project developers who are seeking financing. Assuming the technical requirements for obtaining the grant are achieved, with respect to each of these illustrated renewable energy project investments, Treasury will provide a grant equal to 30 percent (or 10 percent in limited cases) of the project cost. Moreover, these investments offer other benefits including additional state tax credits or cash grants, fixed long-term energy costs in an era of rapidly rising energy costs and public relations benefits from "going green."