Treasury's 1603 Grant Program: What should you consider before the December 31st deadline?

Alternative & Renewable Energy Tax Newsalert

Since 2009, many companies have benefitted from the grant-in-lieu of tax credit program provided by section 1603 of the American Recovery and Reinvestment Act (the "1603 grant program"). Under the 1603 grant program, companies may elect to apply for a cash grant from Treasury in lieu of claiming an investment tax credit or production tax credit on many forms of renewable energy property. The grant may reimburse 10% to 30% of eligible costs, depending on the project technology.

To be eligible for the 1603 grant program, companies must "begin construction" on their projects by December 31, 2011. Although this deadline was extended into 2011 by legislation enacted late last year, currently, there appears to be little momentum in Congress for a further extension of the program. All applicants will be required to demonstrate how they met this deadline, and those whose projects will not be placed in service prior to October 1, 2012 will need to file a notice regarding the beginning of construction prior to that date.

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