Energy Alert: Applications to Remain Eligible for the 1603 Grant Are Due September 30.

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[author: Allison Woodbury Leppert]

Renewable energy projects that are seeking the 1603 Grant in Lieu of Tax Credit based on beginning construction by December 31, 2011 (either through the 5% of Total Eligible Costs Safe Harbor OR through physical work of a significant nature, but that have not yet been placed in service) must file a Begun Construction Application with the U.S. Department of the Treasury or risk losing their grant eligibility. For those projects to remain eligible for the 1603 Grant, the applications must be filed by midnight on September 30, 2012, using the Section 1603 Online Application System.

Any qualifying renewable energy project that has not yet been placed in service and filed its application for the 1603 Grant must file the Begun Construction Application. Documentation required to be filed with the Begun Construction Application for the Safe Harbor includes documentation of the costs paid (for cash method applicants) or incurred (for accrual method applicants) before January 1, 2012 (such as invoices or other financial records), cost breakdown of the costs paid (for cash method applicants) or incurred (for accrual method applicants) before January 1, 2012 (including delineation of eligible and ineligible costs), and cost breakdown of the estimated total project cost identifying major equipment and construction categories. Applicants relying on costs paid or incurred by a contractor must provide additional documentation.

Documentation required to be filed with the Begun Construction Application for applicants who have performed physical work of a significant nature includes documentation of physical work commenced between 2009 and 2011 (such as invoices or other financial documents, time sheets evidencing the work done at the site or photographs) and a detailed construction schedule that would note key dates and benchmarks for construction, including the manufacturing of equipment, if applicable. Applicants relying on physical work done off-site under a contract must also submit additional documentation.

Deadlines for placement in service vary by type of project. The chart below identifies the type of energy project and its credit termination date.

Specified Energy Property

Credit Termination Date

Large Wind

January 1, 2013

Closed-Loop Biomass Facility

January 1, 2014

Open-loop Biomass Facility

January 1, 2014

Geothermal under IRC sec. 45

January 1, 2014

Landfill Gas Facility

January 1, 2014

Trash Facility

January 1, 2014

Qualified Hydropower Facility

January 1, 2014

Marine & Hydrokinetic

January 1, 2014

Solar

January 1, 2017

Geothermal under IRC sec. 48

January 1, 2017

Fuel Cells

January 1, 2017

Microturbines

January 1, 2017

Combined Heat & Power

January 1, 2017

Small Wind

January 1, 2017

Geothermal Heat Pumps

January 1, 2017