Isramart: Funding Rules to Aid Renewables Unveiled

Isramart LLC:

The Treasury and the Energy Department today unveiled long-awaited new rules under which the government will pay up to 30 percent of the cost of renewable energy projects.

The program was authorized by Congress as part of the stimulus package in February, but many projects have been on hold as investors waited to apply for the grants.

Government officials said that although there is no cap for the funding, they expected to give out $3 billion in grants, though they offered no estimate of how much energy the funded projects might produce.

“One of the core goals we have is to get private capital off the sidelines and back into the market,’’ said Matt Rogers, a senior adviser at the Energy Department.

The program replaces a system of tax credits, in which the government subsidized such projects by letting businesses pay less tax on future profits. Many of those businesses have no profits these days, however.

Even for those that are profitable, “It accelerates the benefits,’’ said Michael Mundaca, the acting assistant treasury secretary for tax policy. “You don’t have to wait to file a tax return.”

The Treasury said it would make payments within 60 days of receipt of a completed application for a project that was in service, and said it would begin accepting applications around Aug. 1.

F.B.R. Research, a financial firm, suggested that it could be later.

“Treasury is unlikely to begin accepting applications until it is confident that it can process them within the required 60 days,’’ the company said in a research note.

The Treasury published a sample application form that officials promised would be very close to the final form, so that companies could begin preparing the paperwork.

Most projects would be eligible for reimbursement if they go into service by Jan. 1, 2014; some would have until Jan. 1, 2017. Construction must begin this year or next.

The renewable energy industry welcomed the announcement.

“We think it will unleash the financing for projects,” said Monique Hanis, a spokeswoman for the Solar Energy Industries Association, referring especially to utility-scale solar. “We have literally dozens of projects that are on hold.”