United States

United States

Wind Wire: Grant lift off

The US Treasury Department began accepting applications in late July for renewable energy grants enacted by Congress as part of a massive economic recovery package signed into law in February.

President Barack Obama's administration released guidance on July 9 outlining how developers can claim a grant, equivalent to 30% of the eligible capital costs of a wind power project.

The payment is available to projects that come online in 2009 or 2010 or start construction by next year and are put in service before the end of 2012. The grants are designed as a temporary alternative to wind power's $0.021/kWh production tax credit after the financial crisis slashed the number of investors able to make use of that incentive. The rules exclude any projects with investors that have tax-exempt status, leading to concerns that billions in potential investment from private equity funds, which count state pension funds, university endowments or other tax-exempt entities among their investors, would be at risk.

The rules allow an excluded fund to bypass the ban by creating a taxable "blocker corporation" that puts a layer of ownership between it and the project. The Treasury Department estimates it will provide at least $3 billion in direct payments to support the installation of about 5000 renewable energy facilities. US wind developers have been awaiting the launch of the program to ramp up their investments. Among others, the world's largest wind plant owner, Iberdrola Renewables, lined up projects for the cash the day after the rules were issued. It said it hopes to secure $400-500 million in Treasury aid in the coming months for the installation of 850 MW of wind in the US this year.

 

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