Energy Provisions of the American Recovery and Reinvestment Act of 2009

Herb Stevens

Residential Energy Efficiency Credit

• increases the energy tax credit for homeowners who make energy efficient improvements

• increases the credit rate to 30 percent of the cost of all qualifying improvements

• raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010

Residential Energy Efficiency Credit cont’d

• Energy-efficient improvements include:

– adding insulation

– exterior windows

– heating

– air conditioning systems

Residential Alternative Energy Credit

• nonrefundable energy tax credit

• help individual taxpayers pay for qualified residential alternative energy equipment

– solar electric

– solar hot water heaters

– geothermal heat pumps

– wind turbines

• credit equal to 30 percent of the cost of qualified property

Plug-in Electric Vehicle Credit

• vehicles must be newly purchased

• draw propulsion using a battery

– at least four kilowatt hours

– recharged from an external source of electricity

• minimum amount of the credit is $2,500 and the credit tops out at $7,500

– depends on the battery capacity

• credit reduced after the vehicle manufacturer has sold 200,000 vehicles

Plug-in Electric Vehicle Credit cont’d

• special tax credit for two types of plug-in vehicles

– certain low-speed electric vehicles

– two- or three-wheeled vehicles

• credit is 10% of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made before Jan. 1, 2012

Extension of Renewable EnergyProduction Tax Credit

• extends eligibility date to end of 2012 for

facilities producing electricity from wind

• extends eligibility date to end of 2013 for

– biomass

– geothermal energy

– municipal solid waste

– qualified hydropower

– marine and hydrokinetic energy

• compare with solar to end of 2016

Election of Investment Creditin Lieu of Production Credit

• For facilities that produce electricity from wind and some other renewable resources

– owner may elect energy investment tax credit; or

– production tax credit

*May not claim both credits for the same facility

Coordination With Renewable Energy Grants

• Owner of property can apply for a grant

• if construction begins in 2009 or 2010, the grant can be claimed for energy investment credit property placed in service through 2016

• for qualified renewable energy facilities, the grant is 30% of the investment in the facility

Repeal of Certain Limits on Business Credits

for Renewable Energy Property

• repeals the $4,000 limit on the 30 percent tax credit for small wind energy property

• repeals limitation on property financed by subsidized energy financing

Bonus Depreciation Extended One Year

• Energy property is depreciated over 5 years

• For 2009 only, 50% of cost is depreciated in first year

New Clean Renewable Energy Bonds

• increases the amount of funds available to issue new clean renewable energy bonds

• qualified tax credit bonds can be issued to finance certain types of facilities that generate electricity from renewable sources

• For borrower - bonds are effectively at less than 1% interest

Qualified Energy Conservation Bonds

• increases the amount of funds available to issue qualified energy conservation bonds

• qualified tax credit bonds can be issued to finance governmental programs to reduce greenhouse gas emissions and other conservation purposes

DOE Loan Guarantee Program

• Additional funding to existing program - $6 billion

• DOE loan guarantee capped at 80% of project cost

• Supports new or improved technologies in

– renewable energy

– fuel cells

– advanced nuclear energy

– carbon capture and storage

New Tax Credit for Manufacturing

• For projects which expand or establish manufacturing of “advanced energy property”, including

– renewable energy

– fuel cells, energy storage

– smart electric grids

– carbon capture

– plug-in electric vehicles

• Competitive bidding process for $2.3 billion of tax credits