18Dec

President Obama Signs Bill Extending Solar Grant Program

Saturday | Filed in: Politics Solar Energy

President Obama, this week, singed the 1603 solar program extending the solar grant bill for one more year. Congress recognized that the photovoltaic industry is creating thousands of new jobs for solar installers across American. The solar program was created by the American Recovery Act and provides cash grants in lieu of the 30% solar income tax credit for businesses.

The solar program is a step in the right direction creating local jobs for solar installers and clean air for generations to come. The one-year extension of the cash grant was included in the Tax Relief of 2010 as reported by Solar Home Journal. The act signed into law extends emergency jobless benefits until Jan. 3, 2012, for as many as 2.6 million unemployed Americans whose checks ran out last month or were due to stop at the end of the year, Mr. Obama said before signing the legislation. The act includes an accelerated depreciation provision for new business equipment another important benefit for some prospective solar owners as well as a reduction in the payroll tax.

The Section 1603 program has distributed about $5.7 billion in cash grants for solar electric systems, solar thermal projects, wind turbines, geothermal installations, biomass projects, fuel cells, landfill gas energy systems and other projects, the latest Treasury Department figures showed.

Of 1,656 projects awarded grants in lieu of tax credits, about three-fourths have been solar electricity projects.
The largest single solar electricity award has been about $19.5 million to Solar Inc. companies for a California solar project. A number of awards of less than $10,000 have been distributed for solar electric installations. At least 13 wind energy projects have each received cash grants exceeding $100 million.

“It took a year of tireless effort from the entire solar industry and our champions in Congress to get an extension of the 1603 solar program,” said Ron Resch President of the Solar Industry Association. “President Obama and our bipartisan champions in the Senate and House recognize that the solar industry is one of the fastest-growing industries in America, and this extension will create tens of thousands of new solar jobs for Americans.”

The Section 1603 solar grant program is primarily for commercial installation but can cover residential solar installations under certain circumstances. For example, the Treasury Department’s website says builders and contractors who install solar systems on residential properties are not eligible for payments unless they continue to own the solar property.

Some other residential properties may be eligible for solar, according to the Treasury Department. As an example, the department says, “property used in a building that is used for residential purposes may be eligible if it is subject to depreciation or amortization in lieu of depreciation by its owner. This means that the property must be used in a trade or business or for the production of income. For example, if the applicant is a business that installed an otherwise eligible solar energy system on the roof of a residence that the business rents out for the production of income, the property would be eligible. If, however, the applicant is a homeowner who installed a solar energy system on the roof of his/her home and uses the solar energy property for personal purposes, the property would not be subject to depreciation and therefore would not be eligible.”

The solar photovoltaic industry experienced sharp growth in the second and third quarters this year, a new research report shows, but many solar installers feared a collapse if the Section 1603 program was allowed to expire at the end of 2010.

“With an extension of the 1603 solar program now in place, the solar industry can continue its record growth, creating new career opportunities for Americans in all 50 states in 2011,” Mr. Resch said. Without the program, we would have seen the sublimation of thousands of jobs. The trade group had lobbied for a two-year extension of the cash grant program, but as the end date loomed that hope was replaced by an urgent need to make sure it continued at least through 2011.

“Two years would be better, but one is better than none,” said Lyndon Rive, chief executive of Solar City, solar installers of residential and small commercial systems, as he watched his company’s workers putting up a commercial solar project in Lancaster, California.

The agreement also allows businesses to expense 100 percent of their investments in 2011, potentially generating more than $50 billion in additional business investment in 2011, which will fuel job creation, the administration said.
Mr. Rive said the depreciation increase to 100 percent could have had an unintended consequence because it “soaks up the tax appetite” of businesses, reducing their ability to take advantage of the Investment Tax Credit.

Had the 100 percent expensing provision passed without the Treasury’s cash grant, the result could have been “devastating for the solar industry,” he said. The cash grant allows businesses that have limited tax liabilities to use the federal government’s offer of 30 percent off a solar system.

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