Renewable Energy Credits - Energy Efficiency Tax Credits

There are two federal tax credits for renewable energy, the production tax credit or renewable energy credit, which is given for each unit of renewable energy produced and the federal investment tax credit (ITC), which amounts to approximately 30% of the cost of construction of  renewable energy facilities. These tax credits have been designed to incentivize the development, deployment and production of renewable energy technology. Federal tax incentives for renewable energy projects are designed to improve the economics of renewable energy technology, by subsidizing the costs of construction of these facilities, and stimulate the economy by creating jobs in renewable energy exploration; to encourage investment in socially responsible forms of energy production; and to encourage investment in renewable energy research and development.

Cherrytree Group LLC can help you structure your transaction or incentives, determine if you qualify for tax credits, grants, or other incentives, analyze your financial projections and development costs, as well as guide you through the process of applying for and securing tax credit grants. These transactions typically require a lawyer, a consultant, and a syndicator, and Cherrytree LLC working with  The Transactional Law Group can act in all three capacities; adding efficiency to your transaction, saving you time and money.

The difference between the Production Tax Credit (PTC's or REC's) and the Federal Investment Tax Credit (ITC)

The Production Tax Credit (PTC or REC) provide owners of renewable energy projects such as wind, biomass and solar facilities with a credit for each megawatt hour of elelctricity generated. These credits are based on the electrical output of renewable energy facilities.

The Investment Tax Credit (ITC) is a credit for a capital investment for renewable energy equipment. This credit is earned when the equipment is placed into service, helps offset the upfront investment in renewable energy projects and provides an economic incentive to develop and deploy more capital-intensive renewable energy technologies such as solar systems, geothermal HVAC and other energy-efficient utilities, as well as automotive fuel cells.

The 1603 Treasury Grant program: in lieu of the ITC, the Federal Government will provide a grant of 30% of the cost a renewable energy installation if contruction “commence(s)” by December 31, 2011 commencement of construction requires pay of 5% of the cost by the project by December 31, 2011.  

ITC's, PTC's, or REC's, one generated can be sold in order to receive revenue for the producer of the renewable energy.  This source of revenue subsidizes the operating costs of a renewable energy facility.