Preliminary applications to the Department of Energy (the “DOE”) are due by September 16, 2009, and final applications to the DOE are due by October 16, 2009.

According to IRS Notice 2009-72 (the “Notice”), applications to the IRS are due by December 16, 2009. However, the DOE website currently states that applications to the IRS are due by October 16, 2009. Unless and until the correct date is clarified, it would be advisable to submit applications to the IRS by October 16, 2009.

IRS Acceptance or Rejection of Applications:
January 15, 2010

Steps Following IRS Acceptance

By March 15, 2010, the awardee must return an executed copy of the agreement in Appendix A of the Notice to the IRS.
Within one year of the date of the IRS’s acceptance of the awardee’s application (the “acceptance date”), the awardee must provide the IRS with documentation showing (i) receipt of all required permits and (ii) completion of steps that must be accomplished within one year of the acceptance date for the project to be placed in service within four years of the acceptance date.
After receiving such documentation, the IRS will decide whether to certify the project for the tax credits.
If the IRS certifies the project, the awardee will then have three years to place the project in service, or else all tax credits allocated to the project will be forfeited.

Note: Please refer to the Notice for important additional information regarding the application process and credit eligibility requirements.

Total Funding Available: $2,300,000,000 available to support total capital investments of approximately $7,700,000,000

Award Instrument: Tax credits

Program Description

Section 1302 of the American Recovery and Reinvestment Act of 2009 (the “Recovery Act”) enacted Internal Revenue Code Section 48C (“Section 48C”), authorizing up to $2,300,000,000 in tax credits. Section 48C provides for a 30% tax credit for investments in eligible property that is part of a “qualifying advanced energy project.” The IRS and DOE will review and make determinations on the eligibility and merit of project applications.

Eligibility Requirements

An eligible project must (1) have a reasonable expectation of commercial viability and (2) qualify as a “qualifying advanced energy project” by re-equipping, expanding, or establishing a manufacturing facility for the production of any of the following:

property designed to produce energy from the sun, wind, geothermal deposits, or other renewable resources;
fuel cells, microturbines, or an energy storage system for use with electric or hybrid-electric motor vehicles;
electric grids to support the transmission of intermittent sources of renewable energy, including storage of such energy;
property designed to capture and sequester carbon dioxide emissions;
property designed to refine or blend renewable fuels or to produce energy conservation technologies (including energy-conserving lighting technologies and smart grid technologies);
qualified electric vehicles or components for such vehicles; or
other advanced energy property designed to reduce greenhouse gas emissions, as may be determined by the IRS.

Section 48C credits are taken into account for the year in which the credit-eligible property is placed in service. Eligible property generally includes tangible depreciable property necessary for the production of clean energy property of a type listed above. However, investments in buildings (or structural components thereof) are not eligible. Also, if the investment generates a tax credit or cash grant under certain other provisions of law, the investment will not be eligible for a Section 48C credit.

Merit Review Criteria

In addition to determining whether projects satisfy the eligibility criteria, the DOE will also rank projects based on the following factors:

expected domestic job creation (direct and indirect),
reduction of air pollutants or anthropogenic emissions of greenhouse gases,
potential for technological innovation and commercial deployment,
project time from certification to completion,
geographic diversity,
technology diversity,
project size diversity, and
regional economic development.

Projects that receive a higher ranking from the DOE based on the above factors and are otherwise eligible for Section 48C credits will generally be allocated the full amount of requested credits before any credits are allocated to lower-ranked projects.

Circular 230 Disclosure

The following disclosure is provided in accordance with the Internal Revenue Service’s Circular 230 (21 CFR Part 10). Any tax advice contained in this Update is intended to be preliminary, for discussion purposes only, and not final. Any such advice is not intended to be used for marketing, promoting or recommending any transaction or for the use of any person in connection with the preparation of any tax return. Accordingly, this advice is not intended or written to be used, and it cannot be used, by any person for the purpose of avoiding tax penalties that may be imposed on such person.