Clean tech companies hoping to capitalize on the 30% Advanced Energy Manufacturing Tax Credit (48C) for re-quipping, expanding, or establishing a manufacturing facility must submit a preliminary application for Department of Energy (DOE) recommendation by September 16, 2009. The federal government has allocated $2.3 billion for this credit. If the limitation is reached during the first allocation round (2009-2010), then no further credit will be permitted.
Manufacturing facilities, which qualify for this credit include but are not limited to facilities, which produce solar photovoltaic panels, wind turbines, fuel cells, energy storage systems for hybrid and electric cars, plug-in electric cars, components specifically designed for plug-in electric cars, carbon capture and sequestration products, and electric grids for the transmission of renewable energy. The manufacturing facilities can produce the finished product or accomplish any intermediate stage of converting the raw materials to the finished products.
The property to which the credit is applicable to must be tangible personal property or other tangible property, but does not include the building or its structural components.
The tax credit available here (Internal Revenue Code Section 48C) is by application only and can generally be taken only in the year the qualifying advanced energy project is placed into service. Companies who receive certification have 3 years from the date of the issuance of the certification to place the project in service. However, the IRS has revived out dated rules and regulations for purposes of this tax credit only, which allow companies to take the credit on qualified progress expenditures.
The IRS will only consider projects which have first received the go ahead by the DOE. Under the published guidance, the DOE will provide the IRS with a recommendation and ranking of projects the DOE has determined to have a reasonable expectation of commercial viability. In making this determination, the DOE will look at the following factors:
- domestic job creation;
- net impact in avoiding or reducing air pollutants;
- potential for technological innovation and commercial deployment;
- cost of generated or stored energy, or of measured reduction in energy consumption or greenhouse gasses; and
- shortest project time from certification to completion.
Given the complexity and the amount of paper work that is required to obtain this tax credit, clean tech companies who believe they qualify should review, in detail, the published guidance and application forms. Guidance can be obtained from the DOE website for this credit.