THE US TREASURY said it will reimburse developers for 30% of the cost of improvements to some existing renewable energy projects.

The Treasury also appears to be relaxing a rule that only one grant will be paid per project. The grants are paid under the so-called section 1603 program. Congress directed the Treasury as an economic stimulus measure in February 2009 to pay developers who agree to forego tax credits on new wind, solar, geothermal and other renewable energy projects in the United States 30% of the project cost in cash. 

The program applies to new projects that are completed during 2009, 2010 and 2011 or that start construction by December 2011 and are completed by a deadline. The deadline is 2012 for wind farms, 2016 for solar and fuel cell projects and 2013 for other renewable energy facilities. 

Grants will be paid on two types of improvements under the new policy.

One type is improvements to older projects that were originally put into service before 2009. 

If the project is of a kind that qualifies potentially for production tax credits — for example, a
wind, geothermal, biomass or landfill gas project — then the improvements qualify for a 30% cash grant only if the original project qualified in fact for production tax credits. Thus, for example, an open-loop biomass plant would have had to have been originally placed in service after October 2004.

If a grant is paid on improvements to such a project, then no more production tax credits can be claimed on the project. 

Improvements to an older solar project qualify for a cash grant even if the project did not  qualify for an investment credit when it originally went into service. The other type of  improvement that qualifies for a grant under the new policy is an improvement to a new renewable energy project that originally went into service in 2009, 2010 or 2011. The Treasury had had a policy of paying only one grant per project as a rule of administrative convenience.

Ellen Neubauer, the cash grant program manager, said in May that Treasury will pay grants on improvements to such projects. The improvements must be under construction by December 2011. They must be capital additions rather than repairs. They must be a case of additional work being done on a project after the original grant application was filed rather than failure to wait to tally up all the costs that had been incurred before the original application was filed.

The deadline to apply for grants is September 30, 2012. Therefore, there is still time to apply for grants on improvements that were completed in 2009 or 2010.