A Solar Developer

A Solar Developer

March 01, 2011

A solar developer won an initial round in court against the US Treasury in January, but it has farther to go.

The developer, Pure Power Development, sued the Treasury in the US Court of Federal Claims charging that it was refused Treasury cash grants on 25 mobile off-grid solar photovoltaic systems mounted on flat-bed trucks. Neither the complaint filed by the company nor the reply brief filed by government explains why the company was refused.

The government moved to dismiss the case on grounds that the Court of Federal Claims lacks jurisdiction over the case. Among other things, the government argued that section 1603 of the American Recovery and Reinvestment Tax Act, which requires the Treasury to pay owners of new renewable energy projects placed in service during the period 2009 through 2011 30% of the project cost in cash in lieu of tax credits that the owners might otherwise have claimed on the projects, is not a “money-mandating statute.” The court disagreed; it said the Treasury is required to pay a grant to anyone who satisfies the eligibility requirements in the statute.

The court ordered the parties to explore a settlement and to report back. Otherwise, the case will be heard on the merits.

The company is seeking a total of $2.33 million in grants on the 25 systems.

Meanwhile, the Solar Energy Industries Association sent the US Treasury secretary a letter in early February complaining that the Treasury is paying many owners of solar equipment smaller grants than they applied for based on average prices for solar equipment rather than the “tax basis” that a company might use were it to claim an investment tax credit. The letter says the practice is “creating significant uncertainty” that is complicating financings for solar projects.

The Treasury is working on a response that is expected in March.

Many developers are using financing structures that allow them to claim grants on the fair market value of their projects rather than the construction cost. The Treasury is taking the position that prices established in such financing transactions are not arm’s length and that it is free to substitute its judgment about the appropriate value based on the large number of solar applications it has received to date.

Keith Martin