Start-of-Construction Issues

Start-of-Construction Issues

November 15, 2010

Start-of-Construction Issues remain a focus for many US renewable energy companies as the year draws to a close. Wind, solar, geothermal, biomass and other renewable energy projects must be under construction by year end to qualify for cash grants from the US Treasury for 30% of the project cost. The Treasury posted a form to its website in October that developers can use to ask the Treasury to confirm that it agrees that construction started in time. The Treasury had 120 such requests by early November, some preceding when the form was released. It is expected to issue the first confirmations shortly.

Ellen Neubauer, the Treasury cash grant program manager, said it will do what it can to respond quickly to requests received in October and November so that there is still time to fix any problems before year end.

Many of the requests to date are deficient or are for projects that will be completed by year end 2010. The Treasury posted a checklist to its website in late October to help ensure companies submit all the required information.

Meanwhile, the Treasury inspector general has been auditing companies that already received grants and, in some cases, questioning the grant calculations. The inspector general has issued at least one draft report asking for 3% of a grant back. Other reports are rumored. Many of the questions the inspector general’s staff are asking during site visits have to do with payments to related parties. There is a presumption that any reports will be posted to the inspector general’s website. However, the inspector general has authority to delete profit margins and other proprietary information.

He is also considering how much of the information in the reports is “taxpayer information” that the government is required by law to keep confidential.

Keith Martin