Solar and the American Recovery and Reinvestment Act

On February 17, 2009, President Obama signed the Economic Recovery Legislation. This bill marks a historic milestone within the solar industry and proposes to create 60,000 jobs in the solar industry in 2009 and a total of 110,000 over the next two years.

Three key points to the bill specific to photovoltaic and thermal solar are:

1. Renewable Energy Grants
2. Repeals Penalty for Subsidized Renewable Energy Financing
3. Remove Limits on Solar Water Heating

The renewable energy grants is a new program administered through the Department of Treasury that provides grants equal to 30 percent of the cost of solar property placed in service during 2009 and 2010. This grant replaces the section 48 investment tax credit. (Div. B, Sec. 1104, p. 38)

The bill also repeals the penalty for subsidized renewable energy financing. This allows businesses and individuals to qualify for the full amount of the solar tax credit even if projects receive subsidized energy financing (e.g. below market loans, tax preferred bonds, state grants etc.). This amendment shall apply to periods after Dec. 31, 2008. (Div. B, Sec. 1103, p.36)

The stimulus bill also removes the $2,000 monetary cap on solar water heating, providing a full 30% credit for qualified solar water heating property (Div. B, Sec. 1122(a), p. 46). Qualified solar water heating property is defined as used for a purpose other than heating swimming pools and hot tubs. In addition, the credit may be claimed against the alternative minimum tax.