1603 Treasury Program

The Section 1603 Treasury Program, created in 2009, allowed solar and other renewable energy developers to receive a direct federal grant in lieu of the Section 48 Investment Tax Credit (ITC). The program, originally approved through the end of 2010, was extended for an additional year, and expired on December 31, 2011. A project may still be eligible for a 1603 award if the developer commenced construction by December 31, 2011, or if the developer satisfied a 5% safe harbor by incurring 5% of the total eligible project costs before the December 31 deadline. For more information regarding this safe harbor provision, visit the 1603 Treasury Program website.

The 1603 Treasury Program continues to be a leading policy priority for the solar industry. In the two years since its enactment, the 1603 Treasury Program has been a proven success and given taxpayers a good return on investment. As of January 2012, the 1603 Treasury Program awarded over 4,000 grants totaling $1.75 billion for more than 22,000 individual solar projects in 47 states and has supported over $4 billion in private investment. According to a report published by EuPD Research in October, a one-year extension of the program would create an additional 37,000 jobs in 2012 in the solar industry alone. In addition, a one-year extension would result in nearly 2,000 additional megawatts (MW) of solar installations above baseline by 2016, enough to power 400,000 homes.

• Download SEIA's Talking Points on the Importance of 1603 Treasury Program Extension
• Download the EuPD Report on Job Creation from Extending the 1603 Treasury Program
  
• Download Rhone Resch's Statement submitted for a December 14 hearing convened by the Senate Finance Subcommittee on Energy, Natural Resources, and Infrastructure

There is support in Congress for addressing business and energy tax extenders as part of a longer-term tax provision package in the first few months of 2012. These negotiations provide an opportunity to extend the 1603 Treasury Program. On February 13, the Obama Administration called on Congress to extend the program in its Fiscal Year 2013 budget proposal.

Call your senators or send them a message now to support an extension of the 1603 Treasury Program.

SEIA is working with a coalition of clean energy industries currently building projects and creating jobs with support from this effective program to advocate for its extension. SEIA is also working with our solar champions in Congress. Nearly 90 members of the House of Representatives signed a letter to congressional leaders asking that the 1603 Treasury Program be extended. In a similar effort, 35 Senators signed their own letter asking that critical clean energy tax provisions be extended.

• Download a copy of the House 1603 Extension Letter with signatories
  
• Download a copy of the Senate Clean Energy Tax Credit Extension Letter with signatories
  
• Download a copy of the 1603 Coalition Letter with signatories
  
• Download a one-pager on the extension of the 1603 Treasury Program

Background

The 2008 economic crisis rendered solar and other renewable energy tax incentives of little immediate value. The economic downturn drastically reduced the availability of tax equity, severely limiting the financing available for renewable energy projects. The American Recovery and Reinvestment Act of 2009 created the 1603 Treasury Program, which allows the owner of commercial solar property to receive a 30 percent grant, in lieu of taking the solar Investment Tax Credit (ITC). Residential solar systems are also eligible if the system is owned by a third-party developer through a power purchase agreement (PPA) or lease. Applicants are eligible for 1603 only if they commence construction on projects by December 31, 2011 and complete construction by December 31, 2016.

On June 30, 2011, the U.S. Department of the Treasury published on its 1603 Treasury Program website the guidance document entitled, Evaluating Cost Basis for Solar Photovoltaic Properties. The document outlines the process used by the Section 1603 team to evaluate the cost basis of solar property and the principles that guide this process.