New Jersey BySolar
973.784.4191 Renewable Energy Systems for Businesses & Residences

Section 1603 of the American Recovery and Reinvestment Act of 2009 has provided a major incentive for the development of commercial solar PV projects in 2010 and 2011. Instead of taking an investment tax credit for a solar energy system, businesses have an option of taking a cash grant equal to 30% of the solar system’s price from the U.S. Department of Treasury.

Although Section 1603 is set to expire on December 31, 2011, businesses can still take advantage of the cash grant for solar systems completed after 2011 as long as they act now. If construction begins on a solar energy system by the end of the year and the system is placed in service by the end of 2016, the applicant will qualify for the 1603 cash grant.

With six weeks left in 2011, the ability to begin construction is not impossible! The applicant must be under contract (legally enforceable under state law with damages not less than 5% of the total contract) with a solar installer or manufacturer prior to the start of work. There are two separate and independent ways that an applicant for a Section 1603 cash grant can establish the beginning of construction:

    1) Physical Work of a Significant Nature

    On-site and off-site work may be used to demonstrate that physical work has begun. Activities such as the installation of mounting systems, the manufacturing of components specifically for the project, or the pouring of concrete for a solar array may be included. It does not include activities such as planning, designing, securing financing, researching, or clearing the site. Once the construction starts, the work must be continuous.

    2) 5% Safe Harbor

    The Safe Harbor rule is satisfied when more than 5% of the total cost of the solar energy system has been paid by the applicant by December 31, 2011. There are two ways to accomplish this.

    First, the applicant can make a payment (greater than 5%) for solar equipment by December 31, 2011 and ensure that the equipment is delivered within three and a half months of the date of payment.

    Second, if the applicant is under a binding contract with a manufacturer of solar equipment in 2011, the applicant can include the costs incurred by the manufacturer to satisfy the 5% Safe Harbor.

Applicants should be aware that applications for projects that begin construction but will not be placed in service by the end of 2011 must be submitted before October 1, 2012. Section 1603 grants are available for the expansion of existing projects, as long as there is additional capacity being provided at the facility.

If you’ve been thinking about installing solar on your property, you don’t want to miss out on this cash grant incentive – once it’s gone, it’s not coming back!

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