$2.3 Billion in New Clean Energy Manufacturing Tax Credits

Qualifying manufacturing facilities include the production of a wide range of clean energy products such as solar, wind, geothermal, or other renewable energy equipment.

Staff Reports

President Obama announced awardees of the clean energy manufacturing tax credit in the American Recovery and Reinvestment Act.

In order to foster investment and job creation in clean energy manufacturing, the American Recovery and Reinvestment Act included a tax credit for investments in manufacturing facilities for clean energy technologies. The Section 48C program will provide a 30 percent tax credit for investments in 183 manufacturing facilities for clean energy products across 43 states. 

This tax credit program will help build a robust high-technology U.S. manufacturing capacity to supply clean energy projects with U.S.-made parts and equipment. These manufacturing facilities should also support significant growth in U.S. exports of U.S. manufactured clean energy products. 

The $2.3 billion in tax credits is being allocated on a competitive
basis. Projects are assessed based on the following criteria:
commercial viability, domestic job creation, technological innovation,
speed to project completion, and potential for reducing air pollution
and greenhouse gas emissions. The Department of Energy also considered
additional factors including diversity of geography, technology and
project size, and regional economic development.

The program is currently capped at $2.3 billion in tax credits and was
oversubscribed by a ratio of more than 3 to 1, reflecting a deep
pipeline of high-quality clean-energy manufacturing opportunities in
the U.S. These tax credits for clean energy manufacturing will help
rebuild domestic manufacturing and bring private capital off the
sidelines.

With this announcement, the IRS has certified applications and notified
the certified projects with the approved amount of their tax credit.
Awardees will receive acceptance agreements from the IRS by April 16,
2010. Credits will be allocated until the program funding ($2.3
billion) is exhausted. Subsequent allocation periods will depend on
remaining funds.

Estimated Jobs Impact and Timeline:
Recovery Act investments of up to $2.3 billion for advanced energy
manufacturing facilities will generate more than 17,000 jobs. This
investment will be matched by as much as $5.4 billion in private-sector
funding likely supporting up to 41,000 additional jobs.

Timing of Projects:
The statute authorizing the 48C tax credits allows projects that are
completed on or after February 17, 2009, when the Recovery Act was
signed. Projects must be commissioned before February 17, 2013. The
statute favors the selection of projects that are in service early. As
a result, some of the selected projects already have been completed and
begun operation.

Applicant Pool:
The application deadline for the 48C program was October 16, 2009. Over
500 applications were received with tax credit requests totaling over
$8 billion. The 48C applications pool was distributed across many clean
energy technologies and was geographically distributed to more than 40
states.

Qualifying manufacturing facilities included the production of a wide range of clean energy products:
•    Solar, wind, geothermal, or other renewable energy equipment
•    Electric grids and storage for renewables
•    Fuel cells and microturbines
•    Energy storage systems for electric or hybrid vehicles
•    Carbon dioxide capture and sequestration equipment
•    Equipment for refining or blending renewable fuels
•    Equipment for energy conservation, including lighting and smart grid technologies
•    Plug-in electric vehicles or their components, such as electric motors, generators, and power control units
•    Other advanced energy property designed to reduce greenhouse gas
emissions may also be eligible as determined by the Secretary of the
Treasury.

The statutorily specified review criteria included:
•    Greatest domestic job creation (direct and indirect)
•    Greatest net impact in avoiding or reducing air pollutants or
emissions of greenhouse gases; lowest levelized cost of energy
•    Greatest potential for technological innovation and commercial deployment
•    Shortest project time from certification to completion

Expanded Support for 48C Tax Credits to Accelerate Manufacturing Job Creation:

Because the 48C program generated far more interest than anticipated,
DOE and Treasury have a substantial backlog of technically acceptable
applications. Instead of turning down worthy applicants who are willing
to invest private resources to build and equip factories that
manufacture clean energy products in America, the Administration has
called on Congress to provide an additional $5 billion to expand the
program.

Because there is already an existing pipeline of worthy projects and
substantial interest in this area, these funds will be deployed quickly
to create jobs and support economic activity. In doing so, the
Administration will employ new approaches to ensure that we maximize
private investment for every dollar we invest.