Energy Industry Updates For July 2009

New Guidance on Claiming Cash Grants in Lieu of Investment Tax Credits for Renewable Energy Facilities

Long-awaited guidance on the implementation of Section 1603 of the American Recovery and Reinvestment Act (ARRA), which authorizes the U.S. Department of the Treasury (Treasury) to make cash payments to eligible persons who place in service specified renewable energy property by a certain date, was issued by the Treasury on July 9, 2009. The ARRA expanded investment tax credits (ITC) under Section 48 of the Internal Revenue Code and allowed the elective conversion of production tax credits (PTCs) under Section 45 of the Code for renewable energy properties into ITCs. Additionally, Section 1603 of the ARRA provides an option for taxpayers to choose to receive a cash payment in lieu of the ITC (including those facilities eligible for PTCs for which taxpayers are able to elect to claim the ITC) in an effort to fill in the gap created by diminished investor demand for