Are you eligible for a manufacturing tax credit?

Sept. 11, 2009
By Elisa Wood September 10, 2009 The United States has been generous with tax credits for energy production. But until now, it’s been somewhat miserly about giving breaks to those who make the equipment that makes the energy – or saves it. That’s changed with creation of the Advanced Energy Manufacturing Credit (MTC), part of […]

By Elisa Wood

September 10, 2009

The United States has been generous with tax credits for energy production. But until now, it’s been somewhat miserly about giving breaks to those who make the equipment that makes the energy – or saves it.

That’s changed with creation of the Advanced Energy Manufacturing Credit (MTC), part of the federal stimulus package. The 30% tax credit makes $2.3 billion available for new, expanded, or re-equipped domestic manufacturing facilities that produce clean energy equipment.

But with the deadline for applications right around the corner – September 16 – manufacturers are perplexed by eligibility requirements and wondering if they qualify.

Bridget Hust, partner with the law firm Faegre & Benson, who has been pouring over the rules on behalf of clients, says application requirements are “all over the map.” She suggests that if you think you might be eligible, then apply. It may not be clear exactly who will qualify until mid-January when the Internal Revenue Service accepts or rejects applications. And even those that are rejected may have a shot at revising and resubmitting their proposals, she said. The Feds plan to keep giving out money until the $2.3 billion is exhausted.

The credit seems particularly wide open for technologies that reduce carbon dioxide emissions – even the more obscure approaches. Hust says she is particularly eager to see how the tax credit affects manufacturing of advanced transmission, smart grid and energy storage products, since they may be key to integrating more wind power into the system.

The DOE says the credit is available for:

  • Technologies that create energy from renewable resources (sun, wind, geothermal and other renewable resources)
  • Energy storage technologies (fuel cells, microturbines or other energy storage systems used in electric vehicles)
  • Advanced transmission technologies that support renewable generation (including storage)
  • Renewable fuel refining or blending technologies
  • Energy conservation technologies (advanced lighting, smart grid)
  • Plug-in electric vehicles & vehicle components  (motors, generators)
  • Property to capture and sequester carbon dioxide
  • Other property designed to reduce greenhouse gas emissions

The manufacturer may not need the credit, particularly in a down economy where many lack taxable income. But like the solar and wind production tax credits, it could draw third-party investors in need of a tax break who will partner with the manufacturer.

See Hust’s white paper for more details http://www.faegre.com/showarticle.aspx?Show=10112, or go to http://www.energy.gov/recovery/48C.htm

Visit Elisa Wood at http://www.realenergywriters.com/ and pick up her free Energy Efficiency Markets podcast and newsletter

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded RealEnergyWriters.com, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

Twitter: @ElisaWood

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