Preliminary Evaluation of the Impact of the Section 1603 Treasury Grant Program on Renewable Energy Deployment in 2009

Publication Type


Date Published




Amidst the most-severe financial crisis since the Great Depression of the 1930s, The American Recovery and Reinvestment Act ("the Recovery Act") was signed into law on February 17, 2009. Portions of the Recovery Act were intended to address the financing challenges faced by renewable power projects. Most notably, Section 1603 of the Recovery Act enables qualifying commercial renewable energy projects to choose between the Section 45 production tax credit ("PTC"), the Section 48 investment tax credit ("ITC"), or a cash grant of equal value to the Section 48 ITC (i.e., 30% of the project's eligible basis in most cases). By giving developers the option to receive a 30% cash grant (administered by the U.S. Department of the Treasury) in lieu of either the ITC or the PTC, Congress hoped to "…temporarily fill the gap created by the diminished investor demand for tax credits," and thereby achieve "…the near term goal of creating and retaining jobs…as well as the long-term benefit of expanding the use of clean and renewable energy and decreasing our dependency on non-renewable energy sources" (U.S. Department of the Treasury 2009). More than a year has now passed since the Recovery Act became law. Although the Section 1603 grant program has been operational for only part of that time – about eight months – the program faces a looming milestone in just another nine months. Specifically, in order to qualify for the Section 1603 grant, eligible projects must have commenced construction by the end of 2010. With this deadline approaching, the Committee on Ways and Means of the U.S. House of Representatives requested that Lawrence Berkeley National Laboratory evaluate the effectiveness of the Section 1603 grant program to date (see Attachment 1), focusing on specific elements of the program that were subsequently agreed upon by Committee staff, the U.S. Department of Energy, and Berkeley Lab. This report, which responds to the Committee's request, represents an initial attempt at a selective evaluation of the first year of the Section 1603 program. The analysis has been conducted under tight time constraints, with incomplete access to relevant data, and a limited operating history of the program being evaluated. Moreover, only a subset of possible issues has been evaluated. As such, the findings presented here should be considered preliminary, and subject to potential revision under a more-rigorous assessment. In addition, neither Berkeley Lab nor the authors of this paper take any position on whether the Section 1603 program should be extended or revised.

Year of Publication



Research Areas

Related Files