If you asked the average person what the U.S. Treasury Department’s Section 1603 Program is, it’s doubtful that they would have any idea. But this program, with its unassuming and technical name, is actually one of the best government programs for developing solar technology and supporting the growth of the industry that’s available today.
Simply put, the Section 1603 program allows businesses to receive a cash grant instead of the 30% federal Investment Tax Credit for the installation of renewable energy systems, including solar. The program was to expire on December 31, 2010, but President Obama signed a one-year extension as part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.
For Hawaii, this is an incredible opportunity to take advantage of a unique program. To date, Section 1603 has distributed nearly $6 billion in grants for a variety of renewable installations, including solar electric and solar thermal projects. In fact, 1,200 of the 1,656 projects which have been funded by the program have been solar electric installations. This program gives the solar industry in Hawaii the opportunity to bring federal funds to the state to support a larger program of energy independence. The largest of the Section 1603 solar project awards—$19.5 million—went to eSolar Inc. of California.
For businesses, Section 1603 includes some provisions that make solar installation even more attractive. An “accelerated depreciation provision” is included for any new equipment purchased for a business under the program. Under previous tax laws, businesses were allowed to recoup the cost of their investments over time, according to a depreciation schedule, but this new provision allows that to occur in a single year. The President asked for the accelerated depreciation measure in the belief that it would encourage businesses to invest in alternative energy, creating a flurry of new “green collar” jobs.
While those provisions are great for business and corporate investment, there are also parts of Section 1603 that are targeted at residential installations. As part of the program, solar contractors can receive a cash grant for a residential installation if the contractor continues to own the solar property.
Rhone Resch, president of the Solar Energy Industries Association called the extension of the program, “a great day for America’s solar industry…the solar industry can continue its record growth, creating new career opportunities for Americans in all 50 states in 2011.”
It’s true that it’s great for the solar industry in general, but what’s good for solar power is good for Hawaii as we push for lower energy costs and energy independence. It’s an opportunity to bring federal funds to Hawaii and help to develop the solar generating infrastructure which is already growing rapidly.
While everyone in the solar industry would like to have seen a two-year extension of the program, the one-year extension provides an unexpected and welcome opportunity. It gives businesses and residents the chance to take advantage of government incentives and install solar generation capacity in homes and businesses throughout the state. As of the first of January, the clock is ticking. It would be a shame to miss an extraordinary chance to invest in solar through the provisions of Section 1603.