What Costs can be Included in a Solar Grant Application?

Question:

Hi,
Good to see this service!  My company offers a range of energy efficiency products including solar electric.  A question has come up regarding whether the federal tax credit can be applied to services and products included in the contract price for a solar system and install. Specifically, we’ve heard conflicting opinions on including a new roof or part of a roof, and/or tree removal with the contract. Would we be in trouble if, hypothetically, we installed a unique looking solar system at a relatively high cost (tax credit savings go up), then paid a marketing fee back to the customer after the install for access to the project for our marketing efforts?

Yours Truly,
Solar Installer

____________________________________

Answer:
Dear Solar Installer,

Without knowing more details about the project you referred to in your question, it would be impossible for us to advise you regarding the legality of your Section 1603 tax credit application.  However, from the general information you provided, we could certainly direct you to Section V of the U.S. Treasury Department’s Program Guidance for payments for Specified Energy Property in Lieu of Tax Credits under the American Recovery and Reinvestment Act of 2009.

The Program Guidance spells out what costs are eligible for the 1603 credit.  It says that the cost of equipement and reasonable installation expenses will be included, but a new roof or modifications to an existing system would probably be considered a “non qualifying activity” and therefore may not be claimed on the application.  Remember that when submitting your application for a Section 1603 payment, you must provide supporting documentation to support the cost basis claimed for the project. Detailed breakdown of all costs including contracts, copies of invoices, and proof of payment must be retained by the applicant and made available to Treasury upon request.

Recently, The U.S. Department of the Treasury, as part of the process of reviewing 1603 applications, has been making supplemental requests that applicants submit copies of their power purchase agreements (PPAs) and other documentation. This is creating delays in the payment of the grant.  For more information about this process, please see our previous post regarding 1603 applications, or send us an email: questions@cleantechlawpartners.com

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