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Self-Storage and Other Businesses Race to Use Expiring Solar-Energy Grant Program


Companies nationwide that are eager to take advantage of federal grant program providing owners of solar projects with a 30-percent cash incentive are rushing to complete by Dec. 31. Fortunately, Michael Kane of 126 Self Storage in Ashland, Mass., was able to finish his $2.2-million system, which will generate enough power for more than 400 homes per year.

This summer, Kane contacted a solar consultant to investigate the installation of electricity-producing panels on his facility’s 57,000 square feet of roof space. In Kane’s case, the grant program created a savings of about $660,000. Programs such as this are often the only way companies can make a renewable-energy project financially viable.

Massachusetts businesses have already received $13.5 million in cash grants from U.S. Treasury Department Program 1603, an unlimited amount of funding from the American Recovery and Reinvestment Act to encourage renewable-energy generation. Nationwide, $387 million has been awarded, according to the Solar Energy Industries Association, a Washington, D.C.-based trade group that has been tracking the incentive.

After the grant expires at the end of the year, companies can still apply for a tax credit worth up to 30 percent. But the credit is not nearly as attractive as a direct cash reimbursement sent to the business owner within 60 days. The tax credit doesn’t benefit the business until the next tax season, but it can be carried forward up to 20 years.

There is a small loophole. If 5 percent of the cost of a solar project is spent before the Dec. 31 deadline, a company can apply for a “safe harbor” provision, which would allow the project to qualify for the 30-percent cash grant. Businesses have to file the request with the federal government before the end of the year, and each application is considered on a case-by-case basis.

Some solar companies are concerned that the program will create a “hangover effect” that will dampen the solar installation market in 2011.


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