Capstopne's Intepretation of the Stimuls BIl

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-Editor


Stimulus Package Signed by President Obama On February 17, President Obama signed the American Recovery and Reinvestment Act (H.R.1) into law.



The package contains a number of measures designed to promote clean energy and energy efficiency, many of which could be beneficial to deployment of Capstone’s products and the continued development of our technology. For example, the Stimulus provides:


Grants in lieu of the 10 percent investment tax credit (ITC) on microturbines and combined heat and power (CHP);
$3.2 billion in block grants to states and local governments to spend on energy efficiency and $3,1 billion to fund state energy programs;
$16.8 billion in funding for DOE to fund Research and Development of clean energy and efficiency technologies, among other programs;
Bonus depreciation of capital equipment;
$11 billion to fund clean energy and energy efficiency upgrades at federal buildings.




The following summary contains more details on the individual energy provisions in the Stimulus package that could be beneficial to Capstone’s business.


Overview of Energy Provisions in the Stimulus Bill

• Clean Energy Grants: Purchasers of microturbines and CHP systems can now elect to receive grants in lieu of the ITC for projects placed in service during 2009 and 2010 (or after 2010 if commenced in 2009-2010).


• The Act also allows facilities included in Section 45 (biomass, biodiesel, landfill gas, et al) to take a 30 percent refundable ITC in lieu of the Production Tax Credit (PTC) for projects placed in service on or before 2013.


• Energy Efficiency and Conservation Block Grants: Appropriates $3.2 billion for Energy Efficiency and Conservation Block Grants as authorized in the Energy Independence and Security Act of 2007. This funding goes to state and local governments to make investments in energy efficiency, including the application and implementation of energy distribution technologies that significantly increase energy efficiency.
  Repeals Penalty for Financing Section 48 Technologies (Microturbines and CHP, et al): Allows businesses and individuals to qualify for the full amount of the tax credit, even if projects are financed with local development bonds or other subsidized energy financing.
  


• Green and Efficient Federal Buildings: The Act includes $5.5 billion to be deposited into the Federal Buildings Fund for expenditures to construct, repair and make alterations on federal buildings to increase energy efficiency, including installing solar energy equipment. In addition, $4.5 billion is available for measures necessary to convert Government Services Administration facilities to green buildings. The act also provides $1 billion for non-recurring maintenance on Veterans Affairs medical facilities, including energy projects.


• State Energy Program: $3.1 billion dollars will be made available to the Secretary of Energy to award grants to states. The award of this funding is conditioned upon a notification to the Secretary of Energy by the governor that the state has obtained the necessary assurances to adopt certain utility regulatory polices to encourage utility-sponsored energy efficiency improvements and updated energy efficient building codes. In order to take advantage of existing institutional structures, a state is also encouraged to use federal funds to existing energy efficiency and renewable energy programs.
  Loan Guarantee Program: Establishes a temporary, low-cost loan guarantee program by DOE for renewable energy systems and electric power transmission projects that begin construction by September 30, 2011. The Act makes available $6 billion for use by this program, which is estimated to support more than $60 billion in loans for these projects.
  Manufacturing Investment Credit: Provides a 30 percent investment tax credit for facilities engaged in the manufacture of advanced energy property, including microturbines. Projects must be certified by the Treasury, in consultation with the Secretary of Energy, through competitive bidding. .Extend Bonus Depreciation: Allows businesses to recover 50 percent of the cost of capital investment in the first year in order to spur upfront expenditures in 2009 and 2010.
  Energy Department Funding: Appropriates $16.8 billion to energy efficiency and renewable energy, including $2.5 billion for applied R&D, demonstration and deployment projects. There will be $800 million for projects related to biomass and $400 million for geothermal projects which, according to the U.S. Clean Heat and Power Association, could also include funding for sections 451, 452 and 471 (these provisions were stripped from the House version). These provisions could entail a DOE grant program for CHP projects.
  


• New Clean Renewable Energy Bonds (“New CREBs”): Provides an additional $1.6 billion for local governments and municipalities to finance facilities that generate electricity from renewable energy (biogas, biodiesel, landfill gas, et al) sources.


• Qualified Energy Conservation Bonds: Authorizes $2.4 billion in bonds to finance state, municipal and tribal government programs that reduce greenhouse gas emissions.


• Green Collar Jobs: Appropriates $500 million to fund job training programs in energy efficiency and renewable energy.


• Smart Grid: Provides up to 50 percent reimbursement to electric utilities or other parties that carry out smart‐grid demonstration projects.
  Renewable Energy for Water Treatment Plants: Appropriates $2.4 billion in grants that could be used to put renewable energy in wastewater treatment plants.


• Department of Defense Energy and Efficiency Programs: The act provides $300 million to the DOD for the purpose of research, testing and evaluation of projects to energy generation, transmission and efficiency. The bill provides an additional $100 million for Navy and Marine Corps facilities to fund energy efficiency and alternative energy projects.


• The Defense Health Program will also receive $400 million to invest in energy efficiency projects and to improve, repair and modernize military medical facilities in the United States and its territories. There is also an additional $120 million appropriated for the Energy Conservation Investment Program for military construction defense-wide