Alternative energy projects in the U.S. that were depending on a renewal of a cash grant program as part of their financing package might be facing some disappointment. The new tax cut extension deal struck between the White House and congressional Republicans will not extend the cash grant election in lieu of the 30% tax credit for projects that generate electricity with renewable energy (solar, wind, geothermal).
As part of the American Recovery and Reinvestment Act of 2009, developers of U.S. renewable energy plants were given a choice under the cash grant program. They could take a 30% tax credit for the cost of the investment in the plant, or they could opt for a cash grant in lieu of the credit when the plant is placed in service. The cash grant has been a major incentive to renewable energy projects, since there is no need to bring in investors who can use the tax credit, and since the cash grant can come much earlier than the benefit of the tax credit (because the tax credit is not claimed until the tax return for the project is filed, which could be many months after the project is placed in service). The problem is that the cash grant election is scheduled to come to an end on December 31. It was hoped that this cash grant election in lieu of the tax credit would be extended as part of the tax cut extension deal, but this does not appear to be the case.
UPDATE: Language extending the cash grant program was included in the Tax Relief, Unemployment Innsurance Reauthorization and Job Creation Act amendment to H.R. 4853, introduced in the Senate last night.  The language can be found in Section 707 of the Bill.