NMTC potential in renewable project finance

Folks working in economic development might already be quite familiar with the new market tax credit program, that incentivizes development in low income areas. The NMTC program was created in 2000 by the US Community Development Financial Institutions (CDFI) Fund to encourage economic investment and job creation in under served communities. The program helps projects attract investors and thus financing through a tax credit scheme. For those less familiar with the program, a clear and simple explanation can be found in this article on the NREL website.

Since its creation the program has provided 664 tax credits worth a total of $33 billion. According to this article, the program announced that it will issue another $3.5 billion of new credits with applications opening in April, with a June deadline.

But the NMTC program has application within the renewable energy world, as well.  The City of Denver, for instance, used NMTC's to finance 1 MW of solar photovoltaic installations on city buildings. And Salt Lake City incorporated NMTC allocations in a 1.65 MW PV project. Still, no renewable projects were selected to receive new market tax credits in 2011. And it seems that to date the program has only experienced limited application in the renewable world.  But as Bethany Speer points out in her article Worth the Trouble: New Market Tax Credits, they could have interesting relevance in renewable project financing as the 1603 grants dry up.