II 

110TH CONGRESS 

1ST SESSION S. 1531 

To amend the Internal Revenue Code of 1986 to provide incentives and 

extend existing incentives for the production and use of renewable energy 

resources, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 25, 2007 

Mr. REID (for himself, Mr. ALLARD, and Mr. SALAZAR) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

incentives and extend existing incentives for the production and use of renewable energy resources, and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; REFERENCES, TABLE OF CON4 TENTS. 

5 (a) SHORT TITLE.—This Act may be cited as the 

6 ‘‘Clean Renewable Energy and Economic Development In7 centives Act of 2007’’. 


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1 (b) AMENDMENT OF 1986 CODE.—Except as other2 wise expressly provided, whenever in this title an amend3 ment or repeal is expressed in terms of an amendment 

4 to, or repeal of, a section or other provision, the reference 

5 shall be considered to be made to a section or other provi6 sion of the Internal Revenue Code of 1986. 

7 (c) TABLE OF CONTENTS.—The table of contents of 

8 this Act is as follows: 

Sec. 1. Short title; references, table of contents. 

TITLE I—TAX INCENTIVES FOR ENERGY CONSERVATION AND 

EXPLORATION 

Sec. 101. Extension of renewable electricity production credit. 

Sec. 102. Extension and modification of clean renewable energy bond credit. 

Sec. 103. Water conservation, reuse and efficiency bonds. 

Sec. 104. Credit for geothermal exploration expenditures. 

Sec. 105. Credit for wind energy systems. 

Sec. 106. Extension and modification of new energy efficient home credit. 

Sec. 107. Investment tax credit for advanced battery production. 

Sec. 108. Qualified renewable school energy bonds. 

Sec. 109. Treatment of bonds issued to finance renewable energy resource facilities. 

TITLE II—INVESTMENT TAX CREDIT WITH RESPECT TO SOLAR 

ENERGY PROPERTY AND MANUFACTURING 

Subtitle A—Solar Energy Property 

Sec. 201. Energy credit with respect to solar energy property. 

Sec. 202. Repeal of exclusion for solar and geothermal public utility property 

under energy credit. 

Sec. 203. Permanent extension and modification of credit for residential energy 

efficient property. 

Sec. 204. 3-year accelerated depreciation period for solar energy property. 

Subtitle B—Promotion of Solar Manufacturing in the United States 

Sec. 211. Solar manufacturing credit. 


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1 TITLE I—TAX INCENTIVES FOR 

2 ENERGY CONSERVATION AND 

3 EXPLORATION 

4 SEC. 101. EXTENSION OF RENEWABLE ELECTRICITY PRO5 DUCTION CREDIT. 

6 (a) IN GENERAL.—Paragraphs (1), (2), (3), (4), (5), 

7 (6), (7), and (9) of section 45(d) (relating to qualified fa8 cilities) are amended by striking ‘‘January 1, 2009’’ each 

9 place it appears and inserting ‘‘January 1, 2019’’. 

10 (b) DEEMED PLACED-IN-SERVICE DATE FOR RE11 NEWABLE ELECTRICITY FACILITIES.—Section 45(e) (re12 lating to definitions and special rules) is amended by add13 ing at the end the following new paragraph: 

14 ‘‘(12) DEEMED PLACED-IN-SERVICE DATE FOR

15 CERTAIN FACILITIES.— 

16 ‘‘(A) IN GENERAL.—In the case of any fa17 cility described in paragraph (1), (2), (3), (4) 

18 (respect to geothermal energy), (5), (6), (7), or 

19 (9), for purposes of such paragraph, such facil20 ity shall be treated as being placed in service 

21 before January 1, 2019, if such facility is under 

22 construction before such date and is producing 

23 and selling electricity within 2 years after such 

24 date. 


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1 ‘‘(B) PERIOD OF CREDIT.—If a facility is 

2 treated as placed in service pursuant to sub3 paragraph (A), the 10-year period referred to in 

4 subsection (a) shall be treated as beginning on 

5 January 1, 2019.’’. 

6 (c) EFFECTIVE DATE.—The amendments made by 

7 this section shall take effect on the date of the enactment 

8 of this Act. 

9 SEC. 102. EXTENSION AND MODIFICATION OF CLEAN RE10 NEWABLE ENERGY BOND CREDIT. 

11 (a) EXTENSION.—Subsection 54(m) (relating to ter12 mination) is amended by striking ‘‘2008’’ and inserting 

13 ‘‘2018’’. 

14 (b) ANNUAL VOLUME CAP FOR BONDS ISSUED DUR15 ING EXTENSION PERIOD.—Paragraph (1) of subsection 

16 54(f) (relating to national limitation) is amended to read 

17 as follows: 

18 ‘‘NATIONAL LIMITATION.— 

19 ‘‘(A) INITIAL NATIONAL LIMITATION.— 

20 With respect to bonds issued after December 

21 31, 2005, and before January 1, 2009, there is 

22 a national clean renewable energy bond limita23 tion of $1,200,000,000. 

24 ‘‘(B) ANNUAL NATIONAL LIMITATION.— 

25 With respect to bonds issued after December 


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1 31, 2008, and before January 1, 2019, there is 

2 a national clean renewable energy bond limita3 tion for each calendar year of 

4 $1,000,000,000.’’. 

5 (c) ALLOCATION BY SECRETARY.—Paragraph (2) of 

6 subsection 54(f) (relating to allocation by Secretary) is 

7 amended by striking ‘‘, except that the Secretary’’ and in8 serting ‘‘, except that, in the case of bonds issued under 

9 paragraph (1)(A), the Secretary’’. 

10 (d) PUBLICITY REGARDING ALLOCATION OF CLEAN

11 RENEWABLE ENERGY BONDS.— 

12 (1) IN GENERAL.—Section 54 is amended by 

13 redesignating subsection (m) as subsection (n) and 

14 by inserting after subsection (l) the following new 

15 subsection: 

16 ‘‘(m) PUBLICITY REGARDING ALLOCATION OF

17 CLEAN RENEWABLE ENERGY BONDS.—The Secretary 

18 shall prepare a report not later than 1 year after each 

19 allocation under subsection (f) to Congress, and make 

20 such report publicly available, which with respect to such 

21 allocation identifies the name of each applicant for such 

22 allocation, the name of the borrower (if other than the 

23 applicant), the type and location of the project that is the 

24 subject of such application, and the amount of the allocaVerDate Aug 31 2005 18:59 May 27, 2007 Jkt 059196 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1531.IS S1531

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1 tion under subsection (f) for such project in the event the 

2 project receives such an allocation.’’. 

3 (2) EFFECTIVE DATE.—The amendments made 

4 by this subsection shall apply to applications for al5 locations made after the date of the enactment of 

6 this Act. 

7 (e) EFFECTIVE DATE.—Except as otherwise pro8 vided, the amendments made by this section shall apply 

9 to bonds issued after December 31, 2007. 

10 SEC. 103. WATER CONSERVATION, REUSE AND EFFICIENCY 

11 BONDS. 

12 (a) IN GENERAL.—Subpart H of part IV of sub13 chapter A of chapter 1 (relating to credits against tax) 

14 is amended by adding at the end the following new section: 

15 ‘‘SEC. 54A. CREDIT TO HOLDERS OF WATER CONSERVA16 TION, REUSE AND EFFICIENCY BONDS. 

17 ‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 

18 a water conservation, reuse and efficiency bond on 1 or 

19 more credit allowance dates of the bond occurring during 

20 any taxable year, there shall be allowed as a credit against 

21 the tax imposed by this chapter for the taxable year an 

22 amount equal to the sum of the credits determined under 

23 subsection (b) with respect to such dates. 

24 ‘‘(b) AMOUNT OF CREDIT.— 


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1 ‘‘(1) IN GENERAL.—The amount of the credit 

2 determined under this subsection with respect to any 

3 credit allowance date for a water conservation, reuse 

4 and efficiency bond is 25 percent of the annual cred5 it determined with respect to such bond. 

6 ‘‘(2) ANNUAL CREDIT.—The annual credit de7 termined with respect to any water conservation, 

8 reuse and efficiency bond is the product of— 

9 ‘‘(A) the credit rate determined by the Sec10 retary under paragraph (3) for the day on 

11 which such bond was sold, multiplied by 

12 ‘‘(B) the outstanding face amount of the 

13 bond. 

14 ‘‘(3) DETERMINATION.—For purposes of para15 graph (2), with respect to any water conservation, 

16 reuse and efficiency bond, the Secretary shall deter17 mine daily or cause to be determined daily a credit 

18 rate which shall apply to the first day on which 

19 there is a binding, written contract for the sale or 

20 exchange of the bond. The credit rate for any day 

21 is the credit rate which the Secretary or the Sec22 retary’s designee estimates will permit the issuance 

23 of water conservation, reuse and efficiency bonds 

24 with a specified maturity or redemption date without 


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1 discount and without interest cost to the qualified 

2 issuer. 

3 ‘‘(4) CREDIT ALLOWANCE DATE.—For purposes 

4 of this section, the term ‘credit allowance date’ 

5 means— 

6 ‘‘(A) March 15, 

7 ‘‘(B) June 15, 

8 ‘‘(C) September 15, and 

9 ‘‘(D) December 15. 

10 Such term also includes the last day on which the 

11 bond is outstanding. 

12 ‘‘(5) SPECIAL RULE FOR ISSUANCE AND RE13 DEMPTION.—In the case of a bond which is issued 

14 during the 3-month period ending on a credit allow15 ance date, the amount of the credit determined 

16 under this subsection with respect to such credit al17 lowance date shall be a ratable portion of the credit 

18 otherwise determined based on the portion of the 3- 

19 month period during which the bond is outstanding. 

20 A similar rule shall apply when the bond is redeemed 

21 or matures. 

22 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The 

23 credit allowed under subsection (a) for any taxable year 

24 shall not exceed the excess of— 


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1 ‘‘(1) the sum of the regular tax liability (as de2 fined in section 26(b)) plus the tax imposed by sec3 tion 55, over, 

4 ‘‘(2) the sum of the credits allowable under this 

5 part (other than subpart C, section 1400N(l), and 

6 this section). 

7 ‘‘(d) WATER CONSERVATION, REUSE AND EFFI8 CIENCY BOND.—For purposes of this section— 

9 ‘‘(1) IN GENERAL.—The term ‘water conserva10 tion, reuse and efficiency bond’ means any bond 

11 issued as part of an issue if— 

12 ‘‘(A) the bond is issued by a qualified 

13 issuer pursuant to an allocation by the Sec14 retary to such issuer of a portion of the na15 tional water conservation, reuse and efficiency 

16 bond limitation under subsection (f)(2), 

17 ‘‘(B) 95 percent or more of the proceeds of 

18 such issue are to be used for capital expendi19 tures incurred by qualified borrowers for 1 or 

20 more qualified projects, 

21 ‘‘(C) the qualified issuer designates such 

22 bond for purposes of this section and the bond 

23 is in registered form, and 

24 ‘‘(D) the issue meets the requirements of 

25 subsection (h). 


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1 ‘‘(2) QUALIFIED PROJECT; SPECIAL USE

2 RULES.— 

3 ‘‘(A) IN GENERAL.—The term ‘qualified 

4 project’ means any rural water supply project 

5 (as defined in section 102(9) of the Rural 

6 Water Supply Act of 2006), owned by a quali7 fied borrower, and which may include prepara8 tion and implementation of water conservation 

9 plans, development and deployment of water ef10 ficient products and processes, and xeriscaping 

11 projects consistent with that section. 

12 ‘‘(B) REFINANCING RULES.—For purposes 

13 of paragraph (1)(B), a qualified project may be 

14 refinanced with proceeds of a water conserva15 tion, reuse and efficiency bond only if the in16 debtedness being refinanced (including any obli17 gation directly or indirectly refinanced by such 

18 indebtedness) was originally incurred by a 

19 qualified borrower after the date of the enact20 ment of this section. 

21 ‘‘(C) REIMBURSEMENT.—For purposes of 

22 paragraph (1)(B), a water conservation, reuse 

23 and efficiency bond may be issued to reimburse 

24 a qualified borrower for amounts paid after the 


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1 date of the enactment of this section with re2 spect to a qualified project, but only if— 

3 ‘‘(i) prior to the payment of the origi4 nal expenditure, the qualified borrower de5 clared its intent to reimburse such expendi6 ture with the proceeds of a water conserva7 tion, reuse and efficiency bond, 

8 ‘‘(ii) not later than 60 days after pay9 ment of the original expenditure, the quali10 fied issuer adopts an official intent to re11 imburse the original expenditure with such 

12 proceeds, and 

13 ‘‘(iii) the reimbursement is made not 

14 later than 18 months after the date the 

15 original expenditure is paid. 

16 ‘‘(D) TREATMENT OF CHANGES IN USE.— 

17 For purposes of paragraph (1)(B), the proceeds 

18 of an issue shall not be treated as used for a 

19 qualified project to the extent that a qualified 

20 borrower or qualified issuer takes any action 

21 within its control which causes such proceeds 

22 not to be used for a qualified project. The Sec23 retary shall prescribe regulations specifying re24 medial actions that may be taken (including 

25 conditions to taking such remedial actions) to 


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1 prevent an action described in the preceding 

2 sentence from causing a bond to fail to be a 

3 water conservation, reuse and efficiency bond. 

4 ‘‘(e) MATURITY LIMITATIONS.— 

5 ‘‘(1) DURATION OF TERM.—A bond shall not be 

6 treated as a water conservation, reuse and efficiency 

7 bond if the maturity of such bond exceeds the max8 imum term determined by the Secretary under para9 graph (2) with respect to such bond. 

10 ‘‘(2) MAXIMUM TERM.—During each calendar 

11 month, the Secretary shall determine the maximum 

12 term permitted under this paragraph for bonds 

13 issued during the following calendar month. Such 

14 maximum term shall be the term which the Sec15 retary estimates will result in the present value of 

16 the obligation to repay the principal on the bond 

17 being equal to 50 percent of the face amount of such 

18 bond. Such present value shall be determined with19 out regard to the requirements of subsection (l)(6) 

20 and using as a discount rate the average annual in21 terest rate of tax-exempt obligations having a term 

22 of 10 years or more which are issued during the 

23 month. If the term as so determined is not a mul24 tiple of a whole year, such term shall be rounded to 

25 the next highest whole year. 


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1 ‘‘(f) LIMITATION ON AMOUNT OF BONDS DES2 IGNATED.— 

3 ‘‘(1) NATIONAL LIMITATION.—There is a na4 tional water conservation, reuse and efficiency bond 

5 limitation of $500,000,000 for each of the 10 cal6 endar years beginning after the date of enactment of 

7 this section. 

8 ‘‘(2) ALLOCATION BY SECRETARY.—The Sec9 retary shall allocate the amount described in para10 graph (1) among qualified projects in such manner 

11 as the Secretary determines appropriate, except that 

12 the Secretary shall allocate the bond limitation for 

13 the financing of qualified projects in as geographi14 cally diverse a manner as practicable. 

15 ‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross 

16 income includes the amount of the credit allowed to the 

17 taxpayer under this section (determined without regard to 

18 subsection (c)), and the amount so included shall be treat19 ed as interest income. 

20 ‘‘(h) SPECIAL RULES RELATING TO EXPENDI21 TURES.— 

22 ‘‘(1) IN GENERAL.—An issue shall be treated as 

23 meeting the requirements of this subsection if, as of 

24 the date of issuance, the qualified issuer reasonably 

25 expects— 


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1 ‘‘(A) at least 95 percent of the proceeds of 

2 such issue are to be spent for 1 or more quali3 fied projects within the 5-year period beginning 

4 on the date of issuance of the water conserva5 tion, reuse and efficiency bond, 

6 ‘‘(B) a binding commitment with a 3rd 

7 party to spend at least 10 percent of the pro8 ceeds of such issue will be incurred within the 

9 6-month period beginning on the date of 

10 issuance of the water conservation, reuse and 

11 efficiency bond or, in the case of a water con12 servation, reuse and efficiency bond the pro13 ceeds of which are to be loaned to 2 or more 

14 qualified borrowers, such binding commitment 

15 will be incurred within the 6-month period be16 ginning on the date of the loan of such proceeds 

17 to a qualified borrower, and 

18 ‘‘(C) such projects will be completed with 

19 due diligence and the proceeds of such issue will 

20 be spent with due diligence. 

21 ‘‘(2) EXTENSION OF PERIOD.—Upon submis22 sion of a request prior to the expiration of the period 

23 described in paragraph (1)(A), the Secretary may 

24 extend such period if the qualified issuer establishes 

25 that the failure to satisfy the 5-year requirement is 


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1 due to reasonable cause and the related projects will 

2 continue to proceed with due diligence. 

3 ‘‘(3) FAILURE TO SPEND REQUIRED AMOUNT

4 OF BOND PROCEEDS WITHIN 5 YEARS.—To the ex5 tent that less than 95 percent of the proceeds of 

6 such issue are expended by the close of the 5-year 

7 period beginning on the date of issuance (or if an 

8 extension has been obtained under paragraph (2), by 

9 the close of the extended period), the qualified issuer 

10 shall redeem all of the nonqualified bonds within 90 

11 days after the end of such period. For purposes of 

12 this paragraph, the amount of the nonqualified 

13 bonds required to be redeemed shall be determined 

14 in the same manner as under section 142. 

15 ‘‘(i) SPECIAL RULES RELATING TO ARBITRAGE.—A 

16 bond which is part of an issue shall not be treated as a 

17 water conservation, reuse and efficiency bond unless, with 

18 respect to the issue of which the bond is a part, the quali19 fied issuer satisfies the arbitrage requirements of section 

20 148 with respect to proceeds of the issue. 

21 ‘‘(j) MUNICIPAL WATER DISTRICT; QUALIFIED

22 WATER SYSTEMS TAX CREDIT BOND LENDER; GOVERN23 MENTAL BODY; QUALIFIED BORROWER.—For purposes of 

24 this section— 


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1 ‘‘(1) MUNICIPAL WATER DISTRICT.—The term 

2 ‘municipal water district’ shall mean a non-profit 

3 private or public entity operated for the purpose of 

4 implementing rural water supply projects (as defined 

5 in section 102(9) of the Rural Water Supply Act of 

6 2006). 

7 ‘‘(2) QUALIFIED WATER SYSTEMS BOND LEND8 ER.—The term ‘qualified water systems bond lender’ 

9 means a lender which is a municipal water district 

10 or a public water system which is owned by a gov11 ernmental body, and shall include any affiliated enti12 ty which is controlled by such lender. 

13 ‘‘(3) GOVERNMENTAL BODY.—The term ‘gov14 ernmental body’ means any State, territory, or pos15 session of the United States, the District of Colum16 bia, Indian tribal government, and any political sub17 division thereof. 

18 ‘‘(4) QUALIFIED ISSUER.—The term ‘qualified 

19 issuer’ means— 

20 ‘‘(A) a qualified water systems bond lend21 er, 

22 ‘‘(B) a municipal water district, or 

23 ‘‘(C) a governmental body. 

24 ‘‘(5) QUALIFIED BORROWER.—The term ‘quali25 fied borrower’ means— 


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1 ‘‘(A) a municipal water district, or 

2 ‘‘(B) a governmental body. 

3 ‘‘(k) SPECIAL RULES RELATING TO POOL BONDS.— 

4 No portion of a pooled financing bond may be allocable 

5 to any loan unless the borrower has entered into a written 

6 loan commitment for such portion prior to the issue date 

7 of such issue. 

8 ‘‘(l) OTHER DEFINITIONS AND SPECIAL RULES.— 

9 For purposes of this section— 

10 ‘‘(1) BOND.—The term ‘bond’ includes any ob11 ligation. 

12 ‘‘(2) POOLED FINANCING BOND.—The term 

13 ‘pooled financing bond’ shall have the meaning given 

14 such term by section 149(f)(4)(A). 

15 ‘‘(3) PARTNERSHIP; S CORPORATION; AND

16 OTHER PASS-THRU ENTITIES.— 

17 ‘‘(A) IN GENERAL.—Under regulations 

18 prescribed by the Secretary, in the case of a 

19 partnership, trusts corporation, or other pass20 thru entity, rules similar to the rules of section 

21 41(g) shall apply with respect to the credit al22 lowable under subsection (a). 

23 ‘‘(B) NO BASIS ADJUSTMENT.—In the case 

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1 tion, rules similar to the rules under section 

2 1397E(i) shall apply. 

3 ‘‘(4) BONDS HELD BY REGULATED INVEST4 MENT COMPANIES.—If any water conservation, reuse 

5 and efficiency bond is held by a regulated investment 

6 company, the credit determined under subsection (a) 

7 shall be allowed to shareholders of such company 

8 under procedures prescribed by the Secretary. 

9 ‘‘(5) RATABLE PRINCIPAL AMORTIZATION RE10 QUIRED.—A bond shall not be treated as a water 

11 conservation, reuse and efficiency bond unless it is 

12 part of an issue which provides for an equal amount 

13 of principal to be paid by the qualified issuer during 

14 each calendar year that the issue is outstanding. 

15 ‘‘(6) REPORTING.—Issuers of water conserva16 tion, reuse and efficiency bonds shall submit reports 

17 similar to the reports required under section 149(e). 

18 ‘‘(m) TERMINATION.—This section shall not apply 

19 with respect to any bond issued after the tenth calendar 

20 year beginning after the date of the enactment of this sec21 tion.’’. 

22 (b) REPORTING.—Subsection (d) of section 6049 (re23 lating to returns regarding payments of interest) is 

24 amended by adding at the end the following new para25 graph: 


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1 ‘‘(9) REPORTING OF CREDIT ON WATER CON2 SERVATION, REUSE AND EFFICIENCY BONDS.— 

3 ‘‘(A) IN GENERAL.—For purposes of sub4 section (a), the term ‘interest’ includes amounts 

5 includible in gross income under section 54A(g) 

6 and such amounts shall be treated as paid on 

7 the credit allowance date (as defined in section 

8 54A(b)(4)). 

9 ‘‘(B) REPORTING TO CORPORATIONS, 

10 ETC.—Except as otherwise provided in regula11 tions, in the case of any interest described in 

12 subparagraph (A), subsection (b)(4) shall be 

13 applied without regard to subparagraphs (A), 

14 (H), (I), (J), (K), and (L)(i) of such subsection. 

15 ‘‘(C) REGULATORY AUTHORITY.—The Sec16 retary may prescribe such regulations as are 

17 necessary or appropriate to carry out the pur18 poses of this paragraph, including regulations 

19 which require more frequent or more detailed 

20 reporting.’’. 

21 (c) CONFORMING AMENDMENT.—The table of sec22 tions for subpart H of part IV of subchapter A of chapter 

23 1 is amended by adding at the end the following new item: 

‘‘Sec. 54A. Credit to holders of water conservation, reuse and efficiency 

bonds.’’. 


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1 (d) ISSUANCE OF REGULATIONS.—The Secretary of 

2 the Treasury shall issue regulations required under section 

3 54A (as added by this section) not later than 120 days 

4 after the date of the enactment of this Act. 

5 (e) REPORT ON USE OF BOND AUTHORITY.—On 

6 April 1, 2008, and annually thereafter, the Secretary of 

7 Treasury shall submit a report to Congress including the 

8 number of applications for bonding authority received, 

9 granted and identifying the purposes and expected effects 

10 of projects supported by the bonding authority in the pre11 vious calendar year. 

12 (f) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to bonds issued after December 

14 31, 2007. 

15 SEC. 104. CREDIT FOR GEOTHERMAL EXPLORATION EX16 PENDITURES. 

17 (a) IN GENERAL.—Subpart D of part IV of sub18 chapter A of chapter 1 (relating to business related cred19 its) is amended by adding at the end the following new 

20 section: 

21 ‘‘SEC. 45O. CREDIT FOR GEOTHERMAL EXPLORATION EX22 PENDITURES. 

23 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

24 geothermal exploration expenditures credit for any taxable 

25 year is an amount equal to 10 percent of the qualifying 


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1 geothermal exploration expenditures paid or incurred by 

2 the taxpayer during such taxable year. 

3 ‘‘(b) QUALIFYING GEOTHERMAL EXPLORATION EX4 PENDITURES.—For purposes of this section— 

5 ‘‘(1) IN GENERAL.—The term ‘qualifying geo6 thermal exploration expenditures’ means expendi7 tures for drilling exploratory wells for geothermal 

8 deposits (as defined by section 613(e)(2)). 

9 ‘‘(2) EXCEPTION.—Such term shall not include 

10 expenditures for any equipment used to produce, dis11 tribute, or use energy derived from a geothermal de12 posit (as so defined) for which a credit is allowable 

13 under section 46 by reason of section 48. 

14 ‘‘(c) SPECIAL RULES.— 

15 ‘‘(1) BASIS REDUCTION.—For purposes of this 

16 subtitle, the basis of any property for which a credit 

17 is allowed under this section shall be reduced by the 

18 amount of the credit so allowed. 

19 ‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc20 tion or credit (other than under section 45) shall be 

21 allowed under this subtitle with respect to any ex22 penditures for which a credit is allowed under this 

23 section.’’. 

24 (b) CREDIT MADE PART OF GENERAL BUSINESS

25 CREDIT.—Section 38(b) (relating to current year business 


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1 credit) is amended by striking ‘‘plus’’ at the end of para2 graph (30), by striking the period at the end of paragraph 

3 (31) and inserting ‘‘, plus’’, and by adding at the end the 

4 following new paragraph: 

5 ‘‘(32) the geothermal exploration expenditures 

6 credit determined under section 45O(a).’’. 

7 (c) CLERICAL AMENDMENT.—The table of sections 

8 for subpart D of part IV of subchapter A of chapter 1 

9 is amended by inserting after the item relating to section 

10 45N the following new item: 

‘‘Sec. 45O. Credit for geothermal exploration expenditures.’’. 

11 (d) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to expenditures made in taxable 

13 years beginning after the date of the enactment of this 

14 Act. 

15 SEC. 105. CREDIT FOR WIND ENERGY SYSTEMS. 

16 (a) RESIDENTIAL.— 

17 (1) IN GENERAL.—Section 25D(a) is amended 

18 by striking ‘‘and’’ at the end of paragraph (2), by 

19 striking the period at the end of paragraph (3) and 

20 inserting ‘‘, and’’, and by adding at the end the fol21 lowing new paragraph: 

22 ‘‘(4) 30 percent of the qualified small wind en23 ergy property expenditures made by the taxpayer 

24 during such year.’’. 


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1 (2) LIMITATION.—Section 25D(b)(1) is amend2 ed by striking ‘‘and’’ at the end of subparagraph 

3 (B), by striking the period at the end of subpara4 graph (A) and inserting ‘‘, and’’, and by adding at 

5 the end the following new subparagraph: 

6 ‘‘(D) $500 with respect to each half kilo7 watt of capacity (not to exceed $5,000) of 

8 qualifying wind turbines for which qualified 

9 small wind energy property expenditures are 

10 made.’’. 

11 (3) QUALIFIED SMALL WIND ENERGY PROP12 ERTY EXPENDITURES.—Section 25D(d) is amended 

13 by adding at the end the following new paragraph: 

14 ‘‘(4) QUALIFIED SMALL WIND ENERGY PROP15 ERTY EXPENDITURE.— 

16 ‘‘(A) IN GENERAL.—The term ‘qualified 

17 wind energy property expenditure’ means an ex18 penditure for property which uses a qualifying 

19 wind turbine to generate electricity for use in 

20 connection with a dwelling unit located in the 

21 United States and used as a residence by the 

22 taxpayer. 

23 ‘‘(B) QUALIFYING WIND TURBINE.—The 

24 term ‘qualifying wind turbine’ means a wind 

25 turbine of 100 kilowatts of rated capacity or 


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1 less which meets the latest performance rating 

2 standards published by the American Wind En3 ergy Association and which is used to generate 

4 electricity and carries at least a 5-year limited 

5 warranty covering defects in design, material, 

6 or workmanship, and, for property that is not 

7 installed by the taxpayer, at least a 5-year lim8 ited warranty covering defects in installation.’’. 

9 (b) BUSINESS.—Section 48(a)(3)(A) (defining energy 

10 property) is amended by striking ‘‘or’’ at the end of clause 

11 (iii), by adding ‘‘or’’ at the end of clause (iv), and by in12 serting after clause (iv) the following new clause: 

13 ‘‘(v) qualifying wind turbine (as de14 fined in section 25D(d)(B)),’’. 

15 (c) EFFECTIVE DATE.—The amendments made by 

16 this section shall apply to property placed in service after 

17 the date of the enactment of this Act, in taxable years 

18 ending after such date. 

19 SEC. 106. EXTENSION AND MODIFICATION OF NEW ENERGY 

20 EFFICIENT HOME CREDIT. 

21 (a) EXTENSION.—Subsection (g) of section 45L (re22 lating to termination) is amended by striking ‘‘2008’’ and 

23 inserting ‘‘2013’’. 


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1 (b) INCREASE OF CREDIT.—Paragraph (2) of sub2 section 45L(a) (relating to applicable amount) is amended 

3 to read as follows: 

4 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

5 paragraph (1), the applicable amount is an amount 

6 equal to, in the case of a dwelling unit described 

7 in— 

8 ‘‘(A) subsection (c)(1), $4,000, 

9 ‘‘(B) subsection (c)(2), $2,000, and 

10 ‘‘(C) subsection (c)(3), $1,000.’’. 

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to qualified new energy efficient 

13 homes acquired after the date of the enactment of this 

14 Act, in taxable years ending after such date. 

15 SEC. 107. INVESTMENT TAX CREDIT FOR ADVANCED BAT16 TERY PRODUCTION. 

17 (a) IN GENERAL.—Section 48(a)(3)(A) is amended— 

18 (1) by striking ‘‘or’’ at the end of clause (iii), 

19 (2) by inserting ‘‘or’’ at the end of clause (iv), 

20 and 

21 (3) by inserting after clause (iv) the following 

22 new clause: 

23 ‘‘(v) equipment used to produce at 

24 least 75 percent of any advanced battery 


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1 and related power electronics intended for 

2 use in— 

3 ‘‘(I) any qualified electric vehicle 

4 (as defined in section 30(c)(1)(A)) or 

5 new qualified hybrid motor vehicle (as 

6 defined in section 30B(d)(3)(A), with7 out regard to clauses (v) and (vi) 

8 thereof), or 

9 ‘‘(II) any grid-enabled or distrib10 uted residential or small commercial 

11 application,’’. 

12 (b) RATE OF ENERGY PERCENTAGE.—Section 

13 48(a)(2)(A) is amended— 

14 (1) by striking ‘‘and’’ at the end of clause 

15 (i)(III), 

16 (2) by striking ‘‘clause (i)’’ in clause (ii) and in17 serting ‘‘clause (i) or clause (ii)’’, 

18 (3) by redesignating clause (ii) as clause (iii), 

19 and 

20 (4) by inserting after clause (i) the following 

21 new clause: 

22 ‘‘(ii) 20 percent in the case of energy 

23 property described in paragraph (3)(A)(v), 

24 and’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to property placed in service after 

3 the date of the enactment of this Act. 

4 SEC. 108. QUALIFIED RENEWABLE SCHOOL ENERGY 

5 BONDS. 

6 (a) IN GENERAL.—Subchapter U of chapter 1 (relat7 ing to incentives for education zones) is amended by redes8 ignating section 1397F as section 1397G and by adding 

9 at the end of part IV of such subchapter the following 

10 new section: 

11 ‘‘SEC. 1397F. QUALIFIED RENEWABLE SCHOOL ENERGY 

12 BONDS. 

13 ‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 

14 a qualified renewable school energy bond on 1 or more 

15 credit allowance dates of the bond occurring during any 

16 taxable year, there shall be allowed as a credit against the 

17 tax imposed by this chapter for the taxable year an 

18 amount equal to the sum of the credits determined under 

19 subsection (b) with respect to such dates. 

20 ‘‘(b) AMOUNT OF CREDIT.— 

21 ‘‘(1) IN GENERAL.—The amount of the credit 

22 determined under this subsection with respect to any 

23 credit allowance date for a qualified renewable 

24 school energy bond is 25 percent of the annual cred25 it determined with respect to such bond. 


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1 ‘‘(2) ANNUAL CREDIT.—The annual credit de2 termined with respect to any qualified renewable 

3 school energy bond is the product of— 

4 ‘‘(A) the credit rate determined by the Sec5 retary under paragraph (3) for the day on 

6 which such bond was sold, multiplied by 

7 ‘‘(B) the outstanding face amount of the 

8 bond. 

9 ‘‘(3) DETERMINATION.—For purposes of para10 graph (2), with respect to any qualified renewable 

11 school energy bond, the Secretary shall determine 

12 daily or cause to be determined daily a credit rate 

13 which shall apply to the first day on which there is 

14 a binding, written contract for the sale or exchange 

15 of the bond. The credit rate for any day is the credit 

16 rate which the Secretary or the Secretary’s designee 

17 estimates will permit the issuance of qualified renew18 able school energy bonds with a specified maturity 

19 or redemption date without discount and without in20 terest cost to the qualified issuer. 

21 ‘‘(4) CREDIT ALLOWANCE DATE.—For purposes 

22 of this section, the term ‘credit allowance date’ 

23 means— 

24 ‘‘(A) March 15, 

25 ‘‘(B) June 15, 


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1 ‘‘(C) September 15, and 

2 ‘‘(D) December 15. 

3 Such term also includes the last day on which the 

4 bond is outstanding. 

5 ‘‘(5) SPECIAL RULE FOR ISSUANCE AND RE6 DEMPTION.—In the case of a bond which is issued 

7 during the 3-month period ending on a credit allow8 ance date, the amount of the credit determined 

9 under this subsection with respect to such credit al10 lowance date shall be a ratable portion of the credit 

11 otherwise determined based on the portion of the 3- 

12 month period during which the bond is outstanding. 

13 A similar rule shall apply when the bond is redeemed 

14 or matures. 

15 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The 

16 credit allowed under subsection (a) for any taxable year 

17 shall not exceed the excess of— 

18 ‘‘(1) the sum of the regular tax liability (as de19 fined in section 26(b)) plus the tax imposed by sec20 tion 55, over 

21 ‘‘(2) the sum of the credits allowable under part 

22 IV of subchapter A (other than subpart C thereof, 

23 relating to refundable credits, subpart H thereof, 

24 section 1400N(l), and this section). 


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1 ‘‘(d) QUALIFIED RENEWABLE SCHOOL ENERGY

2 BOND.—For purposes of this section— 

3 ‘‘(1) IN GENERAL.—The term ‘renewable school 

4 energy bond’ means any bond issued as part of an 

5 issue if— 

6 ‘‘(A) 95 percent or more of the proceeds of 

7 such issue are to be used for a qualified pur8 pose with respect to a qualified school operated 

9 by an eligible local education agency, 

10 ‘‘(B) the bond is issued by a State or local 

11 government of an eligible State within the juris12 diction of which such school is located, 

13 ‘‘(C) the issuer— 

14 ‘‘(i) designates such bond for purposes 

15 of this section, and 

16 ‘‘(ii) certifies that it has the written 

17 approval of the eligible local education 

18 agency for such bond issuance, and 

19 ‘‘(D) the term of each bond which is part 

20 of such issue is 20 years. 

21 ‘‘(2) QUALIFIED SCHOOL.—The term ‘qualified 

22 school’ means any public school or public school sys23 tem administrative building which is owned by or op24 erated by an eligible local education agency. 


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1 ‘‘(3) ELIGIBLE LOCAL EDUCATION AGENCY.— 

2 The term ‘eligible local education agency’ means any 

3 local educational agency as defined in section 9101 

4 of the Elementary and Secondary Education Act of 

5 1965. 

6 ‘‘(4) ELIGIBLE STATE.—The term ‘eligible 

7 State’ means, with respect to any calendar year, any 

8 State described in one of the following: 

9 ‘‘(A) The 5 States within Region 4 of the 

10 United States Census with the greatest percent11 age population growth change between 2000 

12 and 2006 as determined under the Cumulative 

13 Estimates of Population Change for the United 

14 States and States, and for Puerto Rico—April 

15 1, 2000 to July 1, 2006, by the Bureau of the 

16 Census. 

17 ‘‘(B) The State with a total percentage 

18 population growth change between 2000 and 

19 2006 greater than 4.5 percent but less than 5.0 

20 percent and a total population 19 years of age 

21 and younger which is greater than 200,000 but 

22 less than 250,000 as determined under such 

23 Cumulative Estimates and the 2005 American 

24 Community Survey by the Bureau of the Cen25 sus. 


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1 ‘‘(5) QUALIFIED PURPOSE.—The term ‘quali2 fied purpose’ means, with respect to any qualified 

3 school, the purchase and installation of renewable 

4 energy products. 

5 ‘‘(e) LIMITATION ON AMOUNT OF BONDS DES6 IGNATED.— 

7 ‘‘(1) NATIONAL LIMITATION.—There is a na8 tional renewable school energy bond limitation for 

9 each calendar year. Such limitation is $50,000,000 

10 for 2008, $100,000,000 for 2009, $150,000,000 for 

11 2010, and, except as provided in paragraph (4), zero 

12 thereafter. 

13 ‘‘(2) ALLOCATION OF LIMITATION.—The na14 tional renewable school energy bond limitation for a 

15 calendar year shall be allocated by the Secretary— 

16 ‘‘(A) among the eligible States described in 

17 subsection (d)(4)(A), 30 percent to the State 

18 with the greatest percentage population growth, 

19 20 percent to each of second and third ranked 

20 States, and 10 percent to each of the fourth 

21 and fifth ranked States, and 

22 ‘‘(B) to the State described in subsection 

23 (d)(4)(B), 10 percent. 

24 The limitation amount allocated to an eligible State 

25 under the preceding sentence shall be allocated by 


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1 the State education agency to qualified schools with2 in such State. 

3 ‘‘(3) DESIGNATION SUBJECT TO LIMITATION

4 AMOUNT.—The maximum aggregate face amount of 

5 bonds issued during any calendar year which may be 

6 designated under subsection (d)(1) with respect to 

7 any qualified school shall not exceed the limitation 

8 amount allocated to such school under paragraph (2) 

9 for such calendar year. 

10 ‘‘(4) CARRYOVER OF UNUSED LIMITATION.—If 

11 for any calendar year— 

12 ‘‘(A) the limitation amount for any eligible 

13 State, exceeds 

14 ‘‘(B) the amount of bonds issued during 

15 such year which are designated under sub16 section (d)(1) with respect to qualified schools 

17 within such State, 

18 the limitation amount for such State for the fol19 lowing calendar year shall be increased by the 

20 amount of such excess. Any carryforward of a limi21 tation amount may be carried only to the first 2 

22 years following the unused limitation year. For pur23 poses of the preceding sentence, a limitation amount 

24 shall be treated as used on a first-in first-out basis. 


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1 ‘‘(f) OTHER DEFINITIONS.—For purposes of this sec2 tion— 

3 ‘‘(1) BOND.—The term ‘bond’ includes any ob4 ligation. 

5 ‘‘(2) STATE.—The term ‘State’ includes the 

6 District of Columbia and any possession of the 

7 United States. 

8 ‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross 

9 income includes the amount of the credit allowed to the 

10 taxpayer under this section (determined without regard to 

11 subsection (c)). 

12 ‘‘(h) CREDITS MAY BE STRIPPED.—Under regula13 tions prescribed by the Secretary— 

14 ‘‘(1) IN GENERAL.—There may be a separation 

15 (including at issuance) of the ownership of a quali16 fied renewable school energy bond and the entitle17 ment to the credit under this section with respect to 

18 such bond. In case of any such separation, the credit 

19 under this section shall be allowed to the person 

20 which, on the credit allowance date, holds the instru21 ment evidencing the entitlement to the credit and 

22 not to the holder of the bond. 

23 ‘‘(2) CERTAIN RULES TO APPLY.—In the case 

24 of a separation described in paragraph (1), the rules 

25 of section 1286 shall apply to the qualified renewVerDate Aug 31 2005 18:59 May 27, 2007 Jkt 059196 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\S1531.IS S1531

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1 able school energy bond as if it were a stripped bond 

2 and to the credit under this section as if it were a 

3 stripped coupon. 

4 ‘‘(i) CREDIT TREATED AS NONREFUNDABLE BOND5 HOLDER CREDIT.—For purposes of this title, the credit 

6 allowed by this section shall be treated as a credit allow7 able under subpart H of part IV of subchapter A of this 

8 chapter. 

9 ‘‘(j) SPECIAL RULES.—For purposes of this section, 

10 rules similar to the rules under paragraphs (3) and (4) 

11 of section 54(l) shall apply.’’. 

12 (b) CONFORMING AMENDMENTS.—The table of sec13 tions for part V of such subchapter is amended by redesig14 nating section 1397F as section 1397G and by adding at 

15 the end of the table of sections for part IV of such sub16 chapter the following new item: 

‘‘Sec. 1397F. Credit for holders of qualified renewable school energy bonds.’’. 

17 (c) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to bonds issued after December 

19 31, 2007. 

20 SEC. 109. TREATMENT OF BONDS ISSUED TO FINANCE RE21 NEWABLE ENERGY RESOURCE FACILITIES. 

22 (a) IN GENERAL.—Subsection (a) of section 142 (re23 lating to exempt facility bond) is amended— 

24 (1) by striking ‘‘or’’ at the end of paragraph 

25 (14), 


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1 (2) by striking the period at the end of para2 graph (15) and inserting ‘‘, or’’, and 

3 (3) by inserting at the end the following new 

4 paragraph: 

5 ‘‘(16) renewable energy resource facilities.’’. 

6 (b) DEFINITION.—Section 142 is amended by insert7 ing at the end the following new subsection: 

8 ‘‘(n) RENEWABLE ENERGY RESOURCE FACILI9 TIES.—For purposes of subsection (a)(16)— 

10 ‘‘(1) IN GENERAL.—The term ‘renewable en11 ergy resource facility’ means any facility used to 

12 produce electric or thermal energy (including a dis13 tributed generation facility) from— 

14 ‘‘(A) wind energy, 

15 ‘‘(B) closed-loop biomass (within the mean16 ing of section 45(c(2)), 

17 ‘‘(C) open-loop biomass (as defined in sec18 tion 45(c)(3), 

19 ‘‘(D) geothermal energy (as defined in sec20 tion 45(c)(4), 

21 ‘‘(E) solar energy, 

22 ‘‘(F) land fill gas derived from the bio23 degradation of municipal solid waste (as defined 

24 in section 45(c)(6), 


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1 ‘‘(G) incremental hydropower production 

2 (as determined under section 45(c)(8)(B), or 

3 ‘‘(H) ocean energy. 

4 ‘‘(2) OCEAN ENERGY.—The term ‘ocean energy’ 

5 includes current, wave, tidal, and thermal energy.’’. 

6 (c) COORDINATION WITH SECTION 45.—Section 

7 45(b)(3) is amended by adding at the end the following 

8 new sentence: ‘‘For purposes of this paragraph, proceeds 

9 of an issue used to provide financing for any qualified fa10 cility by reason of section 142(a)(16) shall not be taken 

11 into account under subparagraph (A)(ii).’’. 

12 (d) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply with respect to bonds issued on 

14 or after the date of the enactment of this Act. 

15 TITLE II—INVESTMENT TAX 

16 CREDIT WITH RESPECT TO 

17 SOLAR ENERGY PROPERTY 

18 AND MANUFACTURING 

19 Subtitle A—Solar Energy Property 

20 SEC. 201. ENERGY CREDIT WITH RESPECT TO SOLAR EN21 ERGY PROPERTY. 

22 (a) PERMANENT EXTENSION OF CREDIT FOR SOLAR

23 ENERGY PROPERTY.—Paragraphs (2)(A)(i)(II) and 

24 (3)(A)(ii) of section 48(a) (relating to the energy credit) 


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1 are each amended by striking ‘‘but only with respect to 

2 periods ending before January 1, 2009’’. 

3 (b) ENERGY PROPERTY TO INCLUDE EXCESS EN4 ERGY STORAGE DEVICE.—Clause (i) of section 

5 48(a)(3)(A) (relating to energy property) is amended to 

6 read as follows: 

7 ‘‘(i) equipment which uses solar en8 ergy to generate electricity, to heat or cool 

9 (or provide hot water for use in) a struc10 ture, or to provide solar process heat, or 

11 advanced energy storage systems installed 

12 as an integrated component of the fore13 going, excepting property used to generate 

14 energy for purposes of heating a swimming 

15 pool,’’. 

16 (c) ADDITIONAL MODIFICATIONS.— 

17 (1) SOLAR ELECTRIC ENERGY PROPERTY CRED18 IT DETERMINED SOLELY BY KILOWATT CAPACITY.— 

19 (A) IN GENERAL.—Subsection (a) of sec20 tion 48 (relating to the energy credit) is amend21 ed by redesignating paragraph (4) as paragraph 

22 (5) and by inserting after paragraph (3) the 

23 following new paragraph: 

24 ‘‘(4) SPECIAL RULE FOR ENERGY CREDIT FOR

25 SOLAR ELECTRIC ENERGY PROPERTY.— 


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1 ‘‘(A) IN GENERAL.—For purposes of sec2 tion 46, the energy credit for any taxable year 

3 for solar electric energy property described in 

4 paragraph (3)(A)(i) which is used to generate 

5 electricity and which is placed in service during 

6 the taxable year is $1,500 with respect to each 

7 half kilowatt of direct current of installed ca8 pacity of such property. Paragraph (2)(A) shall 

9 not apply to property to which the preceding 

10 sentence applies. 

11 ‘‘(B) APPLICATION OF SPECIAL RULES FOR

12 REHABILITATED OR SUBSIDIZED PROPERTY.— 

13 Rules similar to the rules of paragraphs (2)(B) 

14 and (5) shall apply to property to which this 

15 paragraph applies.’’. 

16 (B) CONFORMING AMENDMENTS.—Sub17 section (a) of section 48 is amended— 

18 (i) in paragraph (1), by inserting ‘‘in 

19 paragraph (4) and’’ after ‘‘except as pro20 vided’’, and 

21 (ii) in paragraph (2)(A)(i)(II), by 

22 striking ‘‘described in paragraph (3)(A)(i)’’ 

23 and inserting ‘‘which is described in para24 graph (3)(A)(i) and to which paragraph 

25 (4) does not apply’’. 


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1 (d) CREDIT ALLOWED AGAINST THE ALTERNATIVE

2 MINIMUM TAX.—Section 38(c)(4)(B) (relating to speci3 fied credits) is amended by— 

4 (1) striking ‘‘and’’ at the end of clause (i), 

5 (2) striking the period at the end of clause 

6 (ii)(II) and inserting ‘‘, and’’, and 

7 (3) adding at the end the following new clause: 

8 ‘‘(iii) the portion of the investment 

9 credit under section 46(2) which is deter10 mined under clauses (i) and (ii) of section 

11 48(a)(3)(A).’’. 

12 (e) EFFECTIVE DATE.—The amendment made by 

13 subsection (a) shall apply to periods after December 31, 

14 2007, in taxable years beginning after such date, under 

15 rules similar to the rules of section 48(m) (as in effect 

16 on the day before the date of the enactment of the Rev17 enue Reconciliation Act of 1990). 

18 SEC. 202. REPEAL OF EXCLUSION FOR SOLAR AND GEO19 THERMAL PUBLIC UTILITY PROPERTY 

20 UNDER ENERGY CREDIT. 

21 (a) IN GENERAL.—The second sentence of section 

22 48(a)(3) is amended by inserting ‘‘(other than property 

23 described in clause (i) or (iii) of subparagraph (A))’’ after 

24 ‘‘any property’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 subsection (a) shall apply to periods after December 31, 

3 2007, in taxable years beginning after such date, under 

4 rules similar to the rules of section 48(m) (as in effect 

5 on the day before the date of the enactment of the Rev6 enue Reconciliation Act of 1990). 

7 SEC. 203. PERMANENT EXTENSION AND MODIFICATION OF 

8 CREDIT FOR RESIDENTIAL ENERGY EFFI9 CIENT PROPERTY. 

10 (a) PERMANENT EXTENSION.—Section 25D is 

11 amended by striking subsection (g) (relating to termi12 nation). 

13 (b) SOLAR ELECTRIC PROPERTY.—Paragraph (1) of 

14 section 25D(a) (relating to allowance of credit) is amended 

15 by striking ‘‘30 percent of’’. 

16 (c) MODIFICATION OF MAXIMUM CREDIT.—Para17 graph (1) of section 25D(b) (relating to limitations) is 

18 amended to read as follows: 

19 ‘‘(1) MAXIMUM CREDIT.—The credit allowed 

20 under subsection (a) (determined without regard to 

21 subsection (c)) for any taxable year shall not ex22 ceed— 

23 ‘‘(A) $1,500 with respect to each half kilo24 watt of direct current of installed capacity of 

25 qualified solar electric property for which qualiVerDate Aug 31 2005 18:59 May 27, 2007 Jkt 059196 PO 00000 Frm 00041 Fmt 6652 Sfmt 6201 E:\BILLS\S1531.IS S1531

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1 fied solar electric property expenditures are 

2 made, 

3 ‘‘(B) $2,000 with respect to any qualified 

4 solar heating and cooling property expenditures, 

5 and 

6 ‘‘(C) $500 with respect to each half kilo7 watt of capacity of qualified fuel cell property 

8 (as defined in section 48(c)(1)) for which quali9 fied fuel cell property expenditures are made.’’. 

10 (d) DEFINITION OF QUALIFIED SOLAR HEATING AND

11 COOLING PROPERTY EXPENDITURE.— 

12 (1) IN GENERAL.—Paragraph (1) of section 

13 25D(d) (relating to definitions) is amended to read 

14 as follows: 

15 ‘‘(2) QUALIFIED SOLAR HEATING AND COOLING

16 PROPERTY EXPENDITURE.—The term ‘qualified 

17 solar heating and cooling property expenditure’ 

18 means an expenditure for property to heat or cool 

19 (or provide hot water for use in) a dwelling unit lo20 cated in the United States and used as a residence 

21 by the taxpayer if at least half of the energy used 

22 by such property for such purpose is derived from 

23 the sun. Such term shall not include an expenditure 

24 which is a qualified solar electric property expendi25 ture.’’. 


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1 (2) CONFORMING AMENDMENTS.—Section 25D 

2 (relating to residential energy efficient property) is 

3 amended— 

4 (A) by striking ‘‘solar water heating’’ in 

5 subsections (a)(2) and (e)(4)(A)(ii) and insert6 ing ‘‘solar heating and cooling’’, and 

7 (B) by striking the heading for subsection 

8 (b)(2) and inserting the following new heading: 

9 ‘‘(2) CERTIFICATION OF SOLAR HEATING AND

10 COOLING PROPERTY.’’. 

11 (e) CREDIT ALLOWED AGAINST ALTERNATIVE MIN12 IMUM TAX.— 

13 (1) IN GENERAL.—Section 25D(b) (relating to 

14 limitations), as amended by subsection (c), is 

15 amended by adding at the end the following new 

16 paragraph: 

17 ‘‘(3) CREDIT ALLOWED AGAINST ALTERNATIVE

18 MINIMUM TAX.—The credit allowed under subsection 

19 (a) for the taxable year shall not exceed the excess 

20 of— 

21 ‘‘(A) the sum of the regular tax liability 

22 (as defined in section 26(b)) plus the tax im23 posed by section 55, over 

24 ‘‘(B) the sum of the credits allowable 

25 under subpart A of part IV of subchapter A 


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•S 1531 IS

1 (other than this section) and section 27 for the 

2 taxable year.’’. 

3 (2) CONFORMING AMENDMENTS.— 

4 (A) Subsection (c) of section 25D (relating 

5 to carryforward of unused credit) is amended to 

6 read as follows: 

7 ‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the 

8 credit allowable under subsection (a) for any taxable year 

9 exceeds the limitation imposed by subsection (b)(3) for 

10 such taxable year, such excess shall be carried to the suc11 ceeding taxable year and added to the credit allowable 

12 under subsection (a) for such succeeding taxable year.’’. 

13 (B) Section 23(b)(4)(B) (relating to limita14 tion based on amount of tax) is amended by in15 serting ‘‘and section 25D’’ after ‘‘this section’’. 

16 (C) Section 24(b)(3)(B) (relating to limita17 tion based on amount of tax) is amended by 

18 striking ‘‘sections 23 and 25B’’ and inserting 

19 ‘‘sections 23, 25B, and 25D’’. 

20 (D) Section 26(a)(1) (relating to limitation 

21 based on amount of tax) is amended by striking 

22 ‘‘and 25B’’ and inserting ‘‘25B, and 25D’’. 

23 (f) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to expenditures made in taxable 

25 years beginning after December 31, 2007. 


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1 SEC. 204. 3-YEAR ACCELERATED DEPRECIATION PERIOD 

2 FOR SOLAR ENERGY PROPERTY. 

3 (a) IN GENERAL.—Subparagraph (A) of section 

4 168(e)(3) (relating to 3-year property) is amended— 

5 (1) by striking ‘‘and’’ at the end of clause (ii), 

6 (2) by striking the period at the end of clause 

7 (iii) and inserting a comma, and 

8 (3) by inserting after clause (iii) the following 

9 new clauses: 

10 ‘‘(iv) any property which is described 

11 in clause (i) or (ii) of section 48(a)(3)(A) 

12 (or would be so described if the last sen13 tence of such section did not apply to such 

14 clause), and 

15 ‘‘(v) any property which is described 

16 in clause (iv) of section 48(a)(3)(A).’’. 

17 (b) CONFORMING AMENDMENT.—Subclause (I) of 

18 section 168(e)(3)(B)(vi) (relating to 5-year property) is 

19 amended to read as follows: 

20 ‘‘(I) would be described in sub21 paragraph (A) of section 48(a)(3) if 

22 ‘wind energy’ were substituted for 

23 ‘solar energy’ in clause (i) thereof and 

24 the last sentence of such section did 

25 not apply to such subparagraph,’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to property placed in service after 

3 December 31, 2007. 

4 Subtitle B—Promotion of Solar 

5 Manufacturing in the United States 

6 SEC. 211. SOLAR MANUFACTURING CREDIT. 

7 (a) IN GENERAL.—Subpart E of part IV of sub8 chapter A of chapter 1 (relating to rules for computing 

9 investment credit) is amended by inserting after section 

10 48B the following new section: 

11 ‘‘SEC. 48C. SOLAR MANUFACTURING CREDIT. 

12 ‘‘(a) CREDIT ALLOWED.—For purposes of section 46, 

13 the solar manufacturing credit for any taxable year is an 

14 amount equal to 30 percent of the qualified investment 

15 for such taxable year. 

16 ‘‘(b) QUALIFIED INVESTMENT.—For purposes of this 

17 section— 

18 ‘‘(1) IN GENERAL.—The qualified investment 

19 for any taxable year is equal to the incremental costs 

20 incurred during such taxable year to re-equip, ex21 pand, or establish an eligible manufacturing facil22 ity— 

23 ‘‘(A) to produce polysilicon for use in solar 

24 cells, wafers manufactured for solar cells, and 

25 solar photovoltaic cells, 


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1 ‘‘(B) to produce or assemble solar photo2 voltaic modules, 

3 ‘‘(C) to produce or assemble solar thermal 

4 panels and solar thermal storage tanks, or 

5 ‘‘(D) to produce concentrated solar power 

6 equipment. 

7 ‘‘(2) EXCEPTIONS.—The qualified investment 

8 for any taxable year shall not include— 

9 ‘‘(A) assets utilized to produce the mate10 rials consumed in the production of solar photo11 voltaic modules, such as aluminum extrusions, 

12 glass, encapsulants, inverters, and mounting 

13 hardware, and 

14 ‘‘(B) assets utilized to produce the mate15 rials consumed in the production of solar ther16 mal panels, such as aluminum extrusions, glass, 

17 copper, and mounting hardware. 

18 ‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI19 TURES MADE APPLICABLE.—Rules similar to the 

20 rules of subsections (c)(4) and (d) of section 46 (as 

21 in effect on the day before the enactment of the Rev22 enue Reconciliation Act of 1990) shall apply for pur23 poses of this section. 

24 ‘‘(c) DEFINITIONS.—For purposes of this section— 


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1 ‘‘(1) ELIGIBLE MANUFACTURING FACILITY.— 

2 The term ‘eligible manufacturing facility’ means any 

3 manufacturing facility for which more than 50 per4 cent of the gross receipts for the taxable year are de5 rived from sales of solar equipment. 

6 ‘‘(2) SOLAR PHOTOVOLTAIC CELL.—The term 

7 ‘solar photovoltaic cell’ means the semiconductor de8 vice which converts photons from light into elec9 tricity. 

10 ‘‘(3) SOLAR PHOTOVOLTAIC MODULE.—The 

11 term ‘solar photovoltaic module’ means an assembly 

12 of multiple interconnected solar photovoltaic cells 

13 that are sized and packaged for installation and de14 ployment in a specific application.’’. 

15 (b) CREDIT TREATED AS PART OF INVESTMENT

16 CREDIT.—Section 46 (relating to amount of credit) is 

17 amended by striking ‘‘and’’ at the end of paragraph (3), 

18 by striking the period at the end of paragraph (4) and 

19 inserting ‘‘, and’’, and by adding at the end the following 

20 new paragraph: 

21 ‘‘(5) the solar manufacturing credit.’’. 

22 (c) CERTAIN NONRECOURSE FINANCING EXCLUDED

23 FROM CREDIT BASE.—Section 49(a)(1)(C) (defining 

24 credit base) is amended by striking ‘‘and’’ at the end of 

25 clause (iii), by striking the period at the end of clause (iv) 


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1 and inserting ‘‘, and’’, and by adding at the end the fol2 lowing new clause: 

3 ‘‘(v) the basis of any property which 

4 is part of the solar manufacturing credit 

5 under section 48C.’’. 

6 (d) EFFECTIVE DATE.—The amendments made by 

7 this section shall apply to periods after December 31, 

8 2007, in taxable years beginning after such date, under 

9 rules similar to the rules of section 48(m) (as in effect 

10 on the day before the date of the enactment of the Rev11 enue Reconciliation Act of 1990). 

Æ 


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