The Treasury Department released long-awaited application procedures and guidelines today for renewable energy project grants that developers can tap in lieu of tax credit financing.

Developers of wind and solar projects say the program is vital. Traditional tax credits on which they have relied have lost their utility in a sour economy because would-be financiers and developers lack the profits and hence tax liabilities that had driven them toward credits.

The program was authorized in the recent economic stimulus package and provides Treasury grants of up to 30 percent of project costs for wind, solar, biomass and some other types of projects.

Treasury and Energy Department officials estimate they will provide $3 billion worth of grants that would support $10 billion to $14 billion worth of projects. However, the program is not capped.

To qualify, projects must have begun operations in 2009 or 2010, or later if they begun construction during the 2009-2010 period. Treasury, which is working with DOE, plans to begin accepting applications on or around Aug. 1 and provide grants within 60 days of receipt of a complete application.

DOE today released guidelines, a sample application and other materials that officials said would allow applicants to file as soon as Treasury begins accepting the forms.

The economic downturn has created major problems for renewable energy investments. The program will "temporarily fill the gap created by the diminished investor demand for tax credits," the Treasury guidance states. FBR Capital Markets, in a research note, pointed out that industry views the grants as "key to restarting funding for projects."

Matt Rogers, a DOE official who is implementing various energy financing programs in the stimulus, predicted the program would enable companies to quickly secure financing and begin construction. "We are hopeful that this brings the private capital off the sidelines and into the market quickly," he said.

Michael Mundaca, Treasury's acting assistant secretary of tax policy, said grants provide companies faster benefits than waiting until tax returns are filed to get credits, while also helping companies that are just starting up or have no profits.

Renewable energy developers, who lobbied hard for direct aid in the stimulus to compensate for faltering credits, have been waiting for action by Treasury. A major solar industry trade group said the announcement is an important step.

"Solar stimulus is ready, set and ... coming soon. The Treasury guidelines allow solar developers to prepare formal applications that will be accepted at a later date," Solar Energy Industries Association CEO Rhone Resch said in a statement. "Once Treasury begins accepting grant applications, the solar industry will create tens of thousands of jobs and spur investment in the clean energy economy."

The 30 percent grant level covers most types of projects, including wind farms, solar projects, biomass, landfill gas, geothermal and others. But a smaller group of project types -- microturbines, combined heat and power, and some types of geothermal -- would receive 10 percent grants.

Rep. Tim Walz (D-Minn.) yesterday introduced legislation, H.R. 3136, that would extend the grant program. Among the co-sponsors of the measure are House Agriculture Chairman Collin Peterson (D-Minn.).

Walz's bill would allow grants for projects that begin operations between 2009 and 2012, or have begun construction during that period. His bill would also extend the application period, which currently ends Oct. 1, 2011, until Oct. 1, 2013.