SeekerBlog

Thanks to Rod Adams for the bit of renewables scam news. BTW, these tax gifts are the motivation behind T. Boone Pickens now-dead wind + natural gas promotion, where there was to be a surefire front end tax-advantaged return regardless of profitability.

Here is an interesting lede from a story in RenewablesBiz.com titled Non-conformity Taxing Developers:

Ask any renewable energy project developer what saved the market from total collapse in 2009 and the unanimous answer would be the cash grants program from the U.S. Treasury. That’s the Section 1603 program changes in the Recovery Act in which project developers were given the option of accepting immediate cash payments of 30 percent of the project’s cost in lieu of 10 years of production tax credits for the generation output. But there’s some worry if that success can continue as some states are now considering the grants taxable income.

These gifts from the federal government amounting to 30% of the total cost of a project came in CASH, not as a standby guarantee – sort of like a co-signature – just in case something happened to a project during its development. Generally speaking, grants count as taxable income – just ask anyone who has filled out tax reports for a child who has earned a scholarship or two to attend college.

However, the federal legislation that provided the grants in lieu of production tax credits in an attempt to salvage uneconomic renewable energy projects recognized that giving with one arm of the U. S. Treasury and taking with the hand of the IRS would not provide the lift that the industry needed to stay afloat, so they specifically exempted the grants from federal income taxes.

(Aside: Should I have used the pejorative term of “bailout” like the anti-nuclear industry does for the loan guarantee program? End Aside.)

[From Is a Federal Grant Really Income? (Wow, I Never Knew That - Sarcasm)]