The Department of Energy, under its Smart Grid Investment Matching Grant Program, provides reimbursement of 20 percent of qualifying smart grid investments.

Qualifying costs include, but are not limited to, certain manufacturing related costs, software that enables computers or other devices to engage in smart grid functions, and metering devices, sensors, and control devices that are capable of engaging in smart grid functions.

Recently, questions have been raised as to whether the DOE grant under this program is subject to federal income tax.

The IRS, in Revenue Procedure 2010-20, concluded that the DOE grant is not subject to federal income tax. (more…)

The Obama administration is awarding $3.4 billion in grants to modernize the national electric grid. One-hundred companies, utilities, manufacturers, and cities will receive the grants — ranging from $400,000 to $200 million — for projects that help build a “smart” grid that cuts energy costs, reduces blackouts, and has the capacity to deliver more wind and solar energy to American homes and businesses. Calling the nation’s grid system “dilapidated,” Carol Browner, the Obama administration’s top adviser on climate and energy issues, said federal funds would be used to expand the national grid and make it work more efficiently.

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The federal government has made it abundantly clear that they want the upcoming plug-in and electric vehicles to succeed. The government has awarded $2.4 billion in stimulus funds for the manufacture of vehicles and their components as well as to establish a vehicle charging infrastructure.

Among the grants is funding for establishing 12,500 charging stations across five states. Another 2,550 charging stations could be becoming very competitive in installing public charging stations. Also, big box retailers are expected to offer free charging to encourage people to shop and recharge their batteries.

But government agencies need to walk a fine line in building out the electric vehicle charging infrastructure. The government is keen on eliminating “range anxiety” — the fear that an electric vehicle might run out of battery power before it can be recharged — that could discourage consumers from buying electric vehicles. (Extended range vehicles such as the Chevrolet Volt can tap the gas tank, so it’s less of a concern.)

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In a move that will surely provide an additional boost for the alternative energy industry, and perhaps T. Boone Pickens‘ plan, the US Department of Treasury has finally released guidelines for claiming the grants instead of the federal tax credit. Applications will be submitted online. However, the Treasury will not be accepting applications at this time.

The American Recovery and Reinvestment Act passed in February allowed for business taxpayers to apply for direct payments instead of claiming a tax credit on their income tax return. This applied to the credit under Internal Revenue Code (“IRC”) Section 45 (Energy Produced for Certain Renewable Resources) and IRC Section 48 (Energy Credit). Property that applies to this includes geothermal, biomass, micro wind turbines, and solar amongst others.

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