IRS Allocates $406 Million in Clean Renewable Energy Bonds
February 13, 2008
The U.S. Internal Revenue Service (IRS) announced on February 8 that it has allocated $406 million in Clean Renewable Energy Bonds (CREBs) for a total of 312 renewable energy projects to be located throughout the United States. Unlike normal bonds that pay interest, CREBs are known as "tax-credit" bonds, and they pay the bondholders by providing a credit against their federal income tax. In effect, the CREBs will provide interest-free financing for certain renewable energy projects. And because the federal government essentially pays the interest via tax credits, the IRS needs to allocate such credits in advance to the lending authorities, which can be state or local governments or electrical cooperatives. The IRS allocates the CREBs under a program established by the Energy Policy Act of 2005. See Internal Revenue Bulletin 2006-10.
The new bond allocations range from $15,000 to $30 million and are set aside for 139 solar energy facilities, 102 wind power installations, 45 landfill gas facilities, 18 hydropower plants, 5 biomass power plants, and 3 trash combustion facilities. Three of the biomass plants are intended to be "closed loop" facilities, that is, they will have dedicated sources of biomass crops to supply them. Of course, each of these projects may require other forms of financing and will probably need approval from permitting authorities, so it is unlikely that all 312 projects will actually be built. In fact, the IRS notes that some of the bond allocations were relinquished after its first round of allocations back in November 2006, when $800 million in bonds were allocated for 610 projects.
The IRS had to select the projects from among 342 applications for 395 projects, for which the lending authorities requested a total of $898 million in bond allocations. And although the IRS couldn't release information on the projects in 2006, this time around the agency received permission to publish the information for 310 of the 312 projects. Most of the projects are located in California and Minnesota, with the remainder located in Alaska, Arizona, Colorado, Connecticut, Florida, Illinois, Iowa, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, Texas, Washington, West Virginia, Wisconsin, and Wyoming. See the IRS press release and the list of 310 projects (PDF 29 KB). Download Adobe Reader.