Concern is mounting over whether the smart grid awards and project grants to be distributed by the Department of Energy (“DOE”) will be taxable in the hands of the recipients. Certain grants administered by federal, state, or local programs for renewable energy projects located in the US may be reportable by the recipient. The 100 smart grid award recipients, who are waiting for their share of the promised $3.4 billion from the DOE, are anxious to resolve this issue as many of them prepared their budgets (and the DOE may have made the awards) on the assumption that the awards were going to be tax-exempt.

The DOE is working closely with the awardees and the Treasury Department to reach resolution and hopes to provide guidance shortly.