The way that the US government encourages a lot of green energy projects is by giving them tax credits. If you build a power plant that runs on certain sorts of renewable resources, the Internal Revenue Service will give you some money — call it 0.3 cents per killowatt-hour1 — for generating that power, which you can use to reduce your taxes.

That is a reasonably safe stream of cash flows. Not totally safe — your plant could burn down, prices could collapse or costs could rise so much that it is no longer economical to run it, the tax code could change — but broadly speaking you can estimate how much power the plant will produce per year and then multiply that by 0.3 cents to get a fairly predictable annual tax credit.

QOSHE - Financial Engineering for Green Energy - Matt Levine
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Financial Engineering for Green Energy

6 0
29.01.2024

The way that the US government encourages a lot of green energy projects is by giving them tax credits. If you build a power plant that runs on certain sorts of renewable resources, the........

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