Court of Federal Claims Issues Decision in Alta Wind- Cost Approach Used to Determine Eligible Basis for Renewable Energy Tax Credits

Short summary

The US Court of Federal Claims ruled in Alta Wind that the fair market value of grant-eligible tangible assets for Section 1603 cash grants must be measured by reproduction costs, not projected income streams via DCF. The court held that anticipated grant value cannot be included in eligible basis, calling it circular. Because Section 1603 basis rules mirror ITC rules under IRC Sections 48 and 48E, this decision directly impacts current renewable energy transactions structured as purchases of operating or near-completion projects.

• •Court adopted cost approach over DCF for determining eligible basis of renewable energy assets
• •Anticipated cash grant value cannot inflate eligible basis — ruling calls this circular
• •Decision applies to current ITC transactions under IRC Sections 48 and 48E, not just Section 1603 grants

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