The Treasury and Energy Departments, along with the IRS, said billions of dollars in government investment grants for smart grid technology would be non-taxable, paving the way for the technology to move forward.

Last year’s Recovery Act provided $3.4 billion in stimulus grants for smart grids, which are supposed to modernize the electrical system by drawing power from renewable and traditional energy sources in more efficient ways. Under the guidance released Wednesday, the IRS is providing a safe harbor under Section 118(a) of the Tax Code for companies receiving funding under the program.

The decision will allow the Energy Department to move forward quickly to finalize grant agreements over the coming weeks.

“This is an important step toward reaching the administration's goal of a more reliable and efficient electrical grid,” said Matt Rogers, senior advisor to the Energy Secretary, in a statement. “As these projects move forward, they will create thousands of new jobs and bring smart grid technologies to communities across the country.”

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