Last month, Red Lake Nation announced that it’s going full-on solar. After the project is completed, the tribe will save about $2 million each year in electricity bills.
The builders estimated that the solar panels will cost a whopping $20 million. However, Red Lake will pay just a measly $100,000.
How is this possible? Red Lake has recruited the help of a tax attorney named Robert Olson, who has a plan known as, quite obviously, the Olson Plan.
The website for his firm is a janky-looking single-page document that explains, sort of vaguely, the magic of pulling $20 million out of thin air by using a complicated equation of investments, tax benefits, and charitable tax write-offs. Frankly, it sounds too good to be true.
We asked Olson if he’s a genius or a crook, and he gave an answer like any tax attorney might.
“I’m basically a reverse Robin Hood, saving wealthy people money and taking it back from the government,” says Olson, a bit confused by the Robin Hood tradition.
Olson finds investors – the crazy-rich who regularly invest in wind and solar in return for tax benefits. In the case of solar, the IRS currently offers a 30 percent tax credit to these investors.
Olson and the investors will technically own the project. Year after year they’ll be able to claim that the solar panels are depreciating in value, which will allow them to reduce the amount of taxable income that they will have to report to the government.
At the end of five years, those savings will have paid for the entire thing, and the investors will collectively donate the panels to Red Lake Nation, winning a massive charitable tax deduction at the same time.
Red Lake Nation wouldn’t be able to access the government’s renewable energy tax benefits on its own because, as a sovereign nation, it doesn’t pay taxes to begin with. Hence the need for Olson, who can string together a rack of wealthy investors.
The fossil fuel and nuclear industries have been doing it for ages, Olson says. “Over the decades, fossil fuels have benefited from tax benefits much more than wind and solar do today.”
When it comes to renewable energy, in fact, the government won’t have these tax incentives forever.
The tax credits for wind basically expired a couple years ago. Solar was going to dip from 30 percent to 10 percent at the end of 2016, but Congress okayed a renewal for the next five years. After that, they’ll decline slowly.
In the meantime, Olson is trying to get city and county governments mostly free solar panels the same way he’s hooking up Red Lake. He says he’s just met with a “large urban county in Minnesota” to talk about getting it a $10 million project.