Who wants to plunge deep into the dreary details of tax law, especially when doing so might get in the way of slapping a scarlet “B” for bailout on a renewable energy project?

So it was that in the wake of our reporting on lower-than-expected production levels at the Ivanpah Solar Electric Generating System in the Mojave Desert, the plant’s owners were pilloried for having the gall to use the tax code precisely as Congress intended companies to.

We’re talking here about a provision with a typically sexy tax law moniker: Section 1603. What is it? Where did it come from? How has it been used? Clearly these are questions that some folks need brushing up on, so let’s tell the story.

Ironically, the whole hubbub has its roots in the George W. Bush administration, which history continues to show was surprisingly friendly to renewable energy development.

As the financial sector crumbled in fall 2008, Congress reluctantly passed President Bush’s Emergency Economic Stabilization Act, and among its bundle of goodies was an eight-year extension of the Investment Tax Credit for solar and other renewable energy technologies (though not big wind) that provided a 30 percent tax credit to qualifying projects.

Generous as this subsidy was, tax credits are an inducement for new construction only if a project developer/owner has a sizeable tax bill – and that’s often not the case with renewable energy plants. So the standard practice is for a plant developer to seek out tax equity, often a big financial institution, which can buy the tax credits, providing cash that can help build the project.

This sort of subsidy has its inefficiencies, with legal, accounting and financing costs siphoning off some of the benefits, but it can often work – unless you’re in the middle of the greatest financial crisis since the Great Depression. As the world was at the end of 2008.

Tax equity had largely dried up. The banks that previously might have provided tax equity to renewable energy developers were deep in mortgage-market doo-doo.

So in February 2009 Congress and the Obama administration, recognizing the problem, hatched Section 1603 as part of the new president’s big stimulus package. Section 1603 allowed project developers to forego their Investment Tax Credit (and avoid all the contortions often required to take advantage of it) and simply get a lump sum payment from the Treasury once their projects were up and running. The Production Tax Credit for wind was also extended as part of this legislation, and projects eligible for the PTC were allowed the option of taking the ITC – and thus were invited into the 1603 program.

As the Congressional Research Service wrote, “Creation of Section 1603 was motivated by challenging economic conditions and reduced availability of tax equity, which is the primary vehicle for renewable energy projects to monetize tax incentives.”

Section 1603 expired at the end of 2011, but projects that began construction before that deadline remain eligible to take advantage of it, but not until they’re online. That’s why Ivanpah’s owners “applied” for their 1603 money this year – it had nothing to do with how well the plant was (or wasn’t) doing, or whether the owners were desperate for cash.

For as much publicity as the Loan Guarantee Program has received, Section 1603 has probably spurred more renewable energy development. According to the Treasury Department, as of October 15, the program had paid out $23 billion to 98,816 projects valued at $81 billion. Those projects comprised installed capacity of 31.1 gigawatts, an amount equal to about one-tenth of the country’s coal-fired plant capacity. Treasury estimated that the projects generated 84.3 terawatt-hours on an annual basis – worth about $10,758,600,000 at the current U.S. average residential retail price of electricity.

Some 98 percent of the projects getting 1603 money were solar, but the vast majority of those were small rooftop systems, so solar has accounted for just 32 percent of the total dollars handed out. Wind, with just less than 1 percent of projects, has gobbled up 56 percent of the $23 billion.

The wind awards, in the early days, might have been a little bit suspect. The Investigative Reporting Workshop reported in 2010 that 11 wind farms that received $600 million “had erected their wind towers during the Bush administration.” The Department of Energy said those payments were then reinvested into new projects and thus had the effect of spurring new projects, but that was a claim that was difficult to verify.

That was one criticism of 1603, and there have been others.

A December 2013 report by the Treasury inspector for tax administration found that the Internal Revenue Service hadn’t yet nailed down a process to determine if taxpayers might be double dipping – taking the 1603 grant as well as the Investment Tax Credit.

In addition, SolarCity and the IRS have been at odds over the valuation of the projects that received the cash grant. The fight began with the IRS investigating whether SolarCity was jacking up valuations, then SolarCity came back with a suit of its own, charging that the government was short-changing it. According to the legal website Lexology, the case is likely to drag into 2016.

Despite these issues, the National Renewable Energy Laboratory reported that even by 2012, “the 1603 Program has supported significant deployment of new renewable power capacity” [PDF]. And it was especially valuable in encouraging both small projects and first-time developers, both of which can have a particularly difficult time finding tax equity.

For those who still don’t like Section 1603, the good news is that the number of projects eligible to take advantage of it – under construction before the end of 2011 – is dwindling. In 2013, 1,133 awards were paid; halfway through 2014, the number was 337, although because many were for big projects that took a long time to build, some of the recent payments have been large. For instance, $464 million for the Solana Generating Station, a concentrating solar power plant in Arizona with energy storage that’s off to a strong start – in just its first year of operation, the plant generated 64 percent of the energy that it’s expected to produce annually over its lifetime.

Big as that award was, it could have been even bigger. The sequestration budget provisions that went into effect in early 2013 have been costing developers using 1603. Thus, the owners of the Ivanpah plant, in trading their ITC for a 1603 payment, are actually getting less than they arguably deserve – $539 million instead of $614 million the law said the company could expect when construction began, according to Platts Megawatt Daily.