Tax Credits
Federal
Renewable Energy Production Incentive (REPI)
The federal Renewable Energy Production Incentive (REPI) provides incentive payments for electricity produced and sold by new qualifying renewable energy facilities. Qualifying systems are eligible for annual incentive payments of 1.5¢ per kilowatt-hour (in 1993 dollars and indexed for inflation) for the first 10-year period of their operation, subject to the availability of annual appropriations in each federal fiscal year of operation.
Section 202 of the Energy Policy Act of 2005 ( H.R. 6 ) reauthorized appropriations for fiscal years 2006 through 2026 and expanded the list of eligible technologies and facilities owners. See the link to 42 USC § 13317, provided above, for details.
Eligible electric production facilities include not-for-profit electrical cooperatives, public utilities, state governments, Commonwealths, territories, possessions of the United States, the District of Columbia, Indian tribal governments, or a political subdivision thereof and Native Corporations. The production payment applies only to the electricity sold to another entity.
Qualifying systems must generate electricity using solar, wind, geothermal (with certain restrictions), biomass,* landfill gas, livestock methane, or ocean (including tidal, wave, current, and thermal) generation technologies. Fuel cells using hydrogen derived from eligible biomass facilities are also eligible. More...
Business Energy Tax Credit
Commercial, industrial, and utility entities are eligible for a corporate tax credit for solar and other renewable energy systems. The credit equals 30% for solar. More...
American Recovery and Reinvestment Act of 2009
The tax section of the American Recovery and Reinvestment Act of 2009 provides a three-year extension of the production tax credit (PTC) for most renewable energy facilities, while offering expansions on and alternatives for tax credits on renewable energy systems. The PTC provides a credit for every kilowatt-hour produced at new qualified facilities during the first 10 years of operation, provided the facilities are placed in service before the tax credit's expiration date. For 2008, biomass facilities fueled with dedicated energy crops ("closed-loop biomass"), as well as wind, solar, and geothermal energy facilities earned 2.1 cents per kilowatt-hour, while other qualified facilities earned 1 cent per kilowatt-hour.
Homes and businesses also will benefit under the American Recovery and Reinvestment Act of 2009 provides greater tax credits for clean energy projects at homes and businesses and for the manufacturers of clean energy technologies. For homeowners, the act increases a 10% tax credit for energy efficiency improvements to a 30% tax credit, eliminates caps for specific improvements (such as windows and furnaces), and instead establishes an aggregate cap of $1,500 for all improvements placed in service in 2009 and 2010 (except biomass systems, which must be placed in service after the act is enacted). The act also tightens the energy efficiency requirements to meet current standards. For residential renewable energy systems, the act removes all caps on the tax credits, which equal 30% of the cost of qualified solar energy systems, geothermal heat pumps, small wind turbines, and fuel cell systems. The act also eliminates a reduction in credits for installations with subsidized financing.
For more information on tax incentives, see:
- Database of State Incentives for Renewables and Efficiency (DSIRE). Includes both state and federal incentives.
