Cost > Federal Renewable Energy Incentives

Federal Tax Incentives

Tax credits represent a fairly effective, and politically viable, way to promote the adoption of renewable energy.

Personal Tax Credit

Eligible:    
Solar water heat, photovoltaics, fuel cells for residential applications

Amount for solar:
30% up to $2,000 for solar energy systems

Amount for fuel cells:
$500 per 0.5 kilowatt

Other info:
Solar thermal systems must be certified by the Solar Rating and Certification Corporation (SRCC) or an equivalent state-recognized entity. Solar thermal systems must provide at least half of total energy used to heat water in for the associated expenditures to be eligible for the tax credit. Excess credit may be carried to succeeding tax year.

Business Energy Tax Credit

Eligible:    
Solar thermal, solar thermal electric, photovoltaics (plus a number of other clean-energy technologies for commercial and industrial applications)

Amount:
30% for solar, with no specified maximum

Other info:
Equipment must enter into service between January 1, 2006 and December 31, 2008 

Corporate Depreciation Incentive: Modified Accelerated Cost-Recovery System (MACRS) + BONUS Deduction

Eligible:    
Solar thermal and thermal electric, PV (and a number of other energy efficient technologies for commercial and industrial applications)

Amount:
For solar applications placed in service after 1986, companies may depreciate investments over the accelerated timeframe of five years

Other info:
In sum, the value that eligible energy systems add to an owner’s property should not increase the owner’s tax liability.

IMPORTANT NOTE: 
Under the Economic Stimulus Act of 2008, Congress added a 50% bonus to the pre-existing MACRS program. For systems put into operation during 2008, businesses are permitted to deduct 50% of the adjusted basis of the eligible system. To qualify, the system ("property") must:

• have a recovery period of less than 20 years under normal federal tax depreciation rules
• have an original use that commences with the individual/business claiming the deduction
• be acquired and placed into service during 2008 (in some rare cases, 2009 operational date will be considered)

Renewable Electricity Production Credit (PTC)

Eligible:    
Solar water heat, solar space heat, photovoltaics (plus wind and geothermal heat) for the residential sector

Amount:
Per-kilowatt-hour tax credit for electricity generated by qualified resources, including solar facilities that came on-line before December 31, 2005

Other info:
Currently set to expire 12/31/2008
 

Residential Energy Conservation Subsidy Exclusion (for utilities)

Eligible:   
Solar thermal and PV for applications in residential sector

Amount:
Per-kilowatt-hour tax credit for electricity generated by qualified resources, including solar facilities that came on-line before December 31, 2005

Other info:
Public utilities that provide energy conservation subsidies directly or indirectly to customers are permitted to deduct the entire amount from their gross income when filing their tax return.

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