Financial Incentives  

Renewable Energy Tax Incentives

The Recovery Act amends several provisions of the U.S. Tax Code, expanding or providing new renewable energy incentives for businesses that produce or utilize renewable energy. These incentives generally take the form of tax credits for the production of electricity from, and facilities that utilize wind, refined coal, geothermal, biomass, solar, and combined heat and power systems.

A. Investment Tax Credit  ("ITC")

An ITC generally allows taxpayers to take a single tax credit against a property's tax basis equal to 30% in its first year and allows a Employers to elect certain qualified facilities to be characterized as energy property (qualified fuel cell property, solar property, or qualified small wind property) eligible for a 10% or 30% ITC, depending on the technology.

Grant applications must be submittted by 10/1/2011. Payment of grant will be made within 60 days of the grant application date or the date property is placed in service. whichever is later. 

The Recovery Act repealed the $4,000 limit on the ITC for small wind energy property, and the limitation on property financed by subsidized energy financing. The repeal applies to property placed in service after Dec. 31, 2008.

B. Production Tax Credit  ("PTC")

Alternatively, the Recovery Act allows a tax credit for the generation of qualified energy from qualified facilities. The PTC amounts, credit periods, definitions of qualified facilities are technology-specific. To be eligible for the credit, electricity produced from qualified energy resources at qualified facilities must be sold by the taxpayer to an unrelated person.

To learn more about these and other renewable energy grants and incentives, click here.