Solar & Battery Regulation & Incentive Programs
Eligibility | Sectors | Technologies |
---|---|---|
%26.0000 | Commercial Industrial Investor-Owned Utility Municipal Utilities Cooperative Utilities Agricultural | Solar Water Heat Solar Space Heat Solar Thermal Electric Solar Thermal Process Heat Solar Photovoltaics Fuel Cells using Non-Renewable Fuels Wind (Small) Fuel Cells using Renewable Fuels |
%10.0000 | Commercial Industrial Investor-Owned Utility Municipal Utilities Cooperative Utilities Agricultural | Geothermal Electric Geothermal Heat Pumps Combined Heat & Power Geothermal Direct-Use Microturbines |
Note: The Consolidated Appropriations Act, signed in December 2015, included several amendments to this credit which applied only to solar technologies and PTC-eligible technologies. However, the Bipartisan Budget Act of 2018 reinstated this tax credit for the remaining technologies that have historically been eligible for the credit.
The federal Business Energy Investment Tax Credit (ITC) has been amended a number of times, most recently in February 2018. The table below shows the value of the investment tax credit for each technology by year. The expiration dates are based on when construction begins.
Technology | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | 12/31/21 | 12/31/22 | Future Years |
---|---|---|---|---|---|---|---|---|
PV, Solar Water Heating, Solar Space Heating/Cooling, Solar Process Heat | 30% | 30% | 30% | 30% | 26% | 22% | 10% | 10% |
Hybrid Solar Lighting, Fuel Cells, Small Wind | 30% | 30% | 30% | 30% | 26% | 22% | 22% | N/A |
Geothermal Heat Pumps, Microtubines, Combine Heat and Power Systems | 10% | 10% | 10% | 10% | 10% | 10% | N/A | N/A |
Geothermal Electric | 10% | 10% | 10% | 10% | 10% | 10% | 10% | 10% |
Large Wind | 30% | 24% | 18% | 12% | N/A | N/A | N/A | N/A |
Geothermal Systems. The credit is equal to 10% of expenditures, with no maximum credit limit stated. Eligible geothermal energy property includes geothermal heat pumps and equipment used to produce, distribute or use energy derived from a geothermal deposit. For electricity produced by geothermal power, equipment qualifies only up to, but not including, the electric transmission stage. For geothermal heat pumps, this credit applies to eligible property placed in service after October 3, 2008. Note that the credit for geothermal property, with the exception of geothermal heat pumps, has no stated expiration date.
In general, the original use of the equipment must begin with the taxpayer, or the system must be constructed by the taxpayer. The equipment must also meet any performance and quality standards in effect at the time the equipment is acquired. The energy property must be operational in the year in which the credit is first taken.
Significantly, the American Recovery and Reinvestment Act of 2009 repealed a previous restriction on the use of the credit for eligible projects also supported by "subsidized energy financing." For projects placed in service after December 31, 2008, this limitation no longer applies. Businesses that receive other incentives are advised to consult with a tax professional regarding how to calculate this federal tax credit.
* Combined heat and power systems can only receive the full credit if the system has an electrical capacity of 15 MW or less, and a mechanical energy capacity of of 20,000 horsepower or less, or an equivalent combination of electrical and mechanical energy capacities. Larger combined heat and power systems (up to a maximum of 50 MW and 67,000 horsepower) can qualify for a reduced tax credit equal to the ratio between the actual system capacity and 15 MW. For example, a 45 MW system can qualify for a tax credit worth 15/45 of the otherwise allowable credit.
History
The federal business energy investment tax credit available under 26 USC § 48 was expanded significantly by the Energy Improvement and Extension Act of 2008 (H.R. 1424), enacted in October 2008. This law extended the duration -- by eight years -- of the existing credits for solar energy, fuel cells and microturbines; increased the credit amount for fuel cells; established new credits for small wind-energy systems, geothermal heat pumps, and combined heat and power (CHP) systems; allowed utilities to use the credits; and allowed taxpayers to take the credit against the alternative minimum tax (AMT), subject to certain limitations. The credit was further expanded by the American Recovery and Reinvestment Act of 2009, enacted in February 2009. The credit was most recently amended by The Consolidated Appropriations Act of 2015, which extended the expiration date, but also introduced a step-down in the value of the credit for solar technologies and PTC-eligible wind.
Name | Enacted Date | Effective Date | Expired Date |
---|---|---|---|
26 USC § 48 | |||
Instructions for IRS Form 3468 | |||
IRS Form 3468 | |||
H.R. 1892 (Bipartisan Budget Act of 2018) | 02/09/2018 |