Alternative Energy Sales Tax Exemption

Utah exempts the purchase or lease of equipment used to generate electricity from alternative resources from the state sales tax. Eligible purchases or leases must be made for or by an alternative energy production facility on or after July 1, 2004, and before June 30, 2027. All leases must be made for at least seven years.

Eligible  resources include wind, solar, biomass, geothermal, hydroelectricity, and energy that is derived from coal-to-liquids, nuclear fuel, oil-impregnated diatomaceous earth, oil sands, oil shale, petroleum coke, waste heat from an industrial facility, or waste heat from a power station in which an electric generator is driven through a process in which water is heated, turns into steam, and spins a steam turbine. Facilities must use alternative energy to produce electricity and must have a minimum capacity of 2 megawatts (MW). An existing facility that is expanded by one or more MW as a result of the machinery or equipment may also be eligible for the exemption.

Equipment used to generate electricity from waste energy is also eligible for this exemption. Waste energy is defined as using as the primary source of energy materials that would be placed in a landfill or refuse pit if it were not used to generate electricity. This includes tires, waste coal, oil shale, and municipal solid waste. The facility must generate an amount of energy greater than that required for the operation of the facility.

Equipment eligible for the exemption generally includes wind turbines, generating equipment, control and monitoring systems, power lines, substation equipment, lighting, fencing, pipes, and other equipment for locating power lines and poles. Equipment not eligible for the exemption includes tools and other equipment used in construction of a new facility, contracted services required for construction, and routine maintenance activities and equipment utilized or acquired after the project is operational.

As of 2013, sales of fuel cells are also exempt from taxation.