November 2009 Archives

Wind Energy-Related Legislation and Loan programs in Arizona

According to A.R.S. §43-1085 enacted in January 2006, tax credit can be applied to corporate or personal taxes which is equal to 10% of the original installation cost of the energy system. The taxable years began in the year of 2006 and it's valid up to 2012. Originally according to HB 2429 this tax credit was eligible only for solar and wind installations in commercial and industrial applications. But later in 2007 according to HB 2491, the tax credit became applicable to all non-residential entities. Entities which were exempted from tax in past, also became eligible. According to the legislation, all third parties involved in manufacturing and installing of such solar and wind systems are eligible to apply for this tax credit of 10% of the original cost of the system. The list of eligible renewable technologies under this tax credit includes Solar water heat, solar space heat, wind, solar cooling, solar thermal electric etc. a detailed list of eligible sectors includes commercial, nonprofit, industrial, state government, local government, agricultural, institutional etc. A eligible device under this provision is defined as a system or series of mechanism designed mainly for providing heat, cooling, to produce electricity, mechanical power by means of collecting and transferring renewable energy sources. Passive systems are also eligible under this tax credit scheme. Such types systems must clearly be designed as solar or wind energy systems e.g. trombe wall. It shouldn't e a part of a normal structure such as a window. The maximum amount that can be credited under this scheme is capped at $25,000 for one building in the same taxable year and $50,000 in total credits in any year. If the calculated tax credit exceeds the taxpayer's income tax liability, then the excess amount not used to offset the tax can be carried forward for a maximum time of 5 consecutive years. This whole tax credit scheme is administered and monitored by the Arizona Department of Commerce (DOC). Interested candidates must apply to the department to qualify for the tax credit. The DOC department will initially provide a certification to qualifying installations and will also issue a credit certificate to the business holder after the installation gets completed and approved. A copy of the tax credit certificate must also be submitted to the Arizona Department of Revenue. The DOC is allowed to approve tax credits up to a total of $15 million each calendar year.

According to A.R.S. § 42-14155 enacted in April 2000, all the taxable renewable energy equipment operating in Arizona will be assessed at twenty per cent of the depreciated cost. This depreciated value of the equipment owned by utilities and other entities will be used for the purpose of determining the property tax. For the purpose of this section, the department has defined renewable energy equipment as electric generation facilities, electric distribution, and electric transmission in the state used for the transmission and distribution of electric power derived from wind, solar and other nonpetroleum renewable energy sources not intended for self-consumption. Though the original expiration date for this scheme was set to December 2011, but later according to House Bill 2614 it was extended to December 31, 2040.

According to A.R.S. § 43-1083 enacted in January 1995, any individual taxpayer in the state of Arizona who has installed a solar or wind energy system at his residence is eligible for the Arizona's Residential Solar and Wind Energy Systems Tax Credit. The tax credit is allowed against the taxpayer's personal income tax. The amount which can be credited under this credit scheme is equal to 25% of the cost of the solar or wind energy device. The maximum amount which can be credited is capped at $1,000 regardless of the number of the devices installed. The credit must be claimed during the same year the device is installed. If the credited tax amount exceeds the taxpayer's total tax liability during the same year, the excess amount can carried forward for up to five years. The list of renewable energy technologies under this tax credit scheme includes passive solar space heat, solar space heat, solar water heat, wind; solar cooling etc. the installed system must be a new one and must also be in compliance with all the applicable performance and safety standards. The system must also carry a minimum 2 year warranty on collectors, heat exchangers and storage units. Other devices must carry a warranty of at least 1 year.

According to A.R.S. § 42-5061 (N) enacted in January 1997 the Arizona Department of Commerce Energy Office has started Solar and Wind Equipment Sales Tax Exemption. According to this sales tax exemption plan, any retail sale of solar or wind energy devices and installation of such devices by contractors is eligible for 100% sales tax exemption. By eligible solar and wind devices it means, wind electric generators and wind powered water pumps in addition to passive solar heating, solar water heating, photovoltaic etc. This sales tax exemption is not applicable to devices which are not part of the eligible system such as batteries, controls etc. though previously the maximum amount that can be exempt under this scheme was capped at $5,000, later HB 2429 eliminated this limit per eligible device. To apply for this sales tax exemption the solar energy retailer or solar energy contractor must get registered with the Arizona Department of Revenue prior to selling or installing solar energy devices. A guide has also been compiled by the Arizona Department of Commerce Energy Office depicting solar wind devices that qualify for this sales exemption under the statuary definition.

According to HB 2429 enacted in June 2006, solar and wind energy devices add no value to the property under the scheme of Energy Equipment Property Tax Exemption. Though the scheme was originally designed only for solar energy systems, but later HB 2332 enacted in July of 2009 expanded the exemption to other renewable technologies such as combined heat and power systems, energy efficient building components etc. according to this bill renewable energy equipment is defined the devices that produces energy primarily for on-site consumption from renewable resources like wind, solar, forest thinning, biomass, low impact hydropower etc. and energy efficient building components are defined as the components installed to meet or exceed the energy efficiencies prescribed by the United States Environmental Protection Agency Energy Star Program, or by a Leadership in Energy and Environmental Design green building rating standard developed by the US Green Building Council. Interested candidate must submit the documents affirming the actual purchase and installation of the system. And it must be done within six months before the cash value is issued against the system for the initial valuation year.

Various Rebate and Loan programs

Sulphur Springs Valley EC - SunWatts Loan Program

All Sulphur Springs Valley Electric Cooperative (SSVEC) members can avail $2 per watt up to a maximum of 25% of the total cost of the solar or wind energy device. The interest rate will be only 3%. In return, the borrower must keep his house or any other property as collateral against the loan. If the borrowed amount is less than $10,000 then it can be repaid over a time period of next 5 year in equal monthly installments. And for loans involving an amount more than $10,000 the repayment period is 10 years. If any borrower wants he can pre-pay the amount without any sort penalty. This loan scheme has limited fund and will be provided on first come first served basis.

APS - Renewable Incentive Program

Through this incentive program, Arizona Public Service (APS) is offering its customer an opportunity to sell their credits associated the energy generated to the APS. The customers must own devices which use renewable energy resources. The maximum amount is capped at 50% of the total project cost for PV systems and the upfront amount is limited to $75,000. This incentive scheme is eligible in commercial and residential sectors. This program has a budget of $6,650,000 for the year of 2009. It includes $5 million for residential installations and $1.65 million for commercial installations. The company is purchasing energy credits and renewable energy certificates to meet its Renewable Energy Standard (RES). All the customers who will participate in this program will receive a one-time rebate or an incentive based on the system's capacity.

TEP - Renewable Energy Credit Purchase Program

Tucson Electric Power (TEP) started its utility rebate program SunShare in 2001 to encourage residential and business customers to install new PV and wind energy devices. Under its new Renewable Energy Credit Purchase Program (RECPP) started in 2008 TEP also included longer list of eligible renewable energy technologies. All the eligible technologies also qualify under Arizona's renewable energy standards (RES). Incentives can be availed in exchange of renewable energy certificates generated by the systems.

UES - Renewable Energy Credit Purchase Program

Under this program UniSource Energy Services (UES) is offering its customers an opportunity to sell the credits associated with the energy generated by the various renewable energy sources to the company. Initially the program was open to only solar energy devices, but in 2008 other renewable energy devices were also included in the eligible list of technologies. This list include solar hot water, photovoltaic, solar HVAC etc. This utility rebate program is eligible in both commercial and residential sectors. PV incentives may also be de-rated based on its expected performance. The maximum amount is capped at 60% of the original cost.

Wind Energy-Related Legislation and Loan programs in Florida 

According to 25-6.065, F.A.C. enacted in March 2008, the Florida Public Service Commission started net metering and interconnection for all the renewable energy systems with a capacity of 2 MW. The PSC is entitled to set all the rules and regulation for this net metering policy. And these set of rules exclusively apply to state's investor owned utilities. Electric co-operatives and municipal co-operatives do not come under this policy. All the customers who generate electricity using one of the following technologies can avail the facility of net metering - wind energy, solar energy, hydroelectric power, geothermal energy etc. if the customer is using net metering then his net excess generation (NEG) will be carried forward to his next bill for a time period of 12 months. NEG is carried forward at the utilities' retail rate as a kilowatt-hour credit. If NEG is remaining at the end of the 12 month period then it will be paid by the utility. The System owner will hold the rights of Renewable energy credits (RECs). But RECs can be sold back to the utility by the customer. PSC hasn't stated any capacity limit for the net metered systems. All information related to the renewable energy system must be filed with PSC. It includes the total energy delivered to and generated from the customers and the total payment made to the interconnected customers. According to H.B. 7135 in June 2008, PSC received the authority to adopt March 2008 rules for interconnected and net metered utilities. A standard interconnection agreement and net metering program for customer owned renewable generation was developed by the municipal utilities and electric cooperatives. Though municipal utilities and electric cooperatives need to file annual report with PSC, it doesn't have any direct authority above the utilities.

According to Modified Accelerated Cost-Recovery System (MACRS) federal government has enabled recovery of investments in property. It can be done through depreciation deductions. A set of class lives for various properties has been declared by MACRS. It is in the range of 3 to 50 years. During this time period the property can be depreciated. According to 26 USC § 168, the eligible 5 year property under energy Investment Tax Credit (ITC) includes - solar electric and thermal technologies, combined heat and power and also wind energy. Large wind facilities are also considered as eligible technology under this provision of ITC. This 5 year plan for wind and solar energy has been in effect since 1986. Under the federal Economic Stimulus Act of 2008 in February 2008, 50% bonus depreciation was added for all the eligible renewable -energy systems which are in service since 2008. Normally to be qualified for this depreciation certain criterion must be met by the project involved. These are - the acquisition of the property must have taken place during the year of 2008 or 2009, it must be in service since 2008 and it must have a recovery period of less than 20 years. If the property satisfies all of these, 50% of the adjusted basis can be deducted in the 2008 or 2009 and the rest will be depreciated over ordinary schedule.

According to Fla. Stat. § 220.193, Florida renewable energy production credit was introduced to encourage the use of renewable energy in Florida. It helped increasing the number of facilities that use renewable energy as their main source of energy. All expanded facilities that increase its electrical production and sale by more than 5 percent are eligible for this credit. A facility which is in service after May 2006 will be provided this credit. According to this tax credit, annually a taxpayer will receive this credit based on his production and sale of electricity from a new or expanded Florida renewable energy facility. If the facility owned by the taxpayer is a new one then the credit will be based on the taxpayer's total electric production. On the other hand if it is expanded facility then the credit will be decided based on the increased electric production after May 2006. The amount is capped at $0.01 per kWh of electricity produced or sold by the taxpayer to an unrelated third party during that tax year. For availing this credit, the taxpayer first must apply to the Department of revenue by February 1 of each year. Department of revenue will consult with the PSC to come up with an application form. If the total amount of credits in one year exceeds $5 million then each applicant will be allotted a prorated amount based on his increased sale and production. In case the allotted credits are not used during one year, then it can be carried forward to the subsequent next year until 5 years.

In order to promote environmentally sensitive design and construction Miami-Dade County implemented a program to expedite the review and approval of permit applications for green buildings. Here green building means one whole design, operation promote and construction promoting the preservation of resources and environmentally sensitive constructive practices, systems and materials. For determining whether the building is green building or not, the building official will rely on the review and evaluation by the recognized environmental rating agencies like Florida Green Building Coalition, the National Home Builder Association and the U.S. Green Building Council.

According to Fla. Stat. § 196.175 enacted in June 2008, an expired Renewable Energy Property Tax Exemption in the year of 1990 was revived. According to this exemption any real property which is improved by installation of renewable energy source device and operated will be entitled to property tax exemption. Te exemption will be given in the amount of the original cost of the device and also the installation cost. But the total amount should exclude any sort of cost occurred due to the removal or improvement of previous existing property during the installation process. If the exemption was filed in the month of January, then during the next 12 moth time period the tax will be exempted for fully operational devices. If the device was operational for only a portion of that period then the amount should be reduced in a proportional manner. This exemption cannot be granted for a period of more than 10 years and the device must not be installed before January 2009.

According to Fla. Stat. § 377.804 enacted in June 2006, Renewable Energy and Energy-Efficient Technologies Grants Program was started in order to promote the demonstration, commercialization, research and development projects using renewable energy technologies and also other innovative technologies significantly increasing energy efficiency for vehicles and commercial buildings. Under this matching grants program any of the following project is eligible to apply for - established companies in the State, universities and colleges in the state, municipalities and county governments, non-profit organizations, utilities located and operating within the state etc. Various factors will determine the approval of the grant of fund. A project stimulating in-state capital investment and economic development in rural areas will be given preference and also the project should produce more job availabilities and future development of commercial market for renewable energy technologies. The project should also incorporate an innovative new technology or an innovative application of existing technology. To evaluate various project proposals the Commission may take help from other external organization like Enterprise Florida Inc and also state universities. It may also solicit expertise of other public and private entities.