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 are 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. However, 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 hot water, solar space heaters, wind power, solar cooling, and solar thermal electric.
Entities which are eligible for this credit include commercial, nonprofit, industrial, state government, local government, agricultural, institutional etc. An eligible device under this provision is defined as a system or series of mechanism designed mainly for providing heat, cooling, to produce electricity, or mechanical power by means of collecting and transferring renewable energy sources. Passive systems are also eligible under this tax credit scheme. Such systems must clearly be designed as solar or wind energy systems. It cannot simply be 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 given 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 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 will initially provide a certification to qualifying installations and will also issue a credit certificate to the business holder after the installation is 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 non-petroleum renewable energy sources not intended for self-consumption. Though the original expiration date for this scheme was set to December 2011, 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 or her residence is eligible for the Arizona’s Residential Solar and Wind Energy Systems Tax Credit. The tax credit is levied 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 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 include passive solar space heat, solar space heat, solar water heat, wind and solar cooling. the installed system must be new and must also be in compliance with all 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 initiated a Solar and Wind Sales Tax Exemption. According to this sales tax exemption plan, any retail sale of solar or wind energy device and installation of such device by contractors is eligible for 100% sales tax exemption. Eligible solar and wind devices include wind electric generators and wind powered water pumps in addition to passive solar heating, solar water heating, and photovoltaic. 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 could 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 be registered with the Arizona Department of Revenue prior to selling or installation. A guide has also been compiled by the Arizona Department of Commerce Energy Office depicting solar wind devices that qualify for this sales exemption.
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, 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 designates devices that produces energy primarily for on-site consumption from renewable resources like wind, solar, forest thinning, biomass, low impact hydro power 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 documents affirming the actual purchase and installation of the system. And installation must be completed within six months at which time 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 are eligible to receive $2 per watt up to a maximum of 25% of the total cost of the solar or wind energy device they install. The interest rate will be set at a low 3%. In return, the borrower must keep his or her 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 the next 5 years in equal monthly installments. For loans involving an amount in excess of $10,000 the repayment period is 10 years. Alternatively buyers can can prepay the full amount without any penalty. This loan scheme has limited funding 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 with 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 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 called 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), which started in 2008, TEP also included longer list of eligible renewable energy technologies. All eligible technologies also qualify under Arizona’s renewable energy standards program (RES). Incentives are available in exchange for 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 credits associated with the energy generated by 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 added. This list include solar hot water, photovoltaic and solar HVAC. This utility rebate program is available to both commercial and residential sectors. PV incentives may also be de-rated based on their expected performance. The maximum amount is capped at 60% of the original cost.
