Renewable energy related legislation and loan programs in Colorado
According to the Renewable Portfolio Standard (RPS) of November 2004, an amendment was passed in Colorado requiring every utility user with 40,000 or more customers to purchase electricity from renewable sources. Additionally the state government is considering various incentives, net metering etc. to promote the use of wind and solar electric equipments. Various terms of the amendment are still under consideration. According to the amendment additional electricity generated in a given month can’t be carried over and used as a credit for the next month.
Businesses are allowed to recover investments in a property through depreciation deductions under the federal Modified Accelerated Cost-Recovery System (MACRS). Generally the property is divided into a set of class lives which vary from 3 to 50 years. According to 26 USC § 168 some renewable technologies, including wind energy, fall under 5 year property and and may be eligible for energy investment tax credit (ITC). Other technologies include solar electric, solar thermal, direct use geothermal and geothermal pumps, combined heat and power etc. this 5 year class life has been in effect since 1986. According to the federal Economic Stimulus Act of 2008, all eligible renewable energy systems are applicable for 50% bonus depreciation. The property must have been acquired during the year of 2008 or 2009 and must also be placed under service in the same year.
The Energy Improvement and Extension Act of 2008 (H.R. 1424) expanded the federal business energy investment tax credit in October 2008. There were major changes to the tax credit. Time duration for the various renewable energy technologies was extended by 8 years and new credits were also established for wind-energy systems. To become eligible for this federal credit all systems must be in service on or before the year 2016. In the case of small wind turbines, 30% of the full cost is eligible for the credit. There is no maximum credit for all the small wind turbines which are in service after the year of 2008. Normally wind turbines with production up to 100KW are eligible for this credit. The maximum amount for this credit is capped at $4000 but micro turbines are eligible for a credit up to 10% of the whole expenditure. The amount is capped at $200 per 200KW production for micro turbines.
According to Renewable Energy Property Tax Assessment all utility-scale electric generating facilities are eligible to assess property tax based on the installment cost. Normally for renewable energy facilities the cost of installation is comparable to non-renewable energy facilities. This comparable value is calculated each year by the division of Property Taxation. Generally for renewable facilities the value above non-renewable is discarded. The value is determined for all renewable energy generators connected to transmission systems.
According to property tax financing law all property owners from the state of Colorado can borrow money for any sort of energy improvement. The owner has to repay the borrowed amount through increased tax assessment over a certain period of years. According to H.B. 1350 enacted in May 2008, the Colorado Clean Energy Development Authority (CEDA) can establish clean energy finance districts in the state of Colorado. A district cannot be established without approval from the voters. Moreover local government is required to get a proposed financing measure approved from the state treasurer. Under this program various renewable energy technologies are eligible including wind, photovoltaic, hydroelectric, and fuel cells. Districts are responsible to create funds from various resources like contracts, agreements, grants, revenues from public utilities, bonds etc.
According to SB 145 enacted on May 2007, the State of Colorado approved sales tax rebates for commercial property owners with installed renewable energy systems on their property. In April 2009, HB 1126 added solar thermal systems to the list of eligible renewable energy technologies. Under this legislation any system producing electricity from renewable resources other than solar and wind systems is also considered as an eligible renewable energy technology. All management tasks are administered by local cities and counties. Any interested property owner should contact their local city or county to find out whether a tax rebate is available.
According to HB 1126 enacted on May 2009, the State of Colorado exempts all storage, use and sales of components used in the production of AC electricity from a renewable energy resource. The list of eligible renewable energy technologies includes solar heat, solar space heat, wind, photovoltaic, biomass and others. The cap can reach up to 100% of the entire cost. This tax exemption is only applicable to state sales and use taxes.
Under the New Energy Economic Development Grant, grants are available to support energy efficiency and renewable energy throughout the state of Colorado. Up to 2007, this program received funds from the Clean Energy Fund (CEO). Later, state government appropriated funds to the Governor’s Energy Office (GEO) from severance tax and gaming tax. This New Energy Economic Development Grant Program (NEED) receives funding from Federal American Recovery and Reinvestment Act funds. In July 2009, GEO announced they had $2 million for funding. Normally funding will be provided on a competitive basis. This program has some terms which must be followed by the approved projects. Within 3 months of the approval of the fund the project must begin construction. The project should also have a targeted completion date of no greater than 8 months from contract execution.
Gunnison County Electric Association (GCEA) started its low-interest utility loan program (Renewable Energy Resource Loan) in January 2003. To successfully get loan approval from the board of directors, applicants must be from the GCEA’s service territory and projects must include the installation of wind, solar and other renewable energy technologies. An amount up to $25,000 can be received under this utility loan program and the repayment period is 10 years. Normally the current interest is not fixed, but it will be at the time when the loan is approved.
Rebate Programs
Local Small Wind Rebate Programs
3 electric cooperatives and one municipal electric utility received matching funds from the Governor’s Energy Office (GEO). Under this rebate program, local businesses and residents can receive rebates for small wind projects. Their are existing terms and conditions from GEO that must be followed by the applicant, however the participating administrators can modify the terms to suit their customers. Basically the rebate is available only for the first 10kW of a wind system and must be less than 50% of the installation cost. The recipient should also meet energy efficiency requirements set by administrators. Under this program each utility has access to an amount of $25,000 from GEO and they should also contribute $25000 from their own funds to the program. The system in question must have a minimum warranty period of 5 years. Applicants can be from either the commercial or residential sector.
Holy Cross Energy – WE CARE Rebates
Under the WE CARE (With Efficiency, Conservation and Renewable Energy) program Holy Cross Energy will provide utility rebates. Holy Cross pays up to $2 per watt of electricity generation per installation using renewable energy technologies such as wind, solar and hydroelectric. The rebate is available for up to 6 kW with a limit of 50% of the actual cost. Customers are liable to get net metering from Holy Cross for renewable energy generation facilities with a capacity up to 25kW. Normally the maximum rebate amount is capped at $20000 per installation. Consumer’s electricity system must be connected to the Holy Cross’s system in order to qualify for the rebate.
La Plata Electric Association – Renewable Generation Rebate Program
La Plata Electric Association (LPEA) grants this one time utility rebate to its small commercial and residential customers who fall in the service territory. In order to qualify for the rebate the customers must install a wind, hydro power or solar facility. The maximum amount which can be achieved through this rebate program is capped at $3000, but cannot exceed the actual cost of the system. All applying systems must be grid-tied. The amount of rebate is $2 per watt as determined by the LPEA Board of Directors. The customer must also assign all Renewable Energy Credits associated with the installation to the LPEA.
