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California Solar Incentives

Live in another state? See all our Solar Incentives by State

Californians have been long time advocates for solar power. So much so, California has become the nation’s pioneer and leader when it comes to “going solar”. Other states look to California to see the trail that’s been blazed with their California Solar Initiative, a statewide rebate program that's now over.

Nonetheless, all Californians can take advantage of the 30% Federal Tax Credit, which will allow you to recoup 30% of your equipment AND installation costs for an unlimited amount.

There may still be other local rebates from your city, county, or utility. Check below!

California Solar PV Rebates & Incentives

Data from DSIRE. Last updated: 11/20/2018

NameAdministratorBudgetLast UpdatedEnd DateDSIRE ID
Summary
Business Energy Investment Tax Credit (ITC)U.S. Internal Revenue Service03/01/1811/20/18658

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


  • Solar Technologies. Eligible solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Hybrid solar lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are not eligible.

  • Fuel Cells. The credit is equal to 30% of expenditures, with no maximum credit. However, the credit for fuel cells is capped at $1,500 per 0.5 kilowatt (kW) of capacity. Eligible property includes fuel cells with a minimum capacity of 0.5 kW that have an electricity-only generation efficiency of 30% or higher. 

  • Small Wind Turbines. The credit is equal to 30% of expenditures, with no maximum credit for small wind turbines placed in service after December 31, 2008. Eligible small wind property includes wind turbines up to 100 kW in capacity. (In general, the maximum credit is $4,000 for eligible property placed in service after October 3, 2008, and before January 1, 2009. The American Recovery and Reinvestment Act of 2009 removed the $4,000 maximum credit limit for small wind turbines.) Small wind turbines must meet the performance and quality standards set forth by either the American Wind Energy Association Small Wind Turbine Performance and Safety Standard 9.1-2009 (AWEA), or the International Electrotechnical Commission 61400-1, 61400-12, and 61400-11 (IEC)
  • 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.


  • Microturbines. The credit is equal to 10% of expenditures, with no maximum credit limit stated (explicitly). The credit for microturbines is capped at $200 per kW of capacity. Eligible property includes microturbines up to two megawatts (MW) in capacity that have an electricity-only generation efficiency of 26% or higher.

  • Combined Heat and Power (CHP). The credit is equal to 10% of expenditures, with no maximum limit stated. Eligible CHP property generally includes systems up to 50 MW in capacity that exceed 60% energy efficiency, subject to certain limitations and reductions for large systems. See the note at the bottom of this page for more details. The efficiency requirement does not apply to CHP systems that use biomass for at least 90% of the system's energy source, but the credit may be reduced for less-efficient systems. This credit applies to eligible property placed in service after October 3, 2008.

  • Production Tax Credit-Eligible Technologies. Technologies that are eligible for the Production Tax Credit (PTC) were eligible to opt for the ITC in lieu of the PTC if construction commenced prior to January 1, 2015. As of January 1, 2015, only wind energy systems are eligible to claim the ITC in lieu of the PTC.  

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. 


Residential Energy Conservation Subsidy Exclusion (Personal)U.S. Internal Revenue Service05/16/1811/20/18666

According to Section 136 of the U.S. Code, energy conservation subsidies provided (directly or indirectly) to customers by public utilities* are non-taxable. This exclusion does not apply to electricity-generating systems registered as "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 (PURPA). If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).

The term "energy conservation measure" includes installations or modifications primarily designed to reduce consumption of electricity or natural gas, or to improve the management of energy demand. Eligible dwelling units include houses, apartments, condominiums, mobile homes, boats and similar properties. If a building or structure contains both dwelling units and other units, any subsidy must be properly allocated.

The definition of "energy conservation measure" implies that utility rebates for residential solar-thermal projects and photovoltaic (PV) systems may be non-taxable. However, the IRS has not ruled definitively on this issue. Taxpayers considering using this provision for a renewable energy system should discuss the details of the project with a tax professional. Other types of utility subsidies that may come in the form of credits or reduced rates might also be non-taxable, according to IRS Publication 525.


* The term "public utility" is defined as an entity "engaged in the sale of electricity or natural gas to residential, commercial, or industrial customers for use by such customers." The term includes federal, state and local government entities.

Modified Accelerated Cost-Recovery System (MACRS)U.S. Internal Revenue Service08/21/1811/20/18676

Note: The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023. 

Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property (26 USC § 168(e)(3)(B)(vi)) under the MACRS, which refers to 26 USC § 48(a)(3)(A), often known as the energy investment tax credit or ITC to define eligible property. Such property currently includes*:

  • a variety of solar-electric and solar-thermal technologies
  • fuel cells and microturbines
  • geothermal electric
  • direct-use geothermal and geothermal heat pumps
  • small wind (100 kW or less)
  • combined heat and power (CHP)
  • the provision which defines ITC technologies as eligible also adds the general term "wind" as an eligible technology, extending the five-year schedule to large wind facilities as well.

In addition, for certain other types of renewable energy property, such as biomass or marine and hydrokinetic property, the MACRS property class life is seven years. Eligible biomass property generally includes assets used in the conversion of biomass to heat or to a solid, liquid or gaseous fuel, and to equipment and structures used to receive, handle, collect and process biomass in a waterwall, combustion system, or refuse-derived fuel system to create hot water, gas, steam and electricity. Marine and hydrokinetic property includes facilities that utilize waves, tides, currents, free-flowing water, or differentials in ocean temperature to generate energy. It does not include traditional hydropower that uses dams, diversionary structures, or impoundments.

The 5-year schedule for most types of solar, geothermal, and wind property has been in place since 1986. The federal Energy Policy Act of 2005 (EPAct 2005) classified fuel cells, microturbines and solar hybrid lighting technologies as five-year property as well by adding them to § 48(a)(3)(A). This section was further expanded in October 2008 by the addition of geothermal heat pumps, combined heat and power, and small wind under The Energy Improvement and Extension Act of 2008.

Bonus Depreciation

Bonus Depreciation has been sporadically available at different levels during different years. Most recently, The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023.

Bonus Depreciation History

The 50% first-year bonus depreciation provision enacted in 2008 was extended (retroactively for the entire 2009 tax year) under the same terms by the American Recovery and Reinvestment Act of 2009 (H.R. 1), enacted in February 2009. It was renewed again in September 2010 (retroactively for the entire 2010 tax year) by the Small Business Jobs Act of 2010 (H.R. 5297). In December 2010 the provision for bonus depreciation was amended and extended yet again by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R. 4853). Under these amendments, eligible property placed in service after September 8, 2010 and before January 1, 2012 was permitted to qualify for 100% first-year bonus depreciation. The December 2010 amendments also permitted bonus depreciation to be claimed for property placed in service during 2012, but reverted the allowable amount from 100% to 50% of the eligible basis. The 50% first-year bonus depreciation allowance was further extended for property placed in service during 2013 by the American Taxpayer Relief Act of 2012 (H.R. 8, Sec. 331) in January 2013. The Tax Increase Prevention Act Of 2014 (H.R. 5771, Sec. 125)extended  these provisions through to December 31, 2014, and thus retroactively for the 2014 tax year.

For more information on the federal MACRS, see IRS Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562. The IRS web site provides a search mechanism for forms and publications. Enter the relevant form, publication name or number, and click "GO" to receive the requested form or publication. For guidance on bonus depreciation, including information relating to the election to claim either 50% or 100% bonus depreciation, retroactive elections to claim 50% bonus depreciation for property placed in service during 2010, and eligible property, please see IRS Rev. Proc. 2011-26.


*Note that the definitions of eligible technologies included in this entry are somewhat simplified versions of those contained in tax code, which often contain additional caveats, restrictions, and modifications. Those interested in this incentive should review the relevant sections of the code in detail prior to making business decisions.

Residential Energy Conservation Subsidy Exclusion (Corporate)U.S. Internal Revenue Service05/16/1811/20/18727

According to Section 136 of the U.S. Code, energy conservation subsidies provided (directly or indirectly) to customers by public utilities* are non-taxable. This exclusion does not apply to electricity-generating systems registered as "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 (PURPA). If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).

The term "energy conservation measure" includes installations or modifications primarily designed to reduce consumption of electricity or natural gas, or to improve the management of energy demand. Eligible dwelling units include houses, apartments, condominiums, mobile homes, boats and similar properties. If a building or structure contains both dwelling units and other units, any subsidy must be properly allocated.

The definition of "energy conservation measure" implies that utility rebates for residential solar-thermal projects and photovoltaic (PV) systems may be non-taxable. However, the IRS has not ruled definitively on this issue. Taxpayers considering using this provision for a renewable energy system should discuss the details of the project with a tax professional. Other types of utility subsidies that may come in the form of credits or reduced rates might also be non-taxable, according to IRS Publication 525. 


* The term "public utility" is defined as an entity "engaged in the sale of electricity or natural gas to residential, commercial, or industrial customers for use by such customers." The term includes federal, state and local government entities.

Renewable Electricity Production Tax Credit (PTC)U.S. Internal Revenue Service02/28/1811/20/18734

Note: Wind facilities commencing construction by December 31, 2019, and all other qualifying facilities commencing construction by January 1, 2018 can qualify for this credit. The value of the credit for wind steps down in 2017, 2018 and 2019. See below for more information. For all other technologies, the credit is not available for systems whose construction commenced after December 31, 2017. 

The federal renewable electricity production tax credit (PTC) is an inflation-adjusted per-kilowatt-hour (kWh) tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year. The duration of the credit is 10 years after the date the facility is placed in service for all facilities placed in service after August 8, 2005.

Originally enacted in 1992, the PTC has been renewed and expanded numerous times, most recently by the American Recovery and Reinvestment Act of 2009 (H.R. 1 Div. B, Section 1101 & 1102) in February 2009 (often referred to as "ARRA"), the American Taxpayer Relief Act of 2012 (H.R. 8, Sec. 407) in January 2013, the Tax Increase Prevention Act of 2014 (H.R. 5771, Sec. 155) in December 2014, the Consolidated Appropriations Act, 2016 (H.R. 2029, Sec. 301) in December 2015, and the Bipartisan Budget Act of 2018 (H.R. 1892 Sec. 40409).

Amount

The tax credit amount is $0.015 per kWh in 1993 dollars for some technologies and half of that amount for others. The amount is adjusted for inflation by multiplying the tax credit amount by the inflation adjustment factor for the calendar year in which the sale occurs, rounded to the nearest 0.1 cents. The Internal Revenue Service (IRS) publishes the inflation adjustment factor no later than April 1 each year in the Federal Register. For 2018, the inflation adjustment factor used by the IRS is 1.5792.

Applying the inflation-adjustment factor for the 2017 calendar year, and the 20% step-down required by H.R. 2029, the production tax credit amount is as follows:

  • $0.019/kWh for wind

The tax credit is phased down for wind facilities and expires for other technologies commencing construction after December 31, 2016. The phase-down for wind facilities is described as a percentage reduction in the tax credit amount described above:

  • For wind facilities commencing construction in 2017, the PTC amount is reduced by 20%
  • For wind facilities commencing construction in 2018, the PTC amount is reduced by 40%
  • For wind facilities commencing construction in 2019, the PTC amount is reduced by 60%

Note that the exact amount of the production tax credit for the tax years 2017-2019 will depend on the inflation-adjustment factor used by the IRS in the respective tax years. 

Duration

The duration of the credit is 10 years after the date the facility is placed in service. Two exceptions applied to facilities placed in service more than a decade ago:

  • open-loop biomass, geothermal, small irrigation hydro, landfill gas, and municipal solid waste combustion facilities placed into service after October 22, 2004, and before enactment of the Energy Policy Act of 2005, on August 8, 2005, were only eligible for the credit for a 5-year period, and
  • open-loop biomass facilities placed in service before October 22, 2004, were eligible for the 5-year period beginning January 1, 2005.

Investment Tax Credit in Lieu of Claiming the PTC

Renewable energy facilities placed in service after 2008 and commencing construction prior to 2018 (or 2020 for wind facilities) may elect to make an irrevocable election to claim the Investment Tax Credit (ITC) in lieu of the PTC. Wind facilities making such an election will have the ITC amount reduced by the same phase-down specified above for facilities commencing construction in 2017, 2018, or 2019. 

Process for Claiming

The credit is claimed by completing Form 8835, "Renewable Electricity Production Credit," and Form 3800, "General Business Credit." For more information, contact IRS Telephone Assistance for Businesses at 1-800-829-4933.

Recent Legislative Changes

The Consolidated Appropriations Act, 2016 (H.R. 2029, Sec. 301) extended both the PTC and permission for PTC-eligible facilities to claim the Investment Tax Credit in lieu of the PTC through the end of 2016 (and the end of 2019 for wind facilities). The Act also created a phase-down in the PTC amount for wind facilities commencing construction in 2017, 2018, or 2019. Prior to the legislation, enacted in December 2015, the PTC had expired December 31, 2014. The effective date is January 1, 2015, meaning any qualifying project that commenced construction at any point in 2015 is eligible to claim the PTC.

The Tax Increase Prevention Act of 2014 (H.R. 5771, Sec. 155) extended both the PTC and permission for PTC-eligible facilities to claim the Investment Tax Credit in lieu of the PTC through the end of 2014. Prior to the legislation, the PTC had expired December 31, 2013. Although not enacted until December 2014, the effective date was January 1, 2014, meaning any qualifying project that commenced construction at any point in 2014 was eligible to claim the PTC.

The American Taxpayer Relief Act of 2012 revised the PTC by removing "placed in service" deadlines and replacing them with deadlines that use the commencing of construction as a basis for determining facility eligibility. It also contained language revising the definition of the term "municipal solid waste" to exclude "paper that is commonly recycled and which has been segregated from other solid waste.” The definition change for municipal solid waste applies to electricity produced and sold after the enactment date of the legislation (January 2, 2013) in taxable years ending after that date.

Determination of Commencing Construction 

To claim the PTC, construction on an eligible project must have “commenced construction” prior to January 1, 2015. The IRS has issued guidance on how it will evaluate whether construction has commenced in IRS Notices 2013-292013-60, 2014-46, 2015-25, and 2016-31 (please see the full text of these notices for complete information on determining the commencing of construction). The guidelines establish two methods—a “physical work” test and a 5% safe harbor (see sections below for details)—to determine when construction has begun on a qualified facility. Meeting the criteria of either method is sufficient to demonstrate that construction has commenced. 

Both methods require that a taxpayer make continuous progress towards completion once construction has begun by meeting the Continuous Construction Test (to satisfy the Physical Work Test) or the Continuous Efforts Test (to satisfy Safe Harbor).  If a taxpayer places a facility in service during a calendar year that is no more than four calendar years after the calendar year during which construction of the facility began, the facility will be considered to satisfy the Continuity Safe Harbor

Physical Work Test

The physical work test provides that a taxpayer may establish the beginning of construction by beginning "physical work of a significant nature.” The physical work test is based on the nature of the work performed rather than the cost of the work; if the work performed is of a significant nature, then “there is no fixed minimum amount of work or monetary or percentage threshold required to satisfy the Physical Work Test” (Notice 2014-46).

Notice 2013-29 provides several examples of actions that constitute work of a significant nature, including:

  • for a facility that produces electricity from a wind turbine, the beginning of the excavation for the foundation, the setting of anchor bolts into the ground, or the pouring of the concrete pads of the foundation;
  • physical work on a custom-designed transformer that steps up the voltage of electricity produced at the facility to the voltage needed for transmission; and
  • beginning construction of roads integral to the activity performed by the facility including onsite roads used for moving materials to be processed (e.g., biomass) and roads for equipment to operate and maintain the facility. 

Safe Harbor

Safe Harbor with respect to a facility is demonstrated by showing that 5% or more of the total cost of the facility was paid or incurred.


Energy-Efficient Mortgages06/24/1511/20/18742

Homeowners can take advantage of energy efficient mortgages (EEM) to either finance energy efficiency improvements to existing homes, including renewable energy technologies, or to increase their home buying power with the purchase of a new energy efficient home. The U.S. federal government supports these loans by insuring them through Federal Housing Authority (FHA) or Veterans Affairs (VA) programs. This allows borrowers who might otherwise be denied loans to pursue energy efficiency, and it secures lenders against loan default.

FHA Energy Efficient Mortgages
The FHA allows lenders to add up to 100% of energy efficiency improvements to an existing mortgage loan with certain restrictions. FHA mortgage limits vary by county, state and the number of units in a dwelling. See website for more details. These mortgages were previously limited to $8,000. In June 2009, HUD issued Mortgage Letter 2009-18 which announced the removal of the dollar cap. The maximum amount of the portion of an energy efficient mortgage allowed for energy improvements is now the lesser of 5% of:

  • The value of the property,
  • 115% of the median area price of a single-family dwelling, or
  • 150% of the Freddie Mac conforming loan limit

Loan amounts may not exceed the projected savings of the energy efficiency improvements. These loans may be combined with FHA 203 (h) mortgages available to victims of presidentially-declared disasters and with financing offered through the FHA 203 (k) rehabilitation program. FHA loan limits do not apply to the EEM. Homebuyers must submit a Home Energy Rating (HER), contractor bids, and a FHA B Worksheet. This process may become streamlined in 2009 as a result of the Housing and Economic Recovery Act of 2008, which requires HUD to report to congress with ways to remove the administrative barriers and increase consumer participation and awareness of these financing options.

Borrowers may include closing costs and the up-front mortgage insurance premium in the total cost of the loan. The loan is available to anyone who meets the income requirements for FHA’s Section 203 (b), provided the applicant can meet the monthly mortgage payments. New and existing owner-occupied homes of up to two units qualify for this loan. Cooperative units are not eligible. Homebuyers should submit applications to their local HUD Field Office through an FHA-approved lending institution.

Department of Veterans Affairs (VA) Energy Efficient Mortgages
The VA insures EEMs to be used in conjunction with VA loans either for the purchase of existing homes or for refinancing loans secured by the dwelling. Homebuyers may borrow up to $3,000 if only documentation of improvement costs or contractor bids is submitted, or up to $6,000 if the projected energy savings are greater than the increase in mortgage payments. Loans may exceed this amount at the discretion of the VA. Applicants may not include the cost of their own labor in the total amount. No additional home appraisal is needed, but applicants must submit a HER, contractor bids and certain other documentation. The VA insures 50% of the loan if taken by itself, but it may insure less if the total value of the mortgage exceeds a certain amount.

This mortgage is available to qualified military personnel, reservists and veterans. Applicants should secure a certificate of eligibility from their local lending office and submit it to a VA-approved private lender. If the loan is approved, the VA guarantees the loan when it is closed.

Conventional EEMs
Conventional mortgages are not backed by a federal agency. Private lenders sell loans to Fannie Mae and Freddie Mac, which in turn allows homebuyers to borrow up to 15% of an existing home’s appraised value for improvements documented by a HER.

Fannie Mae also lends up to 5% for Energy Star new homes. Fannie Mae EEMs are available to single-family, owner-occupied units, and Fannie Mae provides EEMs to those whose income might otherwise disqualify them from receiving the loans by allowing approved lenders to adjust borrowers’ debt-to-income ratio by 2%. The value of the improvements is immediately added to the total appraised value of the home.

Freddie Mac offers EEMs for one- to four-unit dwellings and also helps raise the effective income of the borrower to qualifying levels by allowing lenders to increase the borrower’s income by a dollar amount equal to the estimated energy savings. Any energy efficiency improvements can qualify, and these mortgages can be combined with both fixed-rate and adjustable-rate mortgages. Borrowers should apply directly to the lender. Click here for more details.

ENERGY STAR Partnership for Lenders
To promote EEMs and lenders who offer them, the federal ENERGY STAR program offers a partnership program for lenders who provide EEMs to borrowers. Becoming a partner allows lenders to utilize the Energy Star brand to promote themselves as Energy Star partners offering EEMs. To become a lender, partner lenders must first provide proof that they know how to write EEMs. To maintain their partnership benefits, lenders must write a certain number of EEMs per year. Energy Star does not have a lender certification program or process. Click here for more information about ENERGY STAR's lender partnership program, and here to access the partner locator tool. As of August 2011, the federal ENERGY STAR program lists 25 lenders who offer EEMs and/or ENERGY STAR mortgages to applicants buying homes that have earned the ENERGY STAR label. ENERGY STAR requires that its lender partners provide EEMs to qualified borrowers regardless of whether it is an FHA EEM, Fannie Mae EEM, or VA EEM.

TVA - Green Power ProvidersTennessee Valley Authority11/01/1811/20/18908

Tennessee Valley Authority (TVA) and participating power distributors of TVA power offer a performance-based incentive program to homeowners and businesses for the installation of renewable generation systems from the following qualifying resources: PV, wind, hydropower, and biomass. The long term Green Power Providers program replaces the Generation Partners* pilot program. The energy generated from these renewable generation systems will count towards TVA's green power pricing program, Green Power Switch.

The Green Power Providers program contract term is 20 years. Generation credit will be paid at the following flat rates for the entirety of the 20-year contract:

•Residential/GSA-1 customers with system sizes 500W - 10kW: 9¢/kWh

•Residential/GSA-1 customers with system sizes > 10kW: 7.5¢/kWh

•Non GSA-1 commercial customers: 7.5¢/kWh 

Participation in the Generation Power Providers program is subject to annual limits imposed by TVA and based upon available budget, the value of renewable technologies to TVA and renewable energy market conditions. Eligible Systems must not have previously generated renewable energy for sale to TVA prior to October 1, 2012, unless the system was part of the Generation Partners pilot. No Premium Rate will be available in the 2018 Calendar Year.

TVA will retain all rights to all renewable energy credits and any other environmental attributes provided by system. Distributors will use the Distributor Billing Option to administer any Generation Credits due to Participants. With the Distributor Billing Option, a generation credit is issued by the local power company on the monthly power bill for the home or business where the generation system is located. If a qualifying system produces more electricity than the customer consumes, payment for any excess credits will be issued either monthly or annually, at the discretion of the power company. 

Qualifying systems will have a minimum total nameplate generation capacity (DC) of 500 watts (W) and a maximum of 50 kilowatts (kW). Systems over 50kW may qualify to participate in TVA’s Mid-Sized Renewable Standard Offer program (link to DSIRE summary). Systems greater than 10 kilowatts in size will be subject to a load requirement. A “load requirement” simply means that the system’s maximum capacity will be limited so that it should not generate more than 100% of the energy usage or consumption at the home or business. TVA will conduct annual program evaluations to set annual MW limits to the program. These limits will be made available on the Generation Power Providers web site. A limit of 10 MW limit will be split equally between residential/GSA-1 and non-GSA-1 commercial customers.

Installations must comply with local codes and adhere to guidelines established by the program. All equipment must be in compliance with environmental regulations and national standards, certified by a licensed electrician, and meet all applicable codes. Systems must be dual-metered, have an external disconnect switch, be grid-tied, and be validated under an interconnection agreement.

For the 2018 Calendar Year, the Generation Credit rate is applicable to Requests initiated January 31, 2018 through December 17, 2018. Updated Generation Credits are annually published in the Green Power Providers Guidelines

USDA - Rural Energy for America Program (REAP) GrantsU.S. Department of Agriculture$600 million for FY 201808/21/1811/20/18917

Note: The U.S. Department of Agriculture's Rural Development issues periodic Notices of Solicitation of Applications for the Rural Energy for America Program (REAP) in the Federal Register. The FY 2018 solicitation for the REAP program includes a total budget of approximately $800 million. 

The Rural Energy for America Program (REAP) provides financial assistance to agricultural producers and rural small businesses in America to purchase, install, and construct renewable energy systems, make energy efficiency improvements to non-residential buildings and facilities, use renewable technologies that reduce energy consumption, and participate in energy audits and renewable energy development assistance.

Renewable energy projects for the Renewable Energy Systems and Energy Efficiency Improvement Guaranteed Loan and Grant Program include wind, solar, biomass and geothermal, and hydrogen derived from biomass or water using wind, solar, or geothermal energy sources. These grants are limited to 25% of a proposed project's cost, and a loan guarantee may not exceed $25 million. The combined amount of a grant and loan guarantee must be at least $5,000 (with the grant portion at least $1,500) and may not exceed 75% of the project’s cost. In general, a minimum of 20% of the funds available for these incentives will be dedicated to grants of $20,000 or less. For more information on grant, loan guarantees, loan financing, and opportunities for combinations thereof, visit the USDA website. 

Application due dates are published annually in the Notice of Funding Availability. 

Eligibility

Grants and Guaranteed Loans are generally available to small businesses and agricultural producers and other entities as determined by USDA. To be eligible for REAP grants and guaranteed loans, applicants must demonstrate sufficient revenue to cover any operations and maintenance expense as well as any applicable debt service of the project for the duration of the guaranteed loan or grant. Rural small businesses must be located in rural areas, but agricultural producers may be located in non-rural areas.

Eligible project costs include purchasing energy efficiency improvements or a renewable energy system, energy audits or assessments, permitting and licensing fees, and business plans and retrofitting. For new construction the replacement of older equipment with more efficient equipment may be eligible as a project cost only when a new facility is planned to be more efficient and similarly sized than the older facility. Working capital and land acquisition are only eligible for loan guarantees.

For more information regarding applicant and project eligibility for loans and grants, visit the USDA REAP eligibility webpage, read the eligibility requirements in the most recent Solicitation of Applications for REAP funding in the Federal Registry, and/or contact your state rural energy coordinator.

Regional rural energy coordinators provide loan and grant applications upon request.

History

The Food, Conservation, and Energy Act of 2008 (H.R. 2419), enacted by Congress in May 2008, converted the federal Renewable Energy Systems and Energy Efficiency Improvements Program,* into the Rural Energy for America Program (REAP). Similar to its predecessor, the REAP promotes energy efficiency and renewable energy for agricultural producers and rural small businesses through the use of (1) grants and loan guarantees for energy efficiency improvements and renewable energy systems, and (2) grants for energy audits and renewable energy development assistance. Congress has allocated funding for the new program in the following amounts: $55 million for FY 2009, $60 million for FY 2010, $70 million for FY 2011, and $70 million for FY 2012. REAP is administered by the U.S. Department of Agriculture (USDA). In addition to these mandatory funding levels, up to $25 million in discretionary funding may be issued each year. The American Taxpayer Relief Act of 2012 (H.R. 8) extended discretionary funding for FY 2013. The 2014 Farm Bill reauthorized the USDA to offer these programs and removed the mandate to offer grants for feasibility studies.

* The Renewable Energy Systems and Energy Efficiency Improvements Program was created by the USDA pursuant to Section 9006 of the 2002 federal Farm Security and Rural Investment Act of 2002. Funding in the amount of $23 million per year was appropriated for each fiscal year from FY 2003-2007. In March 2008, the USDA announced that it would accept $220.9 million in applications for grants, loan guarantees, and loan/grant combination packages under the Renewable Energy Systems and Energy Efficiency Improvements Program. The application deadline was June 16, 2008.

Land grant colleges and universities are referred to in the summary table as "schools" and "institutional" eligible sectors. K-12 schools are not eligible for this grant.

Tribal Energy Program GrantU.S. Department of Energy03/03/1711/20/18918

The U.S. Department of Energy's (DOE) Tribal Energy Program promotes tribal energy sufficiency, economic growth, and employment on tribal lands through the development of renewable energy and energy efficiency technologies. The program provides financial assistance, technical assistance, and education and training to tribes for the evaluation and development of renewable energy resources and energy efficiency measures.

DOE's Tribal Energy Program consists of program management through DOE headquarters, program implementation and project management through DOE's field offices, and technical support through DOE laboratories. Program management for the Tribal Energy Program is carried out by DOE's Weatherization and Intergovernmental Program, which provides programmatic direction and funding to DOE field offices for program implementation. DOE's Golden Field Office solicits, awards, administers, and manages financial assistance agreements.

Program funding is awarded through a competitive process. Click here to view current program funding opportunities, and here to apply for technical assistance.

Local Government Energy Loan ProgramAlabama Department of Economic and Community Affairs07/25/1411/20/181203

Through a public-private partnership with PowerSouth, Alabama's Local Government Energy Loan Program offers zero-interest loans to local governments, K-12 schools, and public colleges and universities for renewable energy systems and energy efficiency improvements that will eventually have a payback through utility savings. Under the program, municipal and county governments, and colleges and universities may borrow up to $350,000 for eligible projects, and K-12 schools may receive up to $350,000 per campus or $500,000 per school system for eligible projects. Eligible renewable energy resources generally include biomass, hydropower, geothermal energy, wind energy, and solar energy.

The application is available on the program web site. An energy audit must be completed to identify necessary improvements. Following installation, the loan recipient must be benchmarked using the Energy Star Portfolio Manager program.

Residential Renewable Energy Tax CreditU.S. Internal Revenue Service03/23/1812/31/211235

Note: The Bipartisan Budget Act of 2018, signed in February 2018, reinstated the tax credit for fuel cells, small wind, and geothermal heat pumps. The tax credit for all technologies now features a gradual step down in the credit value. 

A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is at a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.

Solar-electric property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Solar water-heating property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021.
  • Equipment must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.
  • At least half the energy used to heat the dwelling's water must be from solar in order for the solar water-heating property expenditures to be eligible.
  • The tax credit does not apply to solar water-heating property for swimming pools or hot tubs.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Fuel cell property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • The maximum credit is $500 per half kilowatt (kW).
  • Systems must be placed in service on or after January 1, 2006, on or before December 31, 2021.
  • The fuel cell must have a nameplate capacity of at least 0.5 kW of electricity using an electrochemical process and an electricity-only generation efficiency greater than 30%.
  • In case of joint occupancy, the maximum qualifying costs that can be taken into account by all occupants for figuring the credit is $1,667 per 0.5 kW. This does not apply to married individuals filing a joint return. The credit that may be claimed by each individual is proportional to the costs he or she paid.
  • The home served by the system must be the taxpayer’s principal residence.

Small wind-energy property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2008, on or before December 31, 2021.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Geothermal heat pumps

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2008, and on or before December 31, 2021.
  • The geothermal heat pump must meet federal Energy Star criteria.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Significantly, The American Recovery and Reinvestment Act of 2009 repealed a previous limitation 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.

Energy Storage

The federal tax code does not explicitly reference energy storage, so stand-alone energy storage systems do not qualify for the tax credit. However, the IRS issued Private Letter Rulings in 2013 and 2018, which address energy storage paired with PV systems. In both cases, the IRS ruled that the energy storage equipment when paired with PV met the statutory definition of a "qualified solar electric property expenditure," as was eligible for the tax credit. It is important to note that Private Letter Rulings only apply to the taxpayer who requested it, and do not establish precedent. Any taxpayer considering the purchase of an energy storage system should consult their accountant or other tax professional before claiming a tax credit.  


History

Established by The Energy Policy Act of 2005, the federal tax credit for residential energy property initially applied to solar-electric systems, solar water heating systems and fuel cells. The Energy Improvement and Extension Act of 2008 extended the tax credit to small wind-energy systems and geothermal heat pumps, effective January 1, 2008. Other key revisions included an eight-year extension of the credit to December 31, 2016; the ability to take the credit against the alternative minimum tax; and the removal of the $2,000 credit limit for solar-electric systems beginning in 2009. The credit was further enhanced in February 2009 by The American Recovery and Reinvestment Act of 2009, which removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.

Clean Renewable Energy Bonds (CREBs)U.S. Internal Revenue Service08/15/1811/20/182510

Note: The Tax Cuts and Jobs Act of 2017 repealed section 54C of the Internal Revenue Code, which authorized the use of New CREBs. IRS Notice 2018-15  announced that the IRS will no longer process applications for or issue allocations of New CREBs. The summary below describes CREBs before they were repealed, and is here for historical purposes only. 

Clean renewable energy bonds (CREBs) may be used by certain entities -- primarily in the public sector -- to finance renewable energy projects. The list of qualifying technologies is generally the same as that used for the federal renewable energy production tax credit (PTC). CREBs may be issued by electric cooperatives, government entities (states, cities, counties, territories, Indian tribal governments or any political subdivision thereof), and by certain lenders.  The bondholder receives federal tax credits in lieu of a portion of the traditional bond interest, resulting in a lower effective interest rate for the borrower.* The issuer remains responsible for repaying the principal on the bond.

The Energy Improvement and Extension Act of 2008 (Div. A, Sec. 107) allocated $800 million for new Clean Renewable Energy Bonds (CREBs). In February 2009, the American Recovery and Reinvestment Act of 2009 (Div. B, Sec. 1111) allocated an additional $1.6 billion for New CREBs, for a total New CREB allocation of $2.4 billion. The Energy Improvement and Extension Act of 2008 also extended the deadline for previously reserved allocations ("Old CREBs") until December 31, 2009, and addressed several provisions in the existing law that previously limited the usefulness of the program for some projects. A separate section of the law extended CREBs eligibility to marine energy and hydrokinetic power projects.

Participation in the program is limited by the volume of bonds allocated by Congress for the program. Participants must first apply to the Internal Revenue Service (IRS) for a CREBs allocation, and then issue the bonds within a specified time period. The New CREBs allocation totaling $2.4 billion does not have a defined expiration date under the law; however, recent IRS solicitations for new applications require the bonds to be issued within 3 years after the applicant receives notification of an approved allocation (see History section below for information on previous allocations). Public power providers, governmental bodies, and electric cooperatives are each reserved an equal share (33.3%) of the New CREBs allocation. IRS Notice 2015-12, however, divided the remaining volume cap differently: $516,565,691.35 for public power providers, $597,134,963.60 for governmental bodies, and $280,778,469.00 for cooperative utilities.

The tax credit rate is set daily by the U.S. Treasury Department. Under past allocations, the credit could be taken quarterly on a dollar-for-dollar basis to offset the tax liability of the bondholder. However, under the new CREBs allocation, the credit has been reduced to 70% of what it would have been otherwise. Other important changes are described in IRS Notice 2009-33.

CREBs differ from traditional tax-exempt bonds in that the tax credits issued through CREBs are treated as taxable income for the bondholder. The tax credit may be taken each year the bondholder has a tax liability as long as the credit amount does not exceed the limits established by the federal Energy Policy Act of 2005. Treasury rates for prior CREB allocations, or "Old" CREBs are available here, while rates for New CREBs and other qualified tax credit bonds are available here.

In April 2009, the IRS issued Notice 2009-33, which solicited applications for the New CREB allocation and provided interim guidance on certain program rules and changes from prior CREB allocations. The expiration date for New CREB applications under this solicitation was August 4, 2009. Further guidance on CREBs is available in IRS Notices 2006-7 and 2007-26 to the extent that the program rules were not modified by 2008 and 2009 legislation. In October 2009, the Department of Treasury announced the allocation of $2.2 billion in new CREBs for 805 projects across the country. A new solicitation (IRS Announcement 2010-54) was issued in September 2010 for roughly $191 million in unallocated New CREB bond volume available only to electric cooperatives. The award announcement for this allocation was made in March 2011. It remains to be seen if or when the IRS will issue new funding announcements for Old CREB allocations which were not issued by the December 31, 2009 deadline, or New CREB allocations which miss the three-year issuance period.

History
The federal Energy Policy Act of 2005 (EPAct 2005) established Clean Energy Renewable Bonds (CREBs) as a financing mechanism for public sector renewable energy projects. This legislation originally allocated $800 million of tax credit bonds to be issued between January 1, 2006, and December 31, 2007. Following the enactment of the federal Tax Relief and Health Care Act of 2006, the IRS made an additional $400 million in CREBs financing available for 2008 through Notice 2007-26.

In November 2006, the IRS announced that the original $800 million allocation had been reserved for a total of 610 projects. The additional $400 million (plus surrendered volume from the previous allocation) was allocated to 312 projects in February 2008. Of the $1.2 billion total of tax-credit bond volume cap allocated to fund renewable-energy projects, state and local government borrowers were limited to $750 million of the volume cap, with the rest reserved for qualified municipal or cooperative electric companies.

For further information on CREBs, contact Zoran Stojanovic or Timothy Jones of the IRS Office of Associate Chief Counsel at (202) 622-3980. Questions on recent IRS Notice 2009-33 can be directed to Janae Lemley at (636) 255-1202.


*In March 2010 Congress enacted H.R. 2847 (Sec. 301) permitting New CREB issuers to make an irrevocable election to receive a direct payment -- a refundable tax credit -- from the Department of Treasury equivalent to and in lieu of the amount of the non-refundable tax credit which would otherwise be provided to the bondholder. This option only applies to New CREBs issued after the March 18, 2010 enactment of the law. In April 2010 the IRS issued Notice 2010-35 providing guidance on the direct payment option.

USDA - Rural Energy for America Program (REAP) Loan GuaranteesU.S. Department of Agriculture08/21/1811/20/182511

The Rural Energy for America Program (REAP) provides financial assistance to agricultural producers and rural small businesses in rural America to purchase, install, and construct renewable energy systems, make energy efficiency improvements to non-residential buildings and facilities, use renewable technologies that reduce energy consumption, and participate in energy audits and renewable energy development assistance.

Renewable energy projects for the Renewable Energy Systems and Energy Efficiency Improvement Guaranteed Loan and Grant Program include wind, solar, biomass and geothermal, and hydrogen derived from biomass or water using wind, solar, or geothermal energy sources. These grants are limited to 25% of a proposed project's cost, and a loan guarantee may not exceed $25 million. The combined amount of a grant and loan guarantee must be at least $5,000 (with the grant portion at least $1,500) and may not exceed 75% of the project’s cost. In general, a minimum of 20% of the funds available for these incentives will be dedicated to grants of $20,000 or less. For more information on grant, loan guarantees, loan financing, and opportunities for combinations thereof, visit the USDA website.

Application due dates are published annually in the Notice of Funding Availability.

Eligibility

Grants and Guaranteed Loans are generally available to small businesses and agricultural producers and other entities as determined by USDA. To be eligible for REAP grants and guaranteed loans, applicants must demonstrate sufficient revenue to cover any operations and maintenance expense as well as any applicable debt service of the project for the duration of the guaranteed loan or grant. Rural small businesses must be located in rural areas, but agricultural producers may be located in non-rural areas.

Eligible project costs include purchasing energy efficiency improvements or a renewable energy system, energy audits or assessments, permitting and licensing fees, and business plans and retrofitting. For new construction the replacement of older equipment with more efficient equipment may be eligible as a project cost only when a new facility is planned to be more efficient and similarly sized than the older facility. Working capital and land acquisition are only eligible for loan guarantees.

For more information regarding applicant and project eligibility for loans and grants, visit the USDA REAP eligibility webpage, read the eligibility requirements in the most recent Solicitation of Applications for REAP funding in the Federal Registry, and/or contact your state rural energy coordinator.

Regional rural energy coordinators provide loan and grant applications upon request.

History

The Food, Conservation, and Energy Act of 2008 (H.R. 2419), enacted by Congress in May 2008, converted the federal Renewable Energy Systems and Energy Efficiency Improvements Program,* into the Rural Energy for America Program (REAP). Similar to its predecessor, the REAP promotes energy efficiency and renewable energy for agricultural producers and rural small businesses through the use of (1) grants and loan guarantees for energy efficiency improvements and renewable energy systems, and (2) grants for energy audits and renewable energy development assistance. Congress has allocated funding for the new program in the following amounts: $55 million for FY 2009, $60 million for FY 2010, $70 million for FY 2011, and $70 million for FY 2012. REAP is administered by the U.S. Department of Agriculture (USDA). In addition to these mandatory funding levels, up to $25 million in discretionary funding may be issued each year. The American Taxpayer Relief Act of 2012 (H.R. 8) extended discretionary funding for FY 2013. The 2014 Farm Bill reauthorized the USDA to offer these programs and removed the mandate to offer grants for feasibility studies.

* The Renewable Energy Systems and Energy Efficiency Improvements Program was created by the USDA pursuant to Section 9006 of the 2002 federal Farm Security and Rural Investment Act of 2002Funding in the amount of $23 million per year was appropriated for each fiscal year from FY 2003-2007. In March 2008, the USDA announced that it would accept $220.9 million in applications for grants, loan guarantees, and loan/grant combination packages under the Renewable Energy Systems and Energy Efficiency Improvements Program. The application deadline was June 16, 2008.

Land grant colleges and universities are referred to in the summary as "schools" and "institutional" eligible sectors. K-12 schools are not eligible for this grant.

U.S. Department of Energy - Loan Guarantee ProgramU.S. Department of Energy08/18/1611/20/183071
Note: President Obama and DOE issued new supplemental guidance for Renewable Energy and Efficient Energy (REEE) Projects that adds $500 million of loan guarantee authority, making the total available approximately $4.5 billion. It also released guidance to clarify the types of Distributed Energy Projects it can support under the Title XVII program. The additional loan guarantee authority was officially available as of October 2015.

Section 1703 of Title XVII of the Energy Policy Act (EPAct) of 2005 created the Department of Energy's (DOE's) Loan Guarantee Program. The program was reauthorized and revised by the American Recovery and Reinvestment Act (ARRA) of 2009 by adding Section 1705 to EPAct. The 1705 Program was retired in September 2011, and Loan Guarantees are no longer available under that authority. DOE, however, still has authority to issue Loan Guarantees under the old Section 1703 Program.  

Under Section 1703, DOE is authorized to issue loan guarantees for projects with high technology risks that "avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases; and employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the guarantee is issued." Loan guarantees are intended to encourage early commercial use of new or significantly improved technologies in energy projects. The loan guarantee program generally does not support research and development projects.

Loan guarantees are provided in response to open solicitations. The application is a two part process; applicants that meet the specified requirements laid out in Part I receive an invitation to submit a Part II application. The updated supplemental guidance for Renewable Energy Projects and Energy Efficiency Projects includes an application solicitation schedule, with final Part I and Part II application due dates to November 30, 2016 (extended in a Fifth Supplement released June 2016). Up to $3 billion is available in loan guarantees for projects in renewable energy, efficient end-use, and efficient generation, transmission, and distribution technologies (plus an additional amount that may be imputed based on the credit subsidy cost of the loan guarantee authority). See the program website for more details on eligibility and the application process. 

Section 1703 requires either an appropriation to cover the Credit Subsidy Cost (the expected long term liability to the Federal Government for providing the loan guarantee), or payment of the Credit Subsidy Cost by the borrower. A credit-based interest rate spread will be added to certain loans receiving a 100% loan guarantee from DOE and financing from the Federal Financing Bank. Rates and more information are available here.


 

Qualified Energy Conservation Bonds (QECBs)U.S. Internal Revenue Service08/22/1811/20/183098

Note: The Tax Cuts and Jobs Act (HR 1) of 2017 repealed the use of tax credit bonds effective January 1, 2018.  Issuers of QECBs that elected to receive direct payments from the Treasury issued on or before December 31, 2017, consistent with the Internal Revenue Code (Section 54D), will continue to receive direct payments. The summary presented below is for historical purposes. 

The Energy Improvement and Extension Act of 2008, enacted in October 2008, authorized the issuance of Qualified Energy Conservation Bonds (QECBs) that may be used by state, local and tribal governments to finance certain types of energy projects. QECBs are qualified tax credit bonds, and in this respect are similar to new Clean Renewable Energy Bonds or CREBs. The October 2008 enabling legislation set a limit of $800 million on the volume of energy conservation tax credit bonds that may be issued by state and local governments. The American Recovery and Reinvestment Act of 2009, enacted in February 2009, expanded the allowable bond volume to $3.2 billion. In April 2009, the IRS issued Notice 2009-29 providing interim guidance on how the program will operate and how the bond volume will be allocated. Subsequently, H.R. 2847 enacted in March 2010 introduced an option allowing issuers of QECBs and New CREBs to recoup part of the interest they pay on a qualified bond through a direct subsidy from the Department of Treasury. Guidance from the IRS on this option was issued in April 2010 under Notice 2010-35.

With tax credit bonds, generally the borrower who issues the bond pays back only the principal of the bond, and the bondholder receives federal tax credits in lieu of the traditional bond interest. The tax credit may be taken quarterly to offset the tax liability of the bondholder. The tax credit rate is set daily by the U.S. Treasury Department; however, energy conservation bondholders will receive only 70% of the full rate set by the Treasury Department under 26 USC § 54A. QECB rates are available here. Credits exceeding a bondholder's tax liability may be carried forward to the succeeding tax year, but cannot be refunded. Energy conservation bonds differ from traditional tax-exempt bonds in that the tax credits issued through the program are treated as taxable income for the bondholder.

For QECBs issued after March 18, 2010, the bond issuer may make an irrevocable election to receive a direct payment from the Department of Treasury equivalent to the amount of the non-refundable tax credit described above, which would otherwise accrue to the bondholder. The direct payment comes in the form of a refundable tax credit to the issuer in lieu of a tax credit to the bondholder. This option was formerly limited to Build America Bonds (see 26 USC § 6431, H.R. 2847 and IRS Notice 2010-35 for details). The advantage of either option is that it creates a lower effective interest rate for the issuer because the federal government subsidizes a portion of the interest costs.

In contrast to CREBs, QECBs are not subject to a U.S. Department of Treasury application and approval process. Bond volume is instead allocated to each state based on the state's percentage of the U.S. population as of July 1, 2008. Each state is then required to allocate a portion of its allocation to "large local governments" within the state based on the local government's percentage of the state's population. Large local governments are defined as municipalities and counties with populations of 100,000 or more. Large local governments may reallocate their designated portion back to the state if they choose to do so. IRS Notice 2009-29 contains a list of the QECB allocations for each state and U.S. territory. Implementing allocations and reallocations most often, but not always, takes place through State Energy Offices. As of this writing some states have yet to assign implementation responsibilities to a specific state agency.

The definition of "qualified energy conservation projects" is fairly broad and contains elements relating to energy efficiency capital expenditures in public buildings that reduce energy consumption by at least 20%; green community programs (including loans and grants to implement such programs); renewable energy production; various research and development applications; mass commuting facilities that reduce energy consumption; several types of energy related demonstration projects; and public energy efficiency education campaigns. In July 2012 the IRS issued Notice 2012-44 clarifying the meaning of "capital expenditures" and "green community program", and providing guidance on meeting the 20% energy consumption reduction requirement for energy -efficiency related capital expenditures in publicly-owned buildings (see 26 USC § 54D and IRS Notice 2012-44 for additional details). Renewable energy facilities that are eligible for CREBs are also eligible for QECBs.

USDA - High Energy Cost Grant ProgramUSDA Rural Utilities Service$10 million (2015 solicitation)06/09/1611/20/184359

NOTE: The most recent solicitation for this program closed December 14, 2015. Please check the program website for information on future solicitations.

The U.S. Department of Agriculture (USDA) offers an ongoing grant program for the improvement of energy generation, transmission, and distribution facilities in rural communities. This program began in 2000. Eligibility is limited to projects in communities that have average home energy costs at least 275% above the national average. Retail power suppliers serving rural areas are eligible to apply for grant funding, including non-profits (cooperatives and limited dividend or mutual associations), commercial entities, state and local governments entities, and tribal governments. Under the most recent solicitation for projects, a total of $7 million was available for qualifying projects. Under this solicitation grants ranging from $50,000 to $3 million were available for a variety of activities, including:

  • Electric generation, transmission, and distribution facilities;
  • Natural gas or petroleum storage or distribution facilities;
  • Renewable energy facilities used for on-grid or off-grid electric power generation, water or space heating, or process heating and power;
  • Backup up or emergency power generation or energy storage equipment; and
  • Weatherization of residential and community property, or other energy efficiency or conservation programs.

This grant program is not limited to renewable energy or energy conservation and efficiency measures, but these measures are eligible for this grant program.

AlabamaSAVES Revolving Loan ProgramAbundant Power$15,500,00005/03/1711/20/184487

The Alabama Department of Economic and Community Affairs (ADECA) offers an energy efficiency and renewable energy participating loan program called AlabamaSAVES. The Program funds subordinated participating interests in qualified third-party loans used to finance energy projects at existing commercial, industrial and non-profit businesses in Alabama. The Participating Interest can be for 100% of the cost of the eligible project or 25% of the Participating Loan up to the cost of the eligible project, whichever is less.A variety of technologies are eligible; see the program technical guide for full details.

In order to apply, interested parties must first contact an AlabamaSAVES representative. Before funding is awarded, an energy assessment, defining the project and estimated energy savings impact, must be submitted and reviewed to ensure a simple payback of 10 years or better or measures “above and beyond” current Alabama code

The program operates as a revolving loan program where the fund is replenished by interest and principal repayments made on prior loans. The fund was initially capitalized with American Recovery and Reinvestment Act (ARRA) funding. Please see the program web site for additional information and program materials.


FHA PowerSaver Loan Program03/07/1611/20/185631

Federal Housing Administration (FHA) through its PowerSaver loan program offers three financing options for homeowners to make energy efficiency and renewable energy upgrades in their residences. For all three PowerSaver products, borrowers must select from a list of approved PowerSaver lenders. Please check the HUD website to find a list of participating FHA approved lender for the program. PowerSaver products are not currently offered in all states, so all potential applicants are encouraged to first check the program website to ensure product availability in their location. 

Eligibility

Homeowners must have following requirements to be eligible for the program:

  •  Minimum credit score of 660
  •  Maximum total debt to income ratio of 45% (monthly income divided by monthly debt payments)
  • Maximum combined loan-to-value: 100%
  • Property type: One-unit, owner-occupied, principal residence properties only
  • Appraisal requirement: exterior-only inspection appraisal or other FHA method of valuation
  • PowerSaver insures lien position in the first place, or second place, and also insures loans without lien, as long as the loan amount is less than $7,500. 

Eligible Measures

Eligible home energy upgrades include, but are not necessarily limited to, the following:

  • A whole home upgrade through Home Performance with ENERGY STAR
  • Insulation and air sealing
  • Replacing doors and windows
  • Upgrading heating, ventilation, and air-conditioning systems and hot water systems
  • Home automations systems and controls (e.g., smart thermostats)
  • Installing solar photovoltaic (PV) systems, solar thermal hot water systems, small wind power, or geothermal heat pumps

PowerSaver Home Energy Upgrade—Up to $7,500

This unsecured consumer loan is intended for smaller projects (e.g., insulation, air and duct sealing, water heating, replacing heating and cooling equipment, etc.). It does not require a home appraisal or lien on the property. Single-family homeowners may qualify for the loan if they have manageable debt and a credit score of 660 or higher. Interest rates vary, but typically range from 4.99% to 7.75%. PowerSaver participating lenders, markets, and contact information is available here.

PowerSaver Second Mortgage (Title I)—Up to $25,000

This Title I loan is intended for financing larger retrofit projects, including energy efficiency, PV, solar hot water, geothermal, or other renewable energy projects. A home appraisal or equity is generally not required, but PowerSaver lenders may request it if required by their investor. Borrowers cannot currently have an existing home equity loan, a second lien, or second mortgage to qualify for this product. Interest rates vary but typically range from 4.99% to 9.99%, and the maximum loan term is 20 years. PowerSaver Title I participating lenders, markets, and contact information is available here.

PowerSaver Energy Rehab (203(k))—First mortgage up to FHA loan limits

This 203(k) loan is for home purchase or refinance, targeting either home buyers wishing to combine home improvements with a home purchases or to homeowners wishing to include home improvements when refinancing an existing mortgage. It is FHA-insured up to 100% for a home purchase or refinance, plus the cost of a home improvement project. Current loan limits for a single-unit property vary by area from $217,500 to $625,000 (higher amounts are permitted for two-, three- and four-unit properties); specific loan limits for an area can be found at this website. In order to qualify as a 203(k) PowerSaver loan, at least $3,500 of the home improvements must consist of eligible PowerSaver measures. PowerSaver 203(k) participating lenders, markets, and contact information is available here.

The two types of PowerSaver 203(k) loans are Standard and Streamlined. Standard 203(k) loans are for major improvements, where a home improvement project costs at least $5,000 and includes $3,500 in energy upgrades. The Streamlined 203(k) loans are for minor home improvements, where the home improvement project cost must not exceed $35,000. A HUD consultant is only required for oversight of home improvements for Standard 203(k) loans. 



Local Option- Sales Tax Abatement for Renewable Energy FacilitiesAlabama Department of Revenue11/16/1611/20/185942

State of Alabama provides the option for local governments to provide exemptions or abatement for sales and use tax for qualifying renewable energy facilities in the State.  The state has a general sales tax of 4%, however, the renewable energy facilities qualify for 1.5% rate provision that is set for manufacturing and farm machinery. In addition to State sales tax, the local governments may also impose an additional sales or use tax. 

The exemption or abatement for both state and local sales/use tax are provided by the local granting authority. The local granting authority could be a city, county, or other local governing body depending on the site of the facility. The sales and use tax abatement shall not extend beyond the date the project is placed in service. The abatement only applies to the noneducational portion of the state and local tax. The incentive is available until the end of 2018. 

Eligibility:

The Renewable Energy Facility is defined as any plant, property or property that either produces electricity from biofuels, or from renewable energy resources, including- wind, biomass, black liquor, tidal or ocean current, geothermal, solar energy, small irrigation, municipal solid waste, and hydrogen when derived or produced from some other renewable energy resource. Hydropower is exempted from the definition of eligible resource. 



Local Option- Property Tax Exemption for Renewable Energy FaclitiesAlabama Department of Revenue11/16/1612/31/185943

The State of Alabama provides abatement of property tax for qualifying renewable energy facility in the state.  Only the noneducational portion of the property tax can be abated. 

Eligibility:

The Renewable Energy Facility is defined as any plant, property or property that either produces electricity from biofuels, or from renewable energy resources, including- wind, biomass, black liquor, tidal or ocean current, geothermal, solar energy, small irrigation, municipal solid waste, and hydrogen when derived or produced from some other renewable energy resource. Hydropower is exempted from the definition of eligible resource. 

Program Description:

The abatement of the property taxes is based on the market value of specific assets; therefore, the actual amount of taxes abated is determined each year as the property is assessed and valued.  Although the Department of Revenue oversees the administration of the property taxes, the county tax assessors and collectors are responsible for assessing the property and collecting the property tax.  

The local governing body i.e.- municipality, county, or a public industrial authority- may grant property tax abatement of all the states and local taxes for the period of 10 years, however, it can be extended for another period of 10 years (maximum of total 20 years) through additional approval by the appropriate granting authority i.e. county tax abated only with consent by resolution of the governing body of the county; municipal tax abated only with consent by resolution of the governing body of the municipality; and State tax abated only with the consent of the Governor. The abatement granted can be incorporated under one agreement. The property tax abatement must be granted  prior to placing the facility in service, no additional property tax may be eligible for abatement once the project is placed in service.

Interested applicants for the property tax abatement may apply to the governing body of the municipality, county, or public industrial authority depending on where the facility is situated. The government authority will perform a cost/benefit analysis to the proposed development to determine the maximum exemption period for the abatement of the property tax. 

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