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State

All of Minnesota can take advantage of the 26%
Federal Tax Credit
, which will allow you to recoup 26% 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!

Minnesota Solar PV Rebates & Incentives

Data from DSIRE. Last updated: 04/18/2024

NameAdministratorBudgetLast UpdatedEnd DateDSIRE ID
Summary
Wind and Solar-Electric (PV) Systems Exemption12/15/2304/19/24151

All real and personal property of wind energy systems are exempt from the state's property tax, except for the land on which the wind energy system is located. Under H.B. 3167, beginning with taxes payable in 2015, personal property consisting of solar energy generating systems is exempt from property taxation, but the real property (i.e., the land on which the solar energy generating system is located) is still subject to property tax. Wind and solar energy production taxes have replaced more typical forms of property tax.

Wind

In lieu of a property tax on large wind-energy electricity generating systems, a production tax was implemented in 2002 for systems installed after January 1, 1991. The production tax for electricity generated by wind is:

  • $0.0012 per kilowatt-hour (kWh) for systems greater than 12 megawatts (MW) nameplate capacity,
  • $0.00036 per kWh for systems between 2 MW and 12 MW nameplate capacity, and
  • $0.00012 per kWh for systems between 0.25 MW and 2 MW nameplate capacity.

Wind systems less than 250 kW are exempt from the production tax, as are systems with a capacity of 2 MW or less that are owned by political subdivisions and systems located in a designated job opportunity building zone. The wind energy production tax is considered to be a personal property tax.

For 2006 - 2009 (Minn. Stat. § 272.029 Subd. 6), the revenue generated by the production tax was required to be distributed to local taxing districts as follows: 80% to counties; 14% to cities and townships; and 6% to school districts. For 2010 and thereafter, the distribution of revenues is set at 80% to counties and 20% to cities and townships. For further details, please see the Minnesota Department of Revenue's Property Tax Administrators' Manual.

Notably, a provision in a separate statute (Minn. Stat. § 272.028) allows a mutually agreeable alternative to be negotiated between the local government authority and the wind facility owner for the purpose of maintaining "public infrastructure and services." For example, a lower tax might be negotiated by a local government in order to attract wind development.

Solar

In lieu of a property tax on large solar energy generating systems, a production tax is set beginning with taxes payable in 2015. The production tax for electricity generated by solar is $1.20 per megawatt-hour (MWh) for systems exceeding 1 MW (AC); systems 1 MW (AC) or less are exempt from the production tax. The solar energy production tax is considered to be a personal property tax.

Aggregated generation systems with over 1 MW of capacity on the same or adjacent parcels is classified as tax Class 3a, "Preferred Commercial," paying 1.5% on the first $150,000 of value and 2% on all additional valuation.

The owner of applicable solar energy generating systems must file a report with the commissioner of revenue on or before January 15 annually; on or before February 28, the commissioner of revenue must notify the owner of the tax due to each county for the current year.

The distribution of revenues is set at 80% to counties and 20% to cities and townships.

Value-Added Stock Loan Participation ProgramRural Finance Authority07/27/2004/19/24206

The Value-Added Stock Loan Participation Program was created in 1994 and is designed to help farmers finance the purchase of stock in certain types of cooperative, limited liability company, or limited liability partnership that will produce a "value-added agricultural product." This may include wind energy and anaerobic-digestion cooperatives if they meet the eligibility requirements (see Statute and Rules for details).

Like Minnesota's Agricultural Improvement Loan Program, this is a "participation loan" program, where loans are made by individual financial institutions working with the Rural Finance Authority (RFA). The RFA purchases up to 45% of the loan principal up to $40,000. The interest rate offered by the RFA is then set at a fixed rate of 2.0% or half the lender's effective rate at closing. Loans are for a maximum of 8 years, and interest-only payments are permitted for the first 2 years. Interest and loan principal repayments are deposited back into a revolving loan account. The RFA is not permitted to make stock loans cumulatively totaling more than $2 million for the financing of stock purchases in any one cooperative.

The program will not finance more than 95% of the price of the stock purchased by the participant. To qualify, an applicant must have a total net worth of less than $450,000 (indexed for inflation), including the assets and liabilities of the applicant's spouse and dependents.

Business Energy Investment Tax Credit (ITC)U.S. Internal Revenue Service08/29/2304/19/24658

Note: The Inflation Reduction Act of 2022 (H.R. 5376) made several significant changes to this tax credit, including expanding the eligible technologies, extending the expiration date, modifying the scheduled step-down in its value, providing for new bonus credits, and establishing new criteria to qualify for the full credit. It also phases out this tax credit under section 48 of the Internal Revenue Code and replaces it with a new technology-neutral tax credit under section 48E of the Internal Revenue Code. The summary below describes the current section 48 tax credit as modified by the Inflation Reduction Act, and below that, the new 48E tax credit.   

The federal Business Energy Investment Tax Credit (ITC) has been amended a number of times, most recently and most significantly by the Inflation Reduction Act of 2022. That bill established new prevailing wage and apprenticeship requirements for larger system to qualify for the full 30% tax credit. The Department of the Treasury issued Initial Guidance on these requirements on November 30, 2022 . According to law, the labor provisions apply to projects for which construction begins 60 days or more after Treasury publishes its guidance. Given the publishing date of November 30, 2022, the effective date for the labor provisions is January 30, 2023. The credit for different project types and available bonus credits is described below.


Base Credit

Projects under 1 MW (or larger projects that are commenced no more than 60 days after the Treasury Secretary develops labor guidelines) do not need to meet the new labor standards established by the Inflation Reduction to receive the full 30% tax credit. Such projects that begin construction after 2021 and before 2025 can receive the full tax credit of 30%. Note, projects that commence construction on or after January 1, 2025 can receive a tax credits under the new Clean Electricity Investment Tax Credit (48E) described below. 

Projects over 1 MW that begin construction 60 days after the Treasury Secretary releases labor guidelines (January 29, 2023) and no later than January 1, 2025 will receive a base tax credit of 6%. However, projects can qualify for the full 30% tax credit if they ensure that all laborers and mechanics involved in the construction of the project or the maintenance of the project for 5 years after project completion are paid wages at rates not less than prevailing wages. Projects must also ensure that a percentage of total labor hours are performed by qualified apprentices. The percent of hours increases over time to a maximum requirement of 15% in 2024 and thereafter. Note, projects that commence construction on or after January 1, 2025 can receive a tax credits under the new Clean Electricity Investment Tax Credit (48E) described below. 

Bonus Credits

Projects in which 100% of any steel or iron that is a component of the facility and 40% of the manufactured products that are components of the facility were produced in the United States can qualify for the Domestic Content Bonus. For projects that are under 1 MW and projects that are larger than 1 MW and meet the labor requirements specified above, the Domestic Content Bonus increases the tax credit by 10 percentage points. For larger projects that do not meet the labor requirements, the Domestic Content Bonus increases the tax credit by 2 percentage points. Note, the 40% requirement for manufactured products increases over time, eventually requiring 55% domestic content for projects commenced after 2026, The IRS issued Notice 2023-38 in May 2023, which provides further guidance on the domestic content bonus.     

Projects that are located within an energy community can receive the Energy Community Bonus. To qualify, a facility must be located at one of the following: (i) a brownfield site, (ii) a metropolitan or non-metropolitan statistical area which (A) has (or, at any time during the period beginning after December 31, 2009, had) 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas, or (B) has an unemployment rate above the national average for the previous year, or (iii) a census tract or a census tract that is adjoining a census tract in which a coal mine has closed after 1999 or a coal-fired electric generating unit was retired after 2009. For projects that are under 1 MW and projects that are larger than 1 MW and meet the labor requirements specified above, the Energy Community Bonus increases the tax credit by 10 percentage points. For larger projects that do not meet the labor requirements, the Energy Community Bonus increases the tax credit by 2 percentage points. 

The Treasury Department issued Notice 2023- 29 in April 2023, which provides initial guidance on the Energy Community Bonus Credit. The Treasury Department later updated and clarified its guidance in June 2023 with Notice 2023-45. The Treasury Department also issued Notice 2023-47 in June 2023, which includes lists of information that taxpayers may use to determine whether they meet certain requirements under the Statistical Area Category or the Coal Closure Category. The Department of Energy has also released a GIS map showing the locations of qualifying energy communities.  

Solar and wind facilities less than 5 MW may also be eligible for low-income bonuses. A project built in a low-income community as defined by the New Markets Tax Credit or on Indian Land can receive an increased tax credit of 10 percentage points. The Department of Energy has also released a GIS map showing qualifying low-income communities. A project associated with a low-income residential building project or a low-income economic benefit project can receive an increased tax credit of 20 percentage points. These bonuses are capped at 1.6 GW of projects per year.  The IRS issued Notice 2023-17 in February 2023, to allocate the cap across different categories of projects. The IRS also issued final regulations in August to provide further guidance on the iow-income communities bonus credit. Additional information can be found on the U.S. Department of Energy's webpage dedicated to the ow-income communities bonus credit.

Eligible Technologies

  • Solar Technologies
  • Fuel Cells
  • Wind Turbines 
  • Geothermal Systems
  • Microturbines
  • Combined Heat and Power (CHP)
  • Offshore Wind
  • Waste Energy Recovery. Qualified waste energy recovery property means property that generates electricity solely from heat from buildings or equipment if the primary purpose of such building or equipment is not the generation of electricity. The term “waste energy recovery property” does not include any property that has a capacity in excess of 50 megawatts.
  • Energy Storage Systems, both paired with generation and installed as a stand-alone system
  • Thermal Energy Storage Systems
  • Qualified Biogas Property
  • Microgrid Controllers
  • Interconnection Property associated with the installation of energy property with a maximum net output of not greater than 5 MW-AC to provide for the transmission or distribution of the electricity produced or stored by such property, and which are properly chargeable to the capital account of the taxpayer.

Credit Monetization

Section 13801 of The Inflation Reduction Act of 2022 also established procedures for other parties to monetize certain tax credits, including this one, for equipment placed in service on or after January 1, 2023 and through December 31, 2032. 

The direct pay option allows non-taxable entities to directly monetize certain tax credits. The provisions apply to nonprofits, a state or political subdivision thereof, the Tennessee Valley Authority, Indian tribal governments (as defined in Section 30D(g)(9)), any Alaska Native Corporation (as defined in Section 3 of the Alaska Native Claims Settlement Act), or any corporation operating on a cooperative basis which is engaged in furnishing electric energy to persons in rural areas. Such applicable entities can elect to be treated as having made a tax payment equal to the value of the tax credit they would otherwise be eligible to claim. The entity can then claim a refund for the excess taxes they are deemed to have paid. The option effectively makes this tax credit refundable for these entities. 

The act also allows eligible taxpayers to transfer all or a portion of their eligible tax credits to an unrelated taxpayer. Transfers must be reported to IRS and only one transfer is permitted. Must be elected no later than the due date for tax filing for the tax year the tax credit is claimed.

Clean Electricity Investment Tax Credit (48E)

Section 13702 of the Inflation Reduction Act created a new tax credit, the Clean Electricity Investment Tax Credit to replace the traditional ITC for systems placed in service on or after January 1, 2025. The tax credit is functionally similar to the ITC, but is not technology-specific. It applies to all generation facilities and energy storage systems that have an anticipated greenhouse gas emissions rate of zero. The credit amount is generally calculated in the same manner as described above, but will be phased out as the U.S. meets greenhouse gas emission reduction targets. For a project whose construction is commenced in the year following the year in which greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25% of the 2022 levels, the tax credit will not be reduced. However, for projects commenced in the second year following the target being met, the tax credit will be worth 75% of what it would otherwise be. Projects commenced in the third year will receive a credit worth 50%, and all projects commenced after then will not be eligible for a tax credit. 


Residential Energy Conservation Subsidy Exclusion (Personal)U.S. Internal Revenue Service07/20/2204/19/24666

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 Service07/12/2304/19/24676

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. Bonus depreciation steps down by 20% each year beginning with 80% in 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 Service05/19/2304/19/24727

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 Service08/29/2304/19/24734

Note: The Inflation Reduction Act of 2022 (H.R. 5376) made several significant changes to this tax credit, including extending the expiration date, providing for new bonus credits, and establishing new criteria to qualify for the full credit. It also phases out this tax credit under section 45 of the Internal Revenue Code at the end of 2024 and replaces it with a new technology-neutral tax credit under section 45Y of the Internal Revenue Code. The summary below describes the current section 45 tax credit as modified by the Inflation Reduction Act, and below that, the new 45Y tax credit.   

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.

Originally enacted in 1992, the PTC has been renewed and expanded numerous times, most recently by the Inflation Reduction Act of 2022. That bill established new prevailing wage and apprenticeship requirements for larger system to qualify for the full value of the tax credit -- 2.6 cents per kilowatt-hour (kWh) for wind, closed-loop biomass, and geothermal energy; 1.3 cents per kWh for open-loop biomass facilities, small irrigation power facilities, landfill gas facilities and trash facilities. In late-2022 or 2023, the Treasury Secretary will issue guidance for these new labor provisions. The credit for different project types and available bonus credits is described below.

Base Credit

Projects under 1 MW (or larger projects that are commenced no more than 60 days after the Treasury Secretary develops labor guidelines) do not need to meet the new labor standards established by the Inflation Reduction to receive the full 1.3 or 2.6 cents/kWh (depending on the facility type) tax credit. This amount may be adjusted annually for inflation. Such projects that begin construction after 2021 and before 2025 can receive the full tax credit. Note, projects that commence construction on or after January 1, 2025 can receive a tax credit under the new Clean Energy Production Tax Credit (45Y) described below. 

Projects over 1 MW that begin construction 60 days after the Treasury Secretary releases labor guidelines and no later than January 1, 2025 will receive a base tax credit of 0.5 cents/kWh. However, projects can qualify for the full tax credit if they ensure that all laborers and mechanics involved in the construction of the project or the maintenance of the project for the entire 10-year PTC period are paid wages at rates not less than prevailing wages. Projects must also ensure that a percentage of total labor hours are performed by qualified apprentices. The percent of hours increases over time to a maximum requirement of 15% in 2024 and thereafter. Note, projects that commence construction on or after January 1, 2025 can receive a tax credit under the new Clean Energy Production Tax Credit (45Y) described below. 

Bonus Credits

The Domestic Content Bonus increases the credit amount by 10% for projects in which 100% of any steel or iron that is a component of the facility and 40% of the manufactured products that are components of the facility were produced in the United States. Note, the required percentage of domestic manufactured products for offshore wind facilities is 20%. The IRS issued Notice 2023-38 in May 2023, which provided guidance on the domestic content bonus.     

The Energy Community Bonus increases the credit amount by 10% for projects that are located at one of the following: (i) a brownfield site, (ii) a metropolitan or non-metropolitan statistical area which (A) has (or, at any time during the period beginning after December 31, 2009, had) 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas, or (B) has an unemployment rate above the national average for the previous year, or (iii) a census tract or a census tract that is adjoining a census tract in which a coal mine has closed after 1999 or a coal-fired electric generating unit was retired after 2009. 

The Treasury Department issued Notice 2023- 29 in April 2023, which provided initial guidance on the Energy Community Bonus Credit. The Treasury Department later updated and clarified its guidance in June 2023 with Notice 2023-45. The Treasury Department also issued Notice 2023-47 in June 2023, which includes lists of information that taxpayers may use to determine whether they meet certain requirements under the Statistical Area Category or the Coal Closure Category. The Department of Energy has also released a GIS map showing the locations of qualifying energy communities.  

Credit Monetization

Section 13801 of The Inflation Reduction Act of 2022 also established procedures for other parties to monetize certain tax credits, including this one, for equipment placed in service on or after January 1, 2023 and through December 31, 2032. 

The direct pay option allows non-taxable entities to directly monetize certain tax credits. The provisions apply to nonprofits, a state or political subdivision thereof, the Tennessee Valley Authority, Indian tribal governments (as defined in Section 30D(g)(9)), any Alaska Native Corporation (as defined in Section 3 of the Alaska Native Claims Settlement Act), or any corporation operating on a cooperative basis which is engaged in furnishing electric energy to persons in rural areas. Such applicable entities can elect to be treated as having made a tax payment equal to the value of the tax credit they would otherwise be eligible to claim. The entity can then claim a refund for the excess taxes they are deemed to have paid. The option effectively makes this tax credit refundable for these entities. 

The act also allows eligible taxpayers to transfer all or a portion of their eligible tax credits to an unrelated taxpayer. Transfers must be reported to IRS and only one transfer is permitted. Must be elected no later than the due date for tax filing for the tax year the tax credit is claimed.

Clean Energy Production Tax Credit (45Y)

Section 13701 of the Inflation Reduction Act created a new tax credit, the Clean Energy Production Tax Credit to replace the traditional PTC for systems placed in service on or after January 1, 2025. The tax credit is functionally similar to the PTC, but is not technology-specific. It applies to all generation facilities that have an anticipated greenhouse gas emissions rate of zero. The credit amount is generally calculated in the same manner as described above, and all technologies that satisfy the labor requirements will be eligible for the full value of the tax credit as adjusted for inflation. The credit will be phased out as the U.S. meets greenhouse gas emission reduction targets. For a project whose construction is commenced in the year following the year in which greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25% of the 2022 levels, the tax credit will not be reduced. However, for projects commenced in the second year following the target being met, the tax credit will be worth 75% of what it would otherwise be. Projects commenced in the third year will receive a credit worth 50%, and all projects commenced after then will not be eligible for a tax credit. 


Energy-Efficient Mortgages08/05/2004/19/24742

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 their website for more details. These mortgages were previously limited to $8,000.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. Borrowers must obtain a home energy assessment by a qualified energy rater, assessor, or auditor using whole-assessment standards, protocols, and procedures. 

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 GreenChOICE mortgages to "provide greater affordability for borrowers, offer more flexibility and combine the flexibilities of Home Possible Mortgages to offer borrowers additional affordable financing opportunities." 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. 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.

USDA - Rural Energy for America Program (REAP) GrantsU.S. Department of Agriculture$600 million for FY 201808/21/1804/19/24917

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.

Office of Indian Energy Policy and Programs - Funding OpportunitiesU.S. Department of Energy02/26/2004/19/24918

The U.S. Department of Energy's (DOE) Office of Indian Energy Policy and Programs 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 program offerings consist of program management through DOE headquarters, program implementation and project management through DOE's field offices, and technical support through DOE laboratories. Program management 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.

Minnesota Power - SolarSense Solar Rebate ProgramMinnesota Power$87,675 (2023-2024)03/07/2304/19/241092

Minnesota Power offers a rebate for grid-connected solar-electric (PV) systems up to 20 kilowatts (kW) in capacity. Rebates are worth $0.29/kWh expected production in the system's first year of operation. The expected production is determined by using PV Watts, a publicly available tool developed by the National Renewable Energy Laboratory (NREL), and accounts for specific characteristics of the system's siting. 


The installer must submit system design specifications to Minnesota Power in order to calculate the incentive estimate. Customers must also get preapproval of the project prior to purchase and installation of equipment. Additional requirements exist; see website above for complete details. 

Solar Energy Sales Tax ExemptionDepartment of Revenue03/09/2104/19/241218

In Minnesota, solar-energy systems purchased on or after August 1, 2005, are exempt from the state's sales tax. Solar energy systems are defined as:

"a set of devices whose primary purpose is to collect solar energy and convert and store it for useful purposes including heating and cooling buildings or other energy-using processes, or to produce generated power by means of any combination of collecting, transferring, or converting solar-generated energy." M.S. 297A.67, subd. 29.

Thus the exemption is very broad and could apply to solar Photovoltaic (PV) systems, solar water-heating systems and solar space-heating systems. All components of these systems are exempt, including panels, wiring, pipes, pumps and racks. Buyers must complete Minnesota Department of Revenue Form ST3 "Certificate of Exemption" in order to claim the exemption. Sellers are required to keep the form in their files for tax reference. This incentive has no expiration date.

Residential Renewable Energy Tax CreditU.S. Internal Revenue Service08/16/2212/31/341235

Note: Section 13302 of The Inflation Reduction Act of 2022 (H.R. 5376) extended the expiration date and modified the phase down of this tax credit. It also made stand-alone energy storage systems eligible for the credit, and biomass heaters ineligible for the credit. Biomass heaters are now eligible for the residential energy efficiency tax credit. The summary below reflects the credit after the enactment of H.R. 5376.

A taxpayer may claim a credit 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 01/01/2022
  • 30% for systems placed in service after 12/31/2021 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • 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, 2034.
  • 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 01/01/2022
  • 30% for systems placed in service after 12/31/2021 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • 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, 2034.
  • 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 01/01/2022
  • 30% for systems placed in service after 12/31/2021 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
  • The maximum credit is $500 per half kilowatt (kW).
  • 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 01/01/2022
  • 30% for systems placed in service after 12/31/2021 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • 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, 2034.
  • 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 01/01/2022
  • 30% for systems placed in service after 12/31/2021 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • 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, 2034.
  • 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

Battery Storage Systems (Standalone Systems)

  • 0% for systems placed in service before 1/1/2023
  • 30% for systems placed in service after 12/31/2022 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • The system must have a capacity of at least 3 kilowatt hours
  • 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

Prior to the enactment of the Inflation Reduction Act of 2022, the federal tax code did not explicitly reference energy storage, so stand-alone energy storage systems did 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.

Austin Utilities (Gas and Electric) - Residential Conserve and Save Rebate ProgramAustin Utilities08/18/2204/19/241935

Austin Utilities offers incentives to its residential customers for the installation of energy-efficient equipment in homes. Rebates are available for both electric and natural gas equipment. Eligible equipment includes a variety of appliances, room and central A/C, heat pumps, boilers, furnaces, water heaters, lighting, insulation, and programmable thermostats. Recycling rebates for refrigerators, freezers, dehumidifiers, and room air conditioners are only available to customers who properly recycle their old working models. Austin Utilities will reimburse the customer for specified recycling costs if they have proof that they recycled their old unit and replaced it with an ENERGY STAR model. Rebates are available until calendar year program funding is exhausted.

Austin Utilities also offers rebates for solar photovoltaics, solar water heating, and shade trees. Details for the solar program can be found here, and details for the tree program can be found here.

Owatonna Public Utilities - Residential Conserve and Save Rebate ProgramOwatonna Public Utilities/Conserve & $ave04/03/2404/19/241944

Owatonna offers incentives to residential customers who install energy-efficient equipment in homes through the Conserve and Save Rebate Program. Equipment rebates for technologies such as refrigerators, freezers and room air conditioners can be increased by properly recycling previously used, working units. Owatonna Public Utilities will reimburse the customer for the recycling costs if they have proof that they recycled an old unit and replaced it with an ENERGY STAR model. Rebate applications for measures purchased during the previous year are due by March 31 of the following year. 

All equipment requirements must be met in order to qualify for rebates. See website for specific details.

Dakota Electric Association - Residential Energy Efficiency Rebate ProgramDakota Electric Service02/13/2404/19/242259

Dakota Electric Association provides incentives through a partnership with the EnergyWise program for residential customers to install energy-efficient equipment in the home. Rebates under $400 will be issued as a credit on your bill. Rebates are available for a variety of products which are listed below.

Limited rebate funds are available, and rebates are awarded on a first-come, first-served basis. Some incentives vary by the efficiency of the purchased equipment. Detailed program requirements and applications may be found on the web site listed above.

 

USDA - Rural Energy for America Program (REAP) Loan GuaranteesU.S. Department of Agriculture08/21/1804/19/242511

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 Energy09/08/2204/19/243071
Note: The Inflation Reduction Act (H.R. 5376) made several changes to this program. It appropriated approximately $11.7 billion in total for the Loan Programs Office (LPO) to support issuing new loans. This, in turn, increased the loan authority in LPO’s existing loan programs by approximately $100 billion. The Inflation Reduction Act also adds a new loan program, the Energy Infrastructure Reinvestment (EIR) Program (section 1706), to help retool, repower, repurpose, or replace energy infrastructure that has ceased operations or to improve the efficiency of infrastructure that is currently operating. 

Title 17 Program

Section 1703 of Title 17 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.

The Inflation Reduction Act added an additional $40 billion of loan authority to Section 1703 program. The legislation appropriated $3.6 billion in credit subsidy to support the cost of those loans and set aside a percentage of these amounts for administrative expenses to help carry out the program, including monitoring and originating new loans. This new loan authority is open to all currently eligible Title 17 Innovative Clean Energy technology categories, including fossil energy and nuclear energy. The Inflation Reduction Act appropriations also support the expanded activities authorized by the Bipartisan Infrastructure Law that required these new appropriations to go into effect. These expanded activities support projects involving critical minerals processing, manufacturing, and recycling, and removing the innovation requirement for State Energy Financing Institution-backed projects. Click here for more information about how a project that reduces greenhouse gas emissions can be eligible without meeting the innovative technology requirement if the project receives support from a State Energy Financing Institution . 

Energy Infrastructure Reinvestment (EIR) Program (Section 1706)

The Inflation Reduction Act also created a new program under Title 17, the Energy Infrastructure Reinvestment (EIR) Program. The new program targets projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations, or enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases. The Inflation Reduction Act appropriated $5 billion through September 30, 2026, to carry out EIR, with a total cap on loans of up to $250 billion. 

Advanced Technology Vehicles Manufacturing Loan Program

LPO initially had $15.1 billion in loan authority to support the manufacture of eligible light-duty vehicles and qualifying components under the Advanced Technology Vehicles Manufacturing Loan Program (ATVM), authorized by the Energy Independence and Security Act of 2007.  To date, the program has loaned $8 billion for projects that have supported the production of more than 4 million advanced technology vehicles. Read more about LPO's ATVM portfolio. The Inflation Reduction Act removed the $25 billion cap on the total amount of loans it can award and appropriated $3 billion to remain available through September 30, 2028 for the costs of direct loans under ATVM. In addition to amounts supported by currently appropriated credit subsidy, this $3 billion is estimated to provide for an additional ~$40 billion in loan authority for a total estimated available loan authority under ATVM of ~$55.1 billion. 

Tribal Energy Projects

The Tribal Energy Loan Guarantee Program (TELGP) supports tribal investment in energy-related projects by providing direct loans or partial loan guarantees to federally recognized tribe, including Alaska Native village or regional or village corporations; or a Tribal Energy Development Organization (TEDO) that is wholly or substantially owned by a federally recognized tribe federally recognized Indian tribe or Alaska Native Corporation. Under this solicitation, The Inflation Reduction Act increased the aggregate amount of loans available at any time under the Tribal Energy Loan Guarantee Program (TELGP) from $2 billion to $20 billion. It also provided $75 million to remain available through September 30, 2028 to carry out TELGP under section 2602(c) of the Energy Policy Act of 1992.

Farm Opportunities Loan ProgramMinnesota Department of Agriculture10/13/2204/19/243395

The Farm Opportunity Loan Program (formerly known as the Sustainable Agriculture Loan Program) is designed to finance the purchase of equipment to add value to crops or livestock, adopt best management practices, reduce agricultural inputs to improve the environment, and increase on-farm energy production. Eligible loan uses do not include expenses related to seed, fertilizer, fuel, or other operating expenses. Refinancing of existing debt is not an eligible expense.

This is a loan participation program available through the Rural Finance Authority (RFA). Farmers will work through their local lender. Upon completion of an application, the lender will apply for RFA participation. The RFA must have a completed Master Participation Agreement with the lender on file.

Loan Terms

The RFA may participate in a Farm Opportunity loan equal to 80% of the project or equipment cost. Participation is limited to 45% of the principal amount of the loan or $100,000 per individual, whichever is less. For loans to a group made up of four or more individuals, participation is limited to 45% of the principal amount of the loan or $250,000, whichever is less.

The loan will be for a maximum of 10 years. The interest rates and repayment terms of the authority’s participation interest may differ from the interest rates and repayment terms of the lender’s retained portion of the loan, but the authority’s interest rate is currently 2%. The authority may review the interest annually and make adjustments as necessary.

The originating lender will retain the balance of each loan. The borrower must satisfy the local lender’s guidelines. The local lender will control the day-to-day operation of the loan. Participating lenders are allowed to charge a fixed or adjustable interest rate consistent with their normal lending practices and their agreement with the RFA.

The RFA will provide a 1% interest rate reduction from the standard 2% rate if a farmer uses this loan program to purchase equipment in which an associated equipment safety course is offered. The farmer must complete and submit documentation for the equipment training course to be eligible for the rate reduction.

Rochester Public Utilities - Solar Rebate ProgramRochester Public Utilities06/23/2304/19/244331
Rochester Public Utilities provides incentives for residential and commercial customers to install photovoltaic (PV) systems. Qualifying PV systems can earn a flat $500 rebate . Systems must fully comply with equipment and installation requirements set forth by RPU.

In order to obtain eligibility, customers must agree to a net-metering and interconnection contract with Rochester Public Utilities. An energy audit must also be performed prior to system installation and results shared with RPU. Incentives are awarded on a first-come, first-served basis. RPU obtains the right to withdraw the program at any time without notice.
Austin Utilities - Solar Rebate ProgramAustin Utilities03/07/2304/19/244333

Austin Utilities provides incentives for their residential and commercial customers to install photovoltaic (PV) and solar water heating systems. Qualifying PV systems can earn flat rebate of $500; eligible solar water heating systems can earn $15 per square foot of collector area. Incentives are awarded on a first-come, first-served basis. Austin Utilities obtains the right to withdraw the program at any time without notice.

In order to obtain eligibility, customers must agree to a net-metering and interconnection contract with Austin Utilities. An energy audit must be performed prior to system installation and results shared with Austin Utilities.

Application forms with additional information are available on the program web site.

Owatanna Public Utilities - Solar Rebate ProgramOwatanna Public Utilities06/23/2304/19/244334

Owatanna Public Utilities provides incentives for their residential and commercial customers to install photovoltaic (PV) and solar water heating systems. Qualifying PV systems can earn a flat rebate of $500; eligible solar water heating systems can earn $15 per square foot of collector area up to $1,200 total.

In order to obtain eligibility, customers must agree to a net-metering and interconnection contract with Owatanna Public Utilities. An energy audit must be performed prior to system installation and results shared with OPU.

Rebates are offered in conjunction with a 30% federal tax credit and are awarded on a first-come, first-served basis. OPU obtains the right to withdraw the program at any time without notice.

Application forms with additional information are available on the program web site.

USDA - High Energy Cost Grant ProgramUSDA Rural Utilities Service$10 million (2021 solicitation)07/20/2204/19/244359

NOTE: The most recent solicitation for this program closed July 6, 2021. 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 $100,000 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.

Fix-Up LoanMinnesota Housing Finance Agency07/20/2204/19/244366

The Minnesota Housing Finance Agency's (MHFA) Fix-up Loan provides low-interest financing for energy conservation and other basic improvements to residential properties. A higher loan amount may be available for improvements that enhance the accessibility of the home for a disabled family member. Loans are available for up to $25,000. To be eligible for the loan, the home must be occupied by the property owner. 

Another key feature of the MHFA home improvement loan program is the opportunity for homeowners to contract with approved lenders directly. Find a participating lender at this link.

Xcel Energy - Solar*Rewards ProgramXcel Energy12/15/2304/19/245417

Xcel Energy offers a solar production incentive for systems 20 kW-DC or less through its Solar*Rewards program.

Eligibility

The customer's system capacity may not be more than 120% of the customer's on-site annual energy consumption. Participating customers must complete program forms and pay a $250 engineering fee; Xcel Energy will begin accepting online payments for the fee on or before January 1, 2017. If, prior to the completion of an engineering review, the application is denied or the customer elects not participate in the program, the customer's application fee will be refunded. 

The same PV project cannot also not a participant in the Made in Minnesota Solar PV Incentive Program coordinated by the Minnesota Department of Commerce.

Participating customers are required to own the PV system and the property/building on which the system will be installed.

Renewable Energy Credits

As a part of the Solar*Rewards contract, the customer agrees to convey all of the Renewable Energy Credits (RECs) or similar green attributes produced by the system to Xcel Energy for the ten-year term of the contract.

Net Metering

Net metering is available for Xcel Energy's customers. Under net metering net excess generation (NEG) at the end of a monthly billing period is generally credited to the next month’s bill. If a customer's NEG balance exceeds $25.00 at the end of a billing period, the customer will be issued a check for the balance by the utility. Net metering takes place using a bi-directional meter for which the customer pays a small monthly fee. The program also requires a generation meter installed at the utility's expense to measure energy (i.e., REC production) by the solar system. 

More Information

Applicants can view the Solar*Rewards Customer Contract at the link above.

History

Xcel has operated a small-solar incentive program called Solar*Rewards since 2010. In 2013, the Minnesota Legislature passed omnibus energy legislation that directed Xcel to operate a small-solar incentive program that provides a production-based incentive for solar energy systems up to 20 kW in size.

According to its compliance report, Xcel allocated $4.6 million for 363 solar PV projects for a projected capacity of 4.86 MW in 2014.

As of July 2023, there is no funding available for the school system and college incentive categories and those program types have been removed from the Solar*Rewards website and offerings.


 

Rural Minnesota Energy Board PACE Program01/03/2404/19/245751

Note:  In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENation for more information about PACE financing and a comprehensive list of all PACE programs across the country.

The Rural Minnesota Energy Board (REMB) of Minnesota offers PACE for businesses in the member counties of the Rural Minnesota Energy Board. To see a list of participating counties, click here. This program is administered by The Southwest Regional Development Commission.

Financing is applicable for Energy efficient and renewable energy retrofits of existing commercial or industrial buildings. These buildings must must be classified as Commercial or Industrial and the applicant(s) must be the legal owner of the property described in the application. The property owner must be current on all mortgages and  not involved in a bankruptcy and the property cannot be an asset in a bankruptcy. Further, there must be no federal or state income liens, judgment liens, or similar involuntary liens on the property.

The property must have an Energy Audit performed by approved energy auditor that shows significant cost savings.

Completed projects:
Blue Line Travel Center in Worthington
Parkwood Place in Mountain Lake
Holiday Station in Worthington
Tae Kwon Do School in Tyler

More information:
Visit the RMEB website
Download the brochure
Download the application

Minnesota PACE Program (MinnPACE)01/13/2404/19/245753

Note:  In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENation for more information about PACE financing and a comprehensive list of all PACE programs across the country.

Summary:
In Minnesota, most PACE loans are run through MinnPACE. MinnPACE is a fit for most industries including farms, commercial office buildings, nonprofit organizations (including places of worship), and multi-tenant buildings. Common investments include solar panels, HVAC systems, lighting, and motors. The MinnPACE structure offers a finance package with 100 percent financing, at a fixed rate, for up to a 20-year term. Going forward, payments are repaid through a special property tax assessment . A local government must establish a joint powers agreement with MinnPACE in order to use the program.

History:

MinnPACE officially started in 2010 with the Minnesota State Legislature approving Statute Sections 216C.435 and 216C.436. These statutes gave cities and counties the authorities to place voluntary assessments on commercial properties to cover the cost of energy-efficiency upgrades and renewable energy investments. The original statutes have been modified several times with recent modifications clarifying that new construction projects can use PACE.

Program Requirements:

  • Commercial properties must be located in a Minnesota city, county or town that has entered into, or will enter into, a MinnPACE Joint Powers Agreement.
  • Property owners may be associations, business entities, farm operations, cooperatives, or any other business payment property taxes. Nonprofit organizations may also leverage the program.
  • Multifamily housing properties must have more than four units.
  • MinnPACE financing is limited to 20 percent of the assessed or appraised value of the property. 
  • The minimum assessment amount is $50,000. The interest rate is determined when the property owner enters into the contract.  

Qualifying businesses must also meet the following criteria: 

  • No “Mechanics” or similar liens against the property 
  • Current on all taxes 
  • Current on mortgage payment(s) 
  • Not involved in any bankruptcy proceedings 

For participating counties and municipalities, click here.

Fannie Mae Green Financing – Loan Program05/08/2004/19/245780

NOTE: Only multifamily properties are eligible for the program. Single family homeowners are not eligible for this program. 

The Fannie Mae Green Financing Business provides mortgage financing to apartment buildings and cooperatives (with 5 or more units) to finance energy and water efficiency property improvements. Its green financing programs include Green Rewards, and preferential pricing for loans secured by a property with an eligible Green Building Certification. All Fannie Mae green loans are securitized as Green Mortgage Backed Securities (Green MBS). To learn more about these programs, multifamily property owners should coordinate with a Fannie Mae DUS Lender:  https://multifamily.fanniemae.com/about-multifamily/our-partners/dus-lenders

Green Rewards, launched in 2015, provides preferential pricing and up to an additional 5% of loan proceeds by including up to 75% of projected owner energy and water savings and 25% of projected tenant savings in the loan underwriting. Conventional and affordable multifamily properties, as well as cooperatives, seniors, military, and student housing properties are eligible for this program. To qualify for a Green Rewards loan the property owner must commit to making property improvements that are projected to reduce the whole property’s annual energy and water consumption by at least 30%, which a minimum of 15% must be attributable to savings in energy consumption. Properties may be located anywhere in US, and the selected property upgrades must be completed within 12 months of loan closing.

Fannie Mae also provides preferential pricing for an acquisition or refinance loan on a conventional or affordable property that has a current, eligible Green Building Certification per Fannie Mae Form 4250.

Please visit the Fannie Mae Green Financing website for more information and detailed program requirements.

Solar for Schools ProgramDepartment of Commerce$14,000,00012/15/2312/31/3222578

H.F. 2310, enacted in May 2023 (see section 216C.375), created the Solar for Schools grant program under the Minnesota Department of Commerce.

The Program allows schools and parties on the behalf of schools to apply for grants for up to 100% of the cost of procuring and installing a solar energy generation system on or adjacent to the school premises. The law directed a $14,310,000 budget allocation to support the program. 

The Department of Commerce is directed to request applications from interested schools, utilities, and developers and assess the applications and ensure that all costs are necessary and reasonable. The amount of the grant amount awarded must be based on the Commissioner's assessment of the school's need for financial assistance.

The program provides grants for systems up to 40 kW or up to 1,000 kW with the consent of the utility servicing the school.

Solar Grant Program: Public Buildings12/15/2306/30/2622579

H.F. 2310, enacted in May 2023 (see section 216C.377), created the Solar Grant Program: Public Buildings program under the Minnesota Department of Commerce.

The Program allows local government units to apply for grants for up to 100% of the cost of procuring and installing a solar energy generation system on or adjacent to the school premises. The law directed a $14,310,000 budget allocation to support the program.

The Department of Commerce is directed to request applications from interested local government units and assess the applications and ensure that all costs are necessary and reasonable. The amount of the grant amount awarded must be based on the Commissioner's assessment of financial capacity of the local government unit.

The program provides grants for systems the smaller of (a) up to 40 kW or (b) up to 120% of the building's annual average electric consumption.