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The U.S. Department of Energy and the North Carolina Clean Energy Technology Center are excited to announce that a new, modernized DSIRE is under construction. The new version of DSIRE will offer significant improvements over the current version, including expanded data accessibility and an array of new tools for site users. The new DSIRE site will be available in December 2014. Staff are currently working hard on the new version of DSIRE but are also maintaining the content of the current version of DSIRE. Thank you for your continued support and patience during this transition. We hope you are as excited for December as we are!

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Incentives/Policies for Renewables & Efficiency

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Financial Incentives

Energy-Efficient Commercial Buildings Tax Deduction   

Last DSIRE Review: 12/22/2014
Program Overview:
State: Federal
Incentive Type: Corporate Deduction
Eligible Efficiency Technologies: Equipment Insulation, Water Heaters, Lighting, Lighting Controls/Sensors, Chillers , Furnaces , Boilers, Heat pumps, Central Air conditioners, Caulking/Weather-stripping, Duct/Air sealing, Building Insulation, Windows, Siding, Roofs, Comprehensive Measures/Whole Building, Tankless Water Heaters, Heat Pump Water Heaters
Applicable Sectors: Commercial, Construction, State Government, Fed. Government, (Deductions associated with government buildings are transferred to the designer)
Amount:$0.30-$1.80 per square foot, depending on technology and amount of energy reduction
Maximum Incentive:$1.80 per square foot
Equipment Requirements:Not specified, but building must be certified as meeting specific energy reduction targets as a result of improvements in interior lighting; building envelope; or heating, cooling, ventilation, or hot water systems.
Start Date:01/01/2006
Expiration Date:12/31/2014
Web Site: http://www.efficientbuildings.org
Authority 1:
Date Enacted:
Date Effective:
Expiration Date:
26 USC § 179D
8/8/2005 (subsequently amended)
01/01/2006
12/31/2014
Authority 2:
Date Enacted:
Date Effective:
Expiration Date:
H.R. 5771 (Tax Increase Prevention Act of 2014)
12/19/2014
01/01/2014
12/31/2014
Summary:

Note: This tax deduction expired at the end of 2013. The Tax Increase Prevention Act of 2014 retroactively reinstated the tax credit for projects completed in 2014.

The federal Energy Policy Act of 2005 established a tax deduction for energy-efficient commercial buildings applicable to qualifying systems and buildings placed in service from January 1, 2006, through December 31, 2007. This deduction was subsequently extended through 2008, and then again through 2013 by Section 303 of the federal Energy Improvement and Extension Act of 2008 (H.R. 1424, Division B), enacted in October 2008.

A tax deduction of $1.80 per square foot is available to owners of new or existing buildings who install (1) interior lighting; (2) building envelope, or (3) heating, cooling, ventilation, or hot water systems that reduce the building’s total energy and power cost by 50% or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1-2001. Energy savings must be calculated using qualified computer software approved by the IRS. Click here for the list of approved software.

Deductions of $0.60 per square foot are available to owners of buildings in which individual lighting, building envelope, or heating and cooling systems meet target levels that would reasonably contribute to an overall building savings of 50% if additional systems were installed.

The deductions are available primarily to building owners, although tenants may be eligible if they make construction expenditures. In the case of energy efficient systems installed on or in government property, tax deductions will be awarded to the person primarily responsible for the system's design. Deductions are taken in the year when construction is completed.

The IRS released interim guidance (IRS Notice 2006-52) in June 2006 to establish a process to allow taxpayers to obtain a certification that the property satisfies the energy efficiency requirements contained in the statute. IRS Notice 2008-40 was issued in March of 2008 to further clarify the rules. NREL published a report (NREL/TP-550-40228) in February 2007 which provides guidelines for the modeling and inspection of energy savings required by the statute.

Click here for answers to frequently asked questions provided by the Commercial Building Tax Deduction Coalition. For more information on this deduction, visit the Energy Star web site.


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




Modified Accelerated Cost-Recovery System (MACRS)   

Last DSIRE Review: 12/23/2014
Program Overview:
State: Federal
Incentive Type: Corporate Depreciation
Eligible Renewable/Other Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Landfill Gas, Wind, Biomass, Geothermal Electric, Fuel Cells, Geothermal Heat Pumps, Municipal Solid Waste, CHP/Cogeneration, Solar Hybrid Lighting, Hydrokinetic Power (i.e., Flowing Water), Anaerobic Digestion, Tidal Energy, Wave Energy, Ocean Thermal, Fuel Cells using Renewable Fuels, Microturbines, Geothermal Direct-Use
Applicable Sectors: Commercial, Industrial, Agricultural
Start Date:1986
Authority 1:
Date Effective:
26 USC § 168
1986
Authority 2:
26 USC § 48
Authority 3:
Date Enacted:
Date Effective:
IRS Rev. Proc. 2011-26
04/18/2011
03/29/2011
Authority 4:
Date Enacted:
Date Effective:
Expiration Date:
H.R. 8 (American Taxpayer Relief Act of 2012)
01/02/2013
01/01/2013
12/31/2013
Authority 5:
Date Enacted:
Date Effective:
Expiration Date:
H.R. 5771 (Tax Increase Prevention Act of 2014)
12/16/2014
1/1/2014
12/31/2014
Summary:

Note: Sec. 125 of H.R. 5771, the Tax Increase Prevention Act of 2014, extended the "placed in service" date of the 50% bonus depreciation provision originally included in the American Recovery and Reinvestment Act of 2009 to December 31, 2014, and thus retroactively through the 2014 tax year.

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

The federal Economic Stimulus Act of 2008, enacted in February 2008, included a 50% first-year bonus depreciation (26 USC § 168(k)) provision for eligible renewable-energy systems acquired and placed in service in 2008. The allowance for bonus depreciation has since been extended and modified several times since the original enactment, most recently in December 2014 by the Tax Increase Prevention Act Of 2014 (H.R. 5771, Sec. 125). This legislation extended the "in-service" provision for qualifying property through to December 31, 2014, and thus also did so retroactively for property placed in service after December 31, 2013, through to enactment.

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. As noted above, 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.


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




Residential Energy Conservation Subsidy Exclusion (Corporate)   

Last DSIRE Review: 10/06/2014
Program Overview:
State: Federal
Incentive Type: Corporate Exemption
Eligible Efficiency Technologies: Unspecified Technologies
Eligible Renewable/Other Technologies: Solar Water Heat, Solar Space Heat, Photovoltaics
Applicable Sectors: Residential, Multi-Family Residential
Amount:100% of subsidy
Web Site: http://www.irs.gov/publications/p525/index.html
Authority 1:
Date Enacted:
Date Effective:
26 USC § 136
10/24/1992 (subsequently amended)
01/01/2003
Summary:

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.


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




Business Energy Investment Tax Credit (ITC)   

Last DSIRE Review: 03/13/2014
Program Overview:
State: Federal
Incentive Type: Corporate Tax Credit
Eligible Renewable/Other Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Wind, Geothermal Electric, Fuel Cells, Geothermal Heat Pumps, Municipal Solid Waste, CHP/Cogeneration, Solar Hybrid Lighting, Tidal Energy, Fuel Cells using Renewable Fuels, Microturbines, Geothermal Direct-Use
Applicable Sectors: Commercial, Industrial, Utility, Agricultural
Amount:30% for solar, fuel cells, small wind*
10% for geothermal, microturbines and CHP
Maximum Incentive:Fuel cells: $1,500 per 0.5 kW
Microturbines: $200 per kW
Small wind turbines placed in service 10/4/08 - 12/31/08: $4,000
Small wind turbines placed in service after 12/31/08: no limit
All other eligible technologies: no limit
Eligible System Size:Small wind turbines: 100 kW or less
Fuel cells: 0.5 kW or greater
Microturbines: 2 MW or less
CHP: 50 MW or less*
Equipment Requirements:Fuel cells, microturbines and CHP systems must meet specific energy-efficiency criteria
Authority 1:
26 USC § 48
Authority 2:
Instructions for IRS Form 3468
Authority 3:
IRS Form 3468
Authority 4:
Date Enacted:
Date Effective:
H.R. 8 (American Taxpayer Relief Act of 2012)
01/02/2013
01/02/2013
Summary:

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.


In general, the following credits are available for eligible systems placed in service on or before December 31, 2016*:

  • Solar. The credit is equal to 30% of expenditures, with no maximum credit. 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. (Note that the credit for property placed in service before October 4, 2008, is capped at $500 per 0.5 kW.)
  • 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.)
  • 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. 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.

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.


* A number of changes to this credit are scheduled to take effect for systems placed in service after December 31, 2016. The credit for 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 will decrease from 30% to 10%. The credit for geothermal heat pumps, hybrid solar lighting, small wind, fuel cells, microturbines, and combined heat and power systems will expire. The credit amount for equipment which uses geothermal energy to produce electricity will remain at 10%. 

 


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




Energy-Efficient New Homes Tax Credit for Home Builders   

Last DSIRE Review: 12/20/2014
Program Overview:
State: Federal
Incentive Type: Corporate Tax Credit
Eligible Efficiency Technologies: Comprehensive Measures/Whole Building
Applicable Sectors: Construction
Amount:$1,000 - $2,000 (depends on energy savings and home type)
Maximum Incentive:$2,000
Start Date:01/01/2006
Expiration Date:12/31/2014
Authority 1:
Date Enacted:
Expiration Date:
26 USC § 45L
08/08/2005 (subsequently amended)
12/31/2014
Authority 2:
Date Enacted:
Date Effective:
Expiration Date:
H.R. 5771
Tax Increase Prevention Act of 2014

12/19/2014
01/01/2014
12/31/2014
Summary:

NOTE: This credit expired at the end of 2013. The Tax Increase Prevention Act of 2014 retroactively renewed this tax credit effective January 1, 2014, expiring again on December 31, 2014. Any qualified home constructed and purchased in 2014 is eligible for this credit.

The federal Energy Policy Act of 2005 established tax credits of up to $2,000 for builders of all new energy-efficient homes, including manufactured homes constructed in accordance with the Federal Manufactured Homes Construction and Safety Standards. Initially scheduled to expire at the end of 2007, the tax credit was extended several times, and is now set to expire at the end of 2014.

The home qualifies for the credit if:

  • It is located in the United States;
  • Its construction is substantially completed before December 31, 2014;
  • It meets the energy saving requirements outlined in the statute; and
  • It is acquired from the eligible contractor after December 31, 2013, and before January 1, 2015, for use as a residence.

Energy Saving Requirements
Site-built homes qualify for a $2,000 credit if they are certified to reduce heating and cooling energy consumption by 50% relative to the International Energy Conservation Code (IECC) 2006 and meet minimum efficiency standards established by the Department of Energy. Building envelope component improvements must account for at least one-fifth of the reduction in energy consumption.

Manufactured homes qualify for a $2,000 credit if they conform to Federal Manufactured Home Construction and Safety Standards and meet the energy savings requirements of site-built homes described above. Manufactured homes qualify for a $1,000 credit if they conform to Federal Manufactured Home Construction and Safety Standards and reduce energy consumption by 30% relative to IECC 2006. In this case, building envelope component improvements must account for at least one-third of the reduction in energy consumption. Alternatively, manufactured homes can also qualify for a $1,000 credit if they meet ENERGY STAR Labeled Home requirements.

Certification
The Internal Revenue Service (IRS) has issued guidance to provide information about the certification process that a builder must complete to qualify for the credit. The guidance also provides for a public list of software programs that may be used in calculating energy consumption for purposes of obtaining a certification.

IRS Notice 2006-27 provides guidance for the credit for building energy-efficient homes other than manufactured homes. IRS Notice 2006-28 provides guidance for the credit for building energy-efficient manufactured homes. Click here to access IRS Form 8908: Energy Efficient Home Credit.

For more information on this and other energy efficiency tax credits, visit the ENERGY STAR web site.

Background

The federal Energy Policy Act of 2005 first established this tax credit. Initially scheduled to expire at the end of 2007, it was extended through 2008 by Section 205 of the Tax Relief and Health Care Act of 2006 (H.R. 6111), and then extended again through December 31, 2009 by Section 304 of The Energy Improvement and Extension Act of 2008 (H.R. 1424). The Tax Relief, Unemployment Insurance Reauthorization, and job Creation Act of 2010 (H.R 4853) again renewed the credit through December 31, 2011. After expiring at the end of 2011, the American Taxpayer Relief Act of 2012 retroactively renewed the cedit effective January 1, 2012, expiring again on December 31, 2013. The bill was again rectroactively renewed by the the Tax Increase Prevention Act of 2014 (H.R. 5771) to December 31, 2014. 


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




Renewable Electricity Production Tax Credit (PTC)   

Last DSIRE Review: 12/22/2014
Program Overview:
State: Federal
Incentive Type: Corporate Tax Credit
Eligible Renewable/Other Technologies: Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Municipal Solid Waste, Hydrokinetic Power, Anaerobic Digestion, Small Hydroelectric, Tidal Energy, Wave Energy, Ocean Thermal
Applicable Sectors: Commercial, Industrial
Amount:$0.023/kWh for wind, geothermal, closed-loop biomass
$0.011/kWh for other eligible technologies
Generally applies to first 10 years of operation
Eligible System Size:Marine and Hydrokinetic: Minimum nameplate capacity rating of 150 kW
Open-Loop Biomass Facilities Using Agricultural Livestock Waste: Minimum nameplate capacity of 150 kW
Carryover Provisions:Unused credits may be carried forward for up to 20 years following the year they were generated or carried back 1 year if the taxpayer files an amended return.
Expiration Date:12/31/2014
Web Site: http://www.irs.gov/pub/irs-pdf/f8835.pdf
Authority 1:
Date Enacted:
26 USC § 45
1992 (subsequently amended)
Authority 2:
Date Enacted:
Date Effective:
Expiration Date:
H.R. 5771 (Tax Increase Prevention Act of 2014)
12/19/2014
01/01/2014
12/31/2014
Authority 3:
Date Enacted:
IRS Notice 2013-29
04/15/2013
Authority 4:
Date Enacted:
IRS Notice 2013-60
09/20/2013
Authority 5:
Date Enacted:
IRS Notice 2014-46
08/08/2014
Authority 6:
Date Enacted:
Date Effective:
Expiration Date:
IRS Notice 2014–36
05/27/2014
01/01/2014
12/31/2014
Summary:

Note: The Tax Increase Prevention Act of 2014 extended the expiration date for this tax credit to December 31, 2014. Projects that are not under construction prior to January 1, 2015, are ineligible for this credit. See below for more information about determining when construction has commenced on a project. 

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. 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, and the Tax Increase Prevention Act of 2014 (H.R. 5771, Sec. 155) in December 2014.

Tax Credit 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 Registrar. (For 2014, the inflation adjustment factor used by the IRS is 1.5088.) 

The table below outlines the credit amount as it applies to different resource types. The table includes changes made by H.R. 8 in January 2013, and the inflation-adjusted credit amounts are current for the 2014 calendar year, as published in the IRS Notice 2014-36.

 Resource Type

 Credit  Amount

 Wind

 $0.023/kWh

 Closed-Loop  Biomass

 $0.023/kWh

 Open-Loop  Biomass

 $0.011/kWh

 Geothermal  Energy

 $0.023/kWh

 Landfill Gas

 $0.011/kWh

 Municipal Solid  Waste

 $0.011/kWh

 Qualified  Hydroelectric

 $0.011/kWh

 Marine and  Hydrokinetic

 $0.011/kWh

Tax Credit Duration

The duration of the credit is generally 10 years after the date the facility is placed in service, but there are two exceptions:

  • open-loop biomass, geothermal, landfill gas, and municipal solid waste combustion facilities placed into service after October 22, 2004, and before January 1, 2015, are only eligible for the credit for a 5-year period, and
  • open-loop biomass facilities placed in service before October 22, 2004, are eligible for the 5-year period beginning January 1, 2005.

Process for Claiming the Tax Credit

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 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 is January 1, 2014, meaning any qualifying project that commenced construction at any point in 2014 is 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 definitional 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, and 2014-46 (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—to determine when construction has begun on a qualified facility. Meeting the criteria of either method is sufficient to demonstrate that construction has commenced. In addition, “[b]oth methods require that a taxpayer make continuous progress towards completion once construction has begun,” which is satisfied if the facility is placed in service before January 1, 2016. In general, a fully or partially developed facility may be transferred without losing its qualification under the Physical Work Test or the Safe Harbor for purposes of the PTC or ITC.

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 amount or 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 before January 1, 2015.

If less than 5% of the total cost of the facility was paid or incurred prior to January 1, 2015, Safe Harbor is not fully satisfied; however, if a taxpayer paid or incurred at least 3%, the Safe Harbor may be satisfied and the PTC (or ITC) may be claimed with respect to some, but not all, of the individual facilities comprising the project. Specifically, “a taxpayer may claim the PTC or ITC on any number of individual facilities as long as the total aggregate cost of those individual facilities at the time the project is placed in service is not greater than 20 times the amount the taxpayer paid or incurred before” January 1, 2015 (Notice 2014-46).


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




Tribal Energy Program Grant   

Last DSIRE Review: 12/09/2014
Program Overview:
State: Federal
Incentive Type: Federal Grant Program
Eligible Efficiency Technologies: Refrigerators, Water Heaters, Lighting, Lighting Controls/Sensors, Chillers , Furnaces , Boilers, Central Air conditioners, Programmable Thermostats, Energy Mgmt. Systems/Building Controls, Caulking/Weather-stripping, Duct/Air sealing, Building Insulation, Windows, Siding, Roofs, Comprehensive Measures/Whole Building, Geothermal Heat Pumps, other energy efficiency improvements may be eligible
Eligible Renewable/Other Technologies: Solar Water Heat, Solar Space Heat, Photovoltaics, Wind, Biomass, Hydroelectric, Geothermal Electric
Applicable Sectors: Tribal Government
Amount:Varies by solicitation
Maximum Incentive:Varies by solicitation
Web Site: http://apps1.eere.energy.gov/tribalenergy
Authority 1:
25 USC § 3501 et seq.
Summary:

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, here for other tribal-energy related funding opportunities, and here to apply for technical assistance.


 
Contact:
  Lizana Pierce
EERE Tribal Energy Program
U.S. Department of Energy
Golden Field Office
15013 Denver West Parkway
Golden, CO 80401
Phone: (720) 356-1749
E-Mail: lizana.pierce@ee.doe.gov
Web Site: http://www.eere.energy.gov/tribalenergy




USDA - Energy Audit and Renewable Energy Development Assistance (EA/REDA) Program   

Last DSIRE Review: 02/18/2015
Program Overview:
State: Federal
Incentive Type: Federal Grant Program
Applicable Sectors: Schools, Local Government, State Government, Tribal Government, Municipal Utility, Rural Electric Cooperative, Institutional, Resource Conservation and Development Council (RC&D)
Maximum Incentive:$100,000
Program Budget:$2 million for 2015
Web Site: http://www.rd.usda.gov/programs-services/rural-energy-america-pro...
Authority 1:
Date Enacted:
Date Effective:
Agricultural Act of 2014 (Public Law No. 113-79)
02/07/2014
02/07/2014
Summary:

Note: The U.S. Department of Agriculture's Rural Development periodically issues Notices of Solicitation of Applications for the Rural Energy for America Program (REAP) in the Federal Registry. The most recent solicitation for the REAP program was on December 29th, 2014 and can be viewed in the Federal Registry here.

The Renewable Energy for America Program (REAP) Energy Audit and Renewable Energy Development Assistance Program (EA/REDA) provides assistance to agricultural producers and rural small businesses for energy audits and renewable energy technical assistance including renewable energy site assessments. 

Applicants must submit separate applications for assistance, limited to one energy audit and one REDA per fiscal year. The maximum aggregate amount of an energy audit and REDA grant in a Federal fiscal year* is $100,000. In 2015, $2 Million in EA/REDA grant funding is available.

Eligible project costs for eligible applicants includes salaries directly related to the project, travel expenses directly related to conducting energy audits or renewable energy development assistance, office supplies (e.g., paper, pens, file folders), administrative expenses, up to a maximum of 5 percent of the grant, which include but are not limited to utilities, office space, operation expenses of office and other project related equipment.

Land grant colleges and universities are referred to above as schools and institutions; K-12 schools are not eligible for this grant.

For more information on the REAP EA/REDA Grant, visit the USDA website.

History

The 2014 Agricultural Act (2014 Farm Bill) authorized the Rural Energy for America Program with $50 Million in mandatory funding each fiscal year. USDA overhauled the Rural Energy for America Program although the core program remains largely the same.  One major change includes a 3 tiered application structure including 1) total project costs of $80,000 or less, 2) total project costs more than $80,000 but less than $200,000, and, 3) total project costs of $200,000 or greater. Grant applications of $20,000 or less will compete in 5 competitions (Congress required 20% of funding to be used for small grants of $20,000 or less).

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, 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 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.





USDA - High Energy Cost Grant Program   

Last DSIRE Review: 11/20/2014
Program Overview:
State: Federal
Incentive Type: Federal Grant Program
Eligible Efficiency Technologies: Unspecified Technologies
Eligible Renewable/Other Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Wind, Biomass, Hydroelectric, Small Hydroelectric
Applicable Sectors: Commercial, Industrial, Residential, Nonprofit, Schools, Local Government, State Government, Tribal Government, Municipal Utility, Institutional
Amount:$50,000-$3,000,000
Maximum Incentive:$3 million
Installation Requirements:Both grid-connected and off-grid renewable energy installations are eligible
Program Budget:$7 million (June 2014 solicitation)
Start Date:2000
Web Site: http://www.rurdev.usda.gov/UEP_Our_Grant_Programs.html
Authority 1:
7 CFR 1709
Summary:

NOTE: The most recent solicitation for this program closed August 1, 2014. 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. Individuals, non-profits, commercial entities, state and local governments (including any agency or instrumentality thereof), and tribal governments are eligible for this grant. Individuals must work on a project that will benefit the community in order to qualify. 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.


 
Contact:
  Kristi Kubista-Hovis
U.S. Department of Agriculture
Rural Development, Electric Programs
1400 Independence Avenue, SW Stop 1560, Room 5165-South
Washington, DC 20250-1560
Phone: (202) 720-9545
Fax: (202) 690-0717
E-Mail: Kristi.Kubista-Hovis@wdc.usda.gov
Web Site: http://www.usda.gov/rus




USDA - Repowering Assistance Biorefinery Program   

Last DSIRE Review: 10/08/2014
Program Overview:
State: Federal
Incentive Type: Federal Grant Program
Eligible Renewable/Other Technologies: Landfill Gas, Biomass, Municipal Solid Waste, Ethanol, Biodiesel
Applicable Sectors: Commercial, Industrial, Local Government, Construction, Utility, State Government, Tribal Government, Fed. Government, Municipal Utility, Investor-Owned Utility, Rural Electric Cooperative, Agricultural, Institutional
Amount:Varies
Maximum Incentive:50% of the total project costs
Equipment Requirements:A facility (including equipment and processes) that converts renewable biomass into biofuels and biobased products, and may produce electricity.
Installation Requirements:Biorefineries must have been in existence on or before June 18, 2008
Web Site: http://www.rurdev.usda.gov/BCP_RepoweringAssistance.html
Authority 1:
Repowering Assistance Payment Instructions
Authority 2:
Date Effective:
9004 Interim Rule
03/14/2011
Authority 3:
7 USC § 8104
Authority 4:
Date Enacted:
Date Effective:
H.R. 8 (American Taxpayer Relief Act of 2012)
01/02/2013
01/02/2013
Summary:

The Repowering Assistance Program provides payments to eligible biorefineries to replace fossil fuels used to produce heat or power to operate the biorefineries with renewable biomass. Reimbursement payments are provided to offset a portion of the costs associated with the conversion of existing fossil fuel systems to renewable biomass fuel systems.

The reimbursement amounts vary and are determined by the availability of funds, the project scope, and the ability of the proposed project to meet all the scoring criteria. In particular reimbursement amounts are calculated by the percentage reduction in fossil fuel used by the biorefinery, the quantity of fossil fuels replaced by a renewable biomass system, and the cost effectiveness of the renewable biomass system. The program will provide reimbursement payments for eligible project costs of the renewable biomass system during the construction phase of the repowering project. Up to 90% of the funds can be utilized during project construction, with the remaining 10% made upon demonstration of successful completion of the project. A maximum of 50% of the total project costs can be reimbursed, as long as amount does not exceed the maximum award for the fiscal year.

Eligible technologies may include, but are not limited to, anaerobic digesters, processed steam, biomass boilers, or combined heat and power technologies (CHP). Applicants must demonstrate, at the time of application, that the proposed site has direct access to biomass or third party commitments to supply biomass for the repowering project for at least three years.

Payments are made for eligible post-application costs incurred during the construction phase of the repowering project.

Congress allocated $35 million for FY 2009, in addition to up to $15 million in discretionary funds annually beginning in FY 2009. The American Taxpayer Relief Act of 2012 extended discretionary funding through FY 2013.


 
Contact:
  U.S. Department of Agriculture
Rural Business - Cooperative Service
USDA/RBS, Room 5045-S, Mail Stop 3201
1400 Independence Avenue SW
Washington, DC 20250-3201
Phone: (202) 690-4730
Fax: (202) 690-4737
E-Mail: webmaster@rurdev.usda.gov
Web Site: http://www.rurdev.usda.gov/rbs




USDA - Rural Energy for America Program (REAP) Grants   

Last DSIRE Review: 12/09/2014
Program Overview:
State: Federal
Incentive Type: Federal Grant Program
Eligible Efficiency Technologies: Unspecified Technologies
Eligible Renewable/Other Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Wind, Biomass, Hydroelectric, Geothermal Electric, Geothermal Heat Pumps, CHP/Cogeneration, Hydrogen, Anaerobic Digestion, Small Hydroelectric, Tidal Energy, Wave Energy, Ocean Thermal, Renewable Fuels, Fuel Cells using Renewable Fuels, Microturbines, Geothermal Direct-Use
Applicable Sectors: Commercial, Schools, Local Government, State Government, Tribal Government, Rural Electric Cooperative, Agricultural, Institutional, Public Power Entities
Amount:2014 Renewable Grants: $2,500-$500,000
2014 Efficiency Grants: $1,500-$250,000
Loan and Grant Combination: Grant portion must exceed $1,500
Maximum Incentive:25% of project cost
Start Date:FY 2003
Web Site: http://www.rurdev.usda.gov/BCP_ReapResEei.html
Authority 1:
Date Enacted:
Date Effective:
7 USC § 8107
5/13/2002
FY 2003
Authority 2:
Date Enacted:
Date Effective:
H.R. 8 (American Taxpayer Relief Act of 2012)
01/02/2013
01/02/2013
Summary:

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 Registry. The most recent solicitation for the REAP program was on May 5th, 2014 and can be viewed in the Federal Registry here. The next Notice of Funding Availability will be published in the Federal Registry and on the USDA website here.

Notably, the 2014 Farm Bill removed authority for the USDA to fund REAP feasibility studies with REAP grants.

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.

In 2014, $12.3 million in grants and $56.4 million in loans was awarded. For a complete list of 2014 projects, click here.

Eligibility

Grants and loans are generally available to state government entities, local governments, tribal governments, land-grant colleges and universities**, rural electric cooperatives and public power entities, and other entities, as determined by the USDA. To be eligible for REAP grants and loans, an applicant must have a satisfactory revenue stream and be in control the budget, operations, and maintenance of a project for the entire duration of the 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 regional 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 above as "schools" and "institutions". It is important to note that K-12 schools are not eligible for this grant.


 
Contact:
  Public Information - RBS
U.S. Department of Agriculture
Rural Business - Cooperative Service
USDA/RBS, Room 5045-S, Mail Stop 3201
1400 Independence Avenue SW
Washington, DC 20250-3201
Phone: (202) 690-4730
Fax: (202) 690-4737
E-Mail: webmaster@rurdev.usda.gov
Web Site: http://www.rurdev.usda.gov/rbs




Clean Renewable Energy Bonds (CREBs)   

Last DSIRE Review: 10/12/2012
Program Overview:
State: Federal
Incentive Type: Federal Loan Program
Eligible Renewable/Other Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Municipal Solid Waste, Hydrokinetic Power, Anaerobic Digestion, Tidal Energy, Wave Energy, Ocean Thermal
Applicable Sectors: Schools, Local Government, State Government, Tribal Government, Municipal Utility, Rural Electric Cooperative
Amount:Varies
Terms:Certain terms for "New" CREBs differ from those for prior allocations. See IRS Notice 2009-33 for details.
Start Date:09/01/2010 (New CREBs Electric Cooperatives Solicitation)
Expiration Date:11/01/2010 (New CREBs Electric Cooperatives Solicitation deadline, expired)
Web Site: http://www.irs.gov/pub/irs-tege/tc_and_stcb_q-a._09-07-10_1.5.pdf
Authority 1:
Date Effective:
Expiration Date:
26 USC § 54 (Old CREBs)
08/08/2005
12/31/2009
Authority 2:
Date Enacted:
Date Effective:
26 USC § 54A (New CREBs)
10/03/2008
10/03/2008
Authority 3:
Date Enacted:
Date Effective:
26 USC § 54C (New CREBs)
10/03/2008 (subsequently amended)
10/03/2008
Authority 4:
Date Effective:
Expiration Date:
IRS Notice 2009-33
04/07/2009
08/04/2009 (application deadline expired, but terms remain effective)
Authority 5:
Date Effective:
Expiration Date:
IRS Announcement 2010-54
09/01/2010
11/01/2010 (application deadline expired)
Summary:

Note: The IRS is not currently accepting applications for New CREB bond volume. The deadline for New CREB applications from electric cooperatives under IRS Announcement 2010-54 expired November 1, 2010. Bond volume for other eligible sectors (government entities and public power providers) was fully allocated in October 2009.

Readers should also note that the terms "New" and "Old" CREBs are used in the following summary to distinguish between prior CREB allocations and the New CREB authorizations made by the U.S. Congress in 2008 and 2009. The use of the term "New CREBs" has legal significance in that New CREBs authorized under 26 USC § 54A and 54C have substantially different rules than prior CREB allocations authorized under 26 USC § 54.


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, the 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. 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.


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




Energy-Efficient Mortgages   

Last DSIRE Review: 10/06/2014
Program Overview:
State: Federal
Incentive Type: Federal Loan Program
Eligible Efficiency Technologies: Unspecified Technologies
Eligible Renewable/Other Technologies: Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Photovoltaics, Daylighting
Applicable Sectors: Residential
Web Site: http://www.resnet.us/ratings/mortgages
Summary:

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 Mortgagee 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. See www.natresnet.org/resources/lender/default.htm 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.





FHA PowerSaver Loan Program   

Last DSIRE Review: 12/04/2014
Program Overview:
State: Federal
Incentive Type: Federal Loan Program
Eligible Efficiency Technologies: Water Heaters, Furnaces , Central Air conditioners, Programmable Thermostats, Energy Mgmt. Systems/Building Controls, Caulking/Weather-stripping, Building Insulation, Windows, Doors, Comprehensive Measures/Whole Building
Eligible Renewable/Other Technologies: Solar Water Heat, Photovoltaics, Wind, Geothermal Heat Pumps
Applicable Sectors: Residential, Multi-Family Residential
Amount:Varies
Maximum Incentive:PowerSaver Home Energy Upgrade: $7,500
PowerSaver Second Mortgage: $25,000
PowerSaver Energy Rehab (203(k)): varies by location (up to $217,500 to $625,000)
Terms:Varies
Start Date:2011
Web Site: http://energy.gov/eere/buildings/powersaver-loans
Summary:

Federal Housing Administration (FHA) PowerSaver loans provide three financing options for homeowners to make home energy efficiency and renewable energy upgrades or improvements. FHA PowerSaver financing products are insured by the FHA.

PowerSaver started as a 2-year pilot program in 2011. The U.S. Department of Housing and Urban Development (HUD) and the FHA developed PowerSaver as part of the Recovery Through Retrofit initiative launched in May 2009.

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

Availability and Eligibility

For all three PowerSaver products, borrowers must select from a list of approved PowerSaver lenders and locations. 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.

PowerSaver is available to borrowers with good credit and manageable overall debt.

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. 


 
Contact:
  PowerSaver
E-Mail: PowerSaver@NREL.gov




Qualified Energy Conservation Bonds (QECBs)   

Last DSIRE Review: 07/09/2012
Program Overview:
State: Federal
Incentive Type: Federal Loan Program
Eligible Efficiency Technologies: Unspecified Technologies
Eligible Renewable/Other Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Municipal Solid Waste, Hydrokinetic Power, Anaerobic Digestion, Tidal Energy, Wave Energy, Ocean Thermal
Applicable Sectors: Local Government, State Government, Tribal Government
Amount:Varies
Authority 1:
Date Enacted:
Date Effective:
26 USC § 54A
10/03/2008 (subsequently amended)
10/03/2008
Authority 2:
Date Enacted:
Date Effective:
26 USC § 54D
10/03/2008 (subsequently amended)
10/03/2008
Authority 3:
Date Effective:
IRS Notice 2009-29
04/07/2009
Authority 4:
Date Enacted:
Date Effective:
26 USC § 6431
02/17/2009 (subsequently amended)
03/18/2010 (for QECBs)
Authority 5:
Date Effective:
IRS Notice 2010-35
04/26/2010
Authority 6:
Date Effective:
IRS Notice 2012-44
07/09/2012
Summary:

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.

For more information on QECBs, contact Timothy Jones, David White, or Zoran Stojanovich of the IRS Office of Associate Chief Counsel at (202) 622-3980.


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




U.S. Department of Energy - Loan Guarantee Program   

Last DSIRE Review: 11/20/2014
Program Overview:
State: Federal
Incentive Type: Federal Loan Program
Eligible Efficiency Technologies: Unspecified Technologies
Eligible Renewable/Other Technologies: Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Wind, Biomass, Hydroelectric, Geothermal Electric, Fuel Cells, Daylighting, Tidal Energy, Wave Energy, Ocean Thermal, Biodiesel, Fuel Cells using Renewable Fuels
Applicable Sectors: Commercial, Industrial, Nonprofit, Schools, Local Government, State Government, Agricultural, Institutional, Any non-federal entity, Manufacturing Facilities
Amount:Varies (program focuses on projects with total project costs over $25 million)
Maximum Incentive:Not specified
Terms:Full repayment is required over a period not to exceed the lesser of 30 years or 90% of the projected useful life of the physical asset to be financed
Web Site: http://www.lgprogram.energy.gov
Authority 1:
42 USC § 16511 et seq.
Authority 2:
10 CFR 609
Summary:
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. A solicitation for Renewable Energy Projects and Energy Efficiency Projects was issued in July 2014, with a final Part I application due date of December 2, 2015. Up to $2.5 billion is available for projects in renewable energy, efficient end-use, and efficient generation, transmission, and distribution technologies. 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.


 


 
Contact:
  Public Information - DOE
U.S. Department of Energy
1000 Independence Avenue, SW
Washington , DC 20585-0121
Phone: (202) 586-8336
E-Mail: LGProgram@hq.doe.gov
Web Site: http://www.lgprogram.energy.gov




USDA - Biorefinery Assistance Program   

Last DSIRE Review: 10/08/2014
Program Overview:
State: Federal
Incentive Type: Federal Loan Program
Eligible Renewable/Other Technologies: Landfill Gas, Biomass, Municipal Solid Waste, Ethanol, Biodiesel
Applicable Sectors: Commercial, Industrial, Local Government, Construction, Utility, State Government, Tribal Government, Fed. Government, Municipal Utility, Investor-Owned Utility, Rural Electric Cooperative, Agricultural, Institutional
Amount:90% maximum loan guarantee on loans of up to $125 million
80% maximum loan guarantee on loans of up $150 million
70% maximum loan guarantee on loans of $150-$200 million
60% maximum loan guarantee on loans of $200 million up to $250 million
Maximum Incentive:Maximum loan amount: 80% of project costs or $250 million
Terms:Term: 20 years or the useful life of the project, whichever is less
Rate: Lender's customary commercial interest rate, fixed or variable
Fees vary with % guarantee and loan amount
Web Site: http://www.rurdev.usda.gov/BCP_Biorefinery.html
Authority 1:
Date Enacted:
7 CFR 4279, Subpart C.
2/14/2011
Authority 2:
7 USC § 8103
Authority 3:
Date Enacted:
Date Effective:
H.R. 8 (American Taxpayer Relief Act of 2012)
01/02/2013
01/02/2013
Summary:

USDA Rural Development is offering loan guarantees for the development, construction, and retrofitting of commercial-scale biorefineries. Eligible borrowers include individuals, entities, Indian tribes, state or local governments, corporations, farm cooperatives or farm cooperative organizations, associations of agricultural producers, National Laboratories, institutions of higher education, rural electric cooperatives, public power entities, and consortium of any of these types of entities. Financed entities must provide at least 20% of the financing for eligible project costs, and applications for funding must include an independent feasibility study and technical assessment.  Eligible project costs include the purchase and installation of equipment, construction or retrofitting costs, permit and licensing fees, working capital, land acquisition, and the costs of financing.

The project must meet the following requirements:

  • Must be for the development and construction or the retrofitting of a commercial-scale biorefinery using an eligible technology
  • Must use an eligible feedstock for the production of advanced biofuels and biobased products
  • The majority of the production must be an advanced biofuels

Eligible advanced biofuels include:

  • Biofuel derived from cellulose, hemicellulose, or lignin, or other fuels derived from cellulose
  • Biofuel derived from sugar, starch, excluding ethanol derived from from corn kernel starch
  • Biofuel derived from waste material, including crop residue, vegetative waste material, animal waste, food waste, and yard waste
  • Diesel fuel derived from renewable biomass, including vegetable oil and animal fat
  • Biogas, including landfill gas and sewage waste treatment gas, produced through the conversion of organic matter from renewable biomass

Congress allocated $75 million for FY 2009 and $245 million for FY 2010, in addition to up to $150 million in discretionary funds annually beginning in FY 2009. The American Taxpayer Relief Act of 2012 extended discretionary funding through FY 2013.  For FY 2014, approximately $76 million in carry over budget will support a program level of approximately $181 million. 


 
Contact:
  National Office
U.S. Department of Agriculture
Business and Cooperative Programs
Mail Stop 3201
1400 Independence Avenue SW
Washington, DC 20250-3201
Phone: (202) 690-4730
Phone 2: (800) 877-8339
Fax: (202) 690-4737




USDA - Rural Energy for America Program (REAP) Loan Guarantees   

Last DSIRE Review: 12/09/2014
Program Overview:
State: Federal
Incentive Type: Federal Loan Program
Eligible Efficiency Technologies: Unspecified Technologies
Eligible Renewable/Other Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Wind, Biomass, Hydroelectric, Geothermal Electric, Geothermal Heat Pumps, CHP/Cogeneration, Hydrogen, Anaerobic Digestion, Small Hydroelectric, Tidal Energy, Wave Energy, Ocean Thermal, Renewable Fuels, Fuel Cells using Renewable Fuels, Microturbines, Geothermal Direct-Use
Applicable Sectors: Commercial, Agricultural
Amount:Varies
Maximum Incentive:$25 million per loan guarantee
Terms:Loans guaranteed 60%-85% depending on loan amount
Start Date:FY 2003
Web Site: http://www.rurdev.usda.gov/rbs/busp/bprogs.htm
Authority 1:
Date Enacted:
Date Effective:
7 USC § 8107
5/13/2002
FY 2003
Authority 2:
Date Enacted:
Date Effective:
H.R. 8 (American Taxpayer Relief Act of 2012)
01/02/2013
01/02/2013
Summary:

ote: 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 Registry. The most recent solicitation for the REAP program was on May 5th, 2014 and can be viewed in the Federal Registry here. The next Notice of Funding Availability will be published in the Federal Registry and on the USDA website here.

Notably, the 2014 Farm Bill removed authority for the USDA to fund REAP feasibility studies with REAP grants.

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.

In 2014, $12.3 million in grants and $56.4 million in loans was awarded. For a complete list of 2014 projects, click here.

Eligibility

Grants and loans are generally available to state government entities, local governments, tribal governments, land-grant colleges and universities**, rural electric cooperatives and public power entities, and other entities, as determined by the USDA. To be eligible for REAP grants and loans, an applicant must have a satisfactory revenue stream and be in control the budget, operations, and maintenance of a project for the entire duration of the 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 regional 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 above as "schools" and "institutions". It is important to note that K-12 schools are not eligible for this grant.


 
Contact:
  Public Information - RBS
U.S. Department of Agriculture
Rural Business - Cooperative Service
USDA/RBS, Room 5045-S, Mail Stop 3201
1400 Independence Avenue SW
Washington, DC 20250-3201
Phone: (202) 690-4730
Fax: (202) 690-4737
E-Mail: webmaster@rurdev.usda.gov
Web Site: http://www.rurdev.usda.gov/rbs




Residential Energy Conservation Subsidy Exclusion (Personal)   

Last DSIRE Review: 10/06/2014
Program Overview:
State: Federal
Incentive Type: Personal Exemption
Eligible Efficiency Technologies: Unspecified Technologies
Eligible Renewable/Other Technologies: Solar Water Heat, Solar Space Heat, Photovoltaics
Applicable Sectors: Residential, Multi-Family Residential
Amount:100% of subsidy
Web Site: http://www.irs.gov/publications/p525/index.html
Authority 1:
Date Enacted:
Date Effective:
26 USC § 136
10/24/1992 (subsequently amended)
01/01/1993
Summary:

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.


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




Residential Energy Efficiency Tax Credit   

Last DSIRE Review: 12/22/2014
Program Overview:
State: Federal
Incentive Type: Personal Tax Credit
Eligible Efficiency Technologies: Water Heaters, Furnaces , Boilers, Heat pumps, Central Air conditioners, Building Insulation, Windows, Roofs, Circulating fans used in a qualifying furnace
Eligible Renewable/Other Technologies: Biomass, Stoves that use qualified biomass fuel
Applicable Sectors: Residential
Amount:Purchases made in 2011 - 2014: Varies (see below)
Maximum Incentive:For purchases made in 2011 - 2014: Aggregate amount of credit is limited to $500. Taxpayer is ineligible for this tax credit if this credit has already been claimed by the taxpayer in an amount of $500 in any previous year.

For purchases made in 2009 or 2010: Aggregate amount of credit for all technologies placed in service in 2009 and 2010 combined is limited to $1,500
Equipment Requirements:Equipment must be new and in compliance with all applicable performance and safety standards as described in tax code
Start Date:1/1/2006
Expiration Date:12/31/2014
Web Site: http://www.energystar.gov/taxcredits
Authority 1:
Date Enacted:
Date Effective:
Expiration Date:
26 USC § 25C
8/8/2005 (subsequently amended)
1/1/2006
12/31/2014
Authority 2:
Date Enacted:
Date Effective:
Expiration Date:
H.R. 5771 (Tax Increase Prevention Act of 2014)
12/19/2014
01/01/2014
12/31/2014
Authority 3:
IRS Form 5695 & Instructions: Residential Energy Credits
Summary:

Note: This tax credit expired at the end of 2013. The Tax Increase Prevention Act of 2014 retroactively renewed this tax credit effective January 1, 2014, expiring again on December 31, 2014.  Any qualified equipment installed in 2014 is eligible for this credit. As in previous years, the cumulative maximum amount of tax credit that can be claimed by a taxpayer in all years combined is $500. If a taxpayer has already claimed a tax credit of $500 for purchases made in any previous year, they are ineligible for additional tax credits for any new equipment purchases.   

This credit applies to energy efficiency improvements in the building envelope of existing homes and for the purchase of high-efficiency heating, cooling and water-heating equipment. Efficiency improvements or equipment must serve a dwelling in the United States that is owned and used by the taxpayer as a primary residence. The maximum tax credit for all improvements made in 2011 - 2014 is $500. The cap includes tax credits for any improvements made in any previous year. If a taxpayer claimed $500 or more of these tax credits in any previous year, any purchases made in 2011 - 2014 will be ineligible for a tax credit.

Building Envelope Improvements
Owners of existing homes may receive a tax credit worth 10% of the cost of upgrading the efficiency of the building's envelope. Installation (labor) costs are not included and the credit is capped at $500 for all improvements. To be eligible for the credit, the improvement must meet the prescriptive requirements established for it under the 2009 International Energy Conservation Code (including supplements). The following improvements are eligible for the tax credit:

  • Insulation materials and systems designed to reduce a home's heat loss or gain
  • Exterior doors and windows (including skylights) --- no more than $200 in total credits can be claimed for windows in years 2006 - 2014
  • Pigmented metal roofs designed to reduce heat gain, and asphalt roofs with appropriate cooling granules.


Heating, Cooling and Water-Heating Equipment
Taxpayers who purchase qualified residential energy-efficient property may eligible for a tax credit. The credit is equal to the full cost of the equipment up to the following caps:

  • Advanced main air circulating fan: $50
  • Natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization rate of 95 or greater: $150
  • Electric heat pump water heater with an energy factor of at least 2.0: $300
  • Electric heat pump which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
  • Central air conditioner which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
  • Natural gas, propane, or oil water heater which has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent: $300
  • Biomass stoves that use "plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers": $300



Background
The Energy Policy Act of 2005 established the tax credit for energy improvements to existing homes. The credit was originally limited to purchases made in 2006 and 2007, with an aggregate cap of $500 for all qualifying purchases made in these two years combined. There were also separate individual caps for the different equipment types. The Energy Improvement and Extension Act of 2008 (H.R. 1424: Div. B, Sec. 302) of 2008 reinstated the credit for 2009 purchases and made other minor adjustments. The American Recovery and Reinvestment Act of 2009 further extended the credit to include improvements made in 2010 and replaced the $500 aggregate cap with a $1,500 aggregate cap for improvements made in 2009 and 2010. This credit has since been renewed several times, but the credit was reduced to its original form and original cap of $500.

Geothermal heat pumps were originally eligible for this credit, with a $300 cap. However, geothermal heat pumps are now eligible for the residential renewable energy tax credit, with no cap.


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




Residential Renewable Energy Tax Credit   

Last DSIRE Review: 10/06/2014
Program Overview:
State: Federal
Incentive Type: Personal Tax Credit
Eligible Renewable/Other Technologies: Solar Water Heat, Photovoltaics, Wind, Fuel Cells, Geothermal Heat Pumps, Other Solar-Electric Technologies, Fuel Cells using Renewable Fuels
Applicable Sectors: Residential
Amount:30%
Maximum Incentive:Solar-electric systems placed in service after 2008: no maximum
Solar water heaters placed in service after 2008: no maximum
Wind turbines placed in service after 2008: no maximum
Geothermal heat pumps placed in service after 2008: no maximum
Fuel cells: $500 per 0.5 kW
Eligible System Size:Fuel cells: 0.5 kW minimum
Equipment Requirements:Solar water heating property must be certified by SRCC or a comparable entity endorsed by the state where the system is installed. At least half the energy used to heat the dwelling's water must be from solar. Geothermal heat pumps must meet federal Energy Star criteria. Fuel cells must have electricity-only generation efficiency greater than 30%.
Carryover Provisions:Excess credit generally may be carried forward to next tax year
Start Date:1/1/2006
Expiration Date:12/31/2016
Web Site: http://www.energystar.gov/taxcredits
Authority 1:
Date Enacted:
Date Effective:
Expiration Date:
26 USC § 25D
8/8/2005 (subsequently amended)
1/1/2006
12/31/2016
Authority 2:
IRS Form 5695 & Instructions: Residential Energy Credits
Summary:

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.

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 excess credit may be carried forward until 2016, but it is unclear whether the unused tax credit can be carried forward after then. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.


Solar-electric property

  • 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, 2016.
  • The home served by the system does not have to be the taxpayer’s principal residence.


Solar water-heating property

  • 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, 2016.
  • 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

  • The maximum credit is $500 per half kilowatt (kW).
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2016.
  • 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

  • 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, 2016.
  • The home served by the system does not have to be the taxpayer’s principal residence.


Geothermal heat pumps

  • 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, 2016.
  • 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.


 
Contact:
  Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov




Rules, Regulations & Policies

Federal Appliance Standards   

Last DSIRE Review: 12/19/2012
Program Overview:
State: Federal
Incentive Type: Appliance/Equipment Efficiency Standards
Eligible Efficiency Technologies: Clothes Washers, Dishwasher, Refrigerators, Dehumidifiers, Ceiling Fan, Water Heaters, Lighting, Furnaces , Boilers, Heat pumps, Central Air conditioners, Motors, Exit and traffic signs, unit heaters, transformers, others
Applicable Sectors: Industrial, (Product Manufacturers)
Equipment RequirementsSpecified in Code of Federal Regulations
Test MethodsVaries
Implementing AgencyU.S. Department of Energy
Web Site: http://www.eere.energy.gov/buildings/appliance_standards
Authority 1:
42 USCS § 6291, et seq.
Authority 2:
10 CFR 430
Authority 3:
10 CFR 431
Authority 4:
Date Enacted:
HR 6582
12/18/2012
Summary:

Note: HR 6582 of 2012 made some modifications to the efficiency standards previously adopted for some appliance types. The bill did not adopt new standards for previously unregulated appliances, but made some minor changes to the requirements for walk-in coolers, walk-in freezers, water heaters, self-contained medium temperature commercial refrigerators, central air conditioners, and heat pumps. The bill also included some non-substantive technical corrections.

Minimum standards of energy efficiency for many major appliances were established by the U.S. Congress in the federal Energy Policy and Conservation Act (EPCA) of 1975, and have been subsequently amended by succeeding energy legislation, including the Energy Policy Act of 2005. The U.S. Department of Energy (DOE) is required to set appliance efficiency standards at levels that achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. The DOE web site lists updates and final rulings for 23 residential product categories and 18 commercial product categories.

The Energy Independence and Security Act of 2007 (EISA), established new standards for a few equipment types not already subjected to a standard, and updated some existing standards. Perhaps the most discussed new standard that EISA 2007 established is for general service lighting which will be deployed in two phases. First, by 2012-2014 (phasing in over several years), common light bulbs will be required to use about 20-30% less energy than present incandescent bulbs. Second, by 2020, light bulbs must consume 60% less energy than today's bulbs. This requirement will effectively phase out the incandescent light bulb.

The president issued a Memorandum for the Secretary of Energy in February of 2009 requesting the DOE take all necessary steps to finalize outstanding efficiency standards as expeditiously as possible. Such standards include those with deadlines prior to and including August 8, 2009. The memorandum also calls on the DOE to prioritize the development of efficiency standards for the remaining product categories based on energy savings. Standards that will result in the greatest energy savings should be developed first, however, the DOE must ensure that it meets applicable deadlines for all standards.

Note: Several states have adopted their own appliance standards. Under the general rules of federal preemption, states which had set standards prior to federal enactment may enforce their state standards up until the federal standards become effective. States that have not set standards for a product category that is now enforced by the federal government are subject to the federal standard immediately.


 
Contact:
  Public Information - DOE
U.S. Department of Energy
Office of Building Technology Assistance
1000 Independence Avenue, EE-42
Washington, DC 20585
Phone: (877) 337-3463
Web Site: http://www.eere.energy.gov/buildings




Energy Goals and Standards for Federal Government   

Last DSIRE Review: 03/24/2014
Program Overview:
State: Federal
Incentive Type: Energy Standards for Public Buildings
Eligible Efficiency Technologies: Comprehensive Measures/Whole Building, Unspecified Technologies
Eligible Renewable/Other Technologies: Solar Water Heat, Other Distributed Generation Technologies
Applicable Sectors: Fed. Government
Goal:Total energy reduction goal of 30% by FY 2015, using FY 2003 as baseline
Requirement:Energy efficiency specs required in procurement bids and evaluations. Requires premium efficient products for a variety of equipment types.
New federal buildings must be designed 30% below ASHRAE standards or IECC, and obtain 30% of their hot water demand from solar water heating, if life-cycle cost-effective.
Web Site: http://www1.eere.energy.gov/femp/regulations/requirements_by_subj...
Authority 1:
Date Enacted:
Energy Policy Act 2005 (sec. 102, 104, 109)
8/8/2005
Authority 2:
Date Enacted:
Date Effective:
Executive Order 13423
01/24/2007
01/24/2007
Authority 3:
Date Enacted:
Date Effective:
Energy Independence and Security Act 2007 (sec. 431, 523)
12/19/2007
12/19/2007
Authority 4:
Date Enacted:
Date Effective:
Executive Order 13514
10/5/2009
10/5/2009
Summary:

The federal Energy Policy Act of 2005 (EPAct 2005) established several goals and standards to reduce energy use in existing and new federal buildings. Executive Order 13423, signed in January 2007, expanded on those goals and standards and was later reaffirmed by congress with the Energy Independence and Security Act of 2007 (EISA 2007). EISA 2007 extended an existing federal energy reduction goal to 30% by fiscal year 2015; directed federal agencies to purchase Energy Star and Federal Energy Management Program (FEMP)-designated products; and required new federal buildings to be built 30% below ASHRAE* standards or the International Energy Conservation Code (IECC). The General Services Administration announced an even stricter requirement in their FY 2010-2015 Strategic Sustainability Performance Plan, stating that all new federal buildings will be designed to achieve the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Gold certification, and meet Energy Star standards.

Most recently, Executive Order 13514, signed in October 2009, created a series of new requirements aimed at increasing the sustainability of all federal agencies. To help achieve these goals, the Executive Order requires all federal agencies to appoint a Senior Sustainability Officer who will prepare and implement a Strategic Sustainability Performance Plan for the agency. These plans can be found here.

Section 431 of EISA 2007 increased the federal energy reduction goal from 2% per year (as established by EPAct 2005) to 3% per year, resulting in 30% greater efficiency by 2015. The reporting baseline for energy savings is 2003, so that energy consumption per gross square foot of federal buildings is reduced, compared to energy consumption in 2003. The specified percentage reductions for each fiscal year are:

  • FY 2006 .......2%
  • FY 2007 .......4%
  • FY 2008 .......9%
  • FY 2009 .......12%
  • FY 2010 .......15%
  • FY 2011 .......18%
  • FY 2012 .......21%
  • FY 2013 .......24%
  • FY 2014 .......27%
  • FY 2015 .......30%

Under EPAct 2005, federal agencies are permitted to retain savings achieved through energy and water reductions. To help achieve these energy reductions, new construction and major renovation of agency buildings must comply with the "Guiding Principles for Federal Leadership in High Performance and Sustainable Buildings" set forth in the Federal Leadership in High Performance and Sustainable Buildings Memorandum of Understanding (2006). The U.S. Department of Energy (DOE) is charged with recommending new requirements for federal energy performance for FY 2016 - FY 2025 by December 31, 2014.

Section 104 of EPAct 2005 directed federal agencies to purchase Energy Star and FEMP-designated products when procuring energy-consuming items covered by the Energy Star program, except when purchasing such items is not cost-effective or does not meet functional requirements of the agency. Agencies must also incorporate energy-efficient specifications in procurement bids and evaluations, and must only purchase premium efficient electric motors, air conditioning and refrigeration equipment. EPAct 2005 also instructed the General Services Administration (GSA) and the U.S. Department of Defense to clearly identify and display Energy Star and FEMP-designated products in any inventory, catalog or product listing. The Executive Orders additionally made requirements specifically for electronic equipment purchased by federal agencies. According to the Executive Orders, electronic equipment must be registered by the Electronic Product Environmental Assessment Tool (EPEAT), Energy Star, or FEMP unless there is no standard for such product.

Section 109 of EPAct 2005 required new federal buildings to be designed 30% below ASHRAE standards or IECC, to the extent that technologies employed are life-cycle cost-effective. In addition, sustainable design principles must be applied to new and replacement buildings. All agencies must identify new building projects in their budget requests and identify those that meet or exceed the standard.

Section 523 of the EISA 2007 requires that at least 30% of the hot water demand for each new federal building or existing federal buildings undergoing a major renovation be met through the use of solar hot water heating, if it is determined to be life-cycle cost-effective.

The executive orders also call for agencies to reduce water consumption intensity when cost-effective. Additionally, agencies that operate fleets of at least 20 vehicles are also required to reduce their fleet's total consumption of petroleum products by 2% annually through 2015, while increasing their consumption of non-petroleum-based fuel by 10% per year. Agencies are also required to purchase plug-in hybrid vehicles when life-cycle cost analysis demonstrates their cost to be reasonably similar to other vehicles.

In addition to these requirements for building performance, the federal government also has green power purchasing goals for the federal government, whereby the 20% of electricity used by federal agencies must be obtained from renewable sources by 2020. Executive Order 13423 also requires at least half of the required renewable energy consumed by an agency in a fiscal year to come from sources placed in service in 1999 or later.


* ASHRAE is the acronym for the American Society of Heating, Refrigerating and Air-Conditioning Engineers.


 
Contact:
  Public Information - FEMP
U.S. Department of Energy
Federal Energy Management Program
EE-2L
1000 Independence Ave., SW
Washington, DC 20585-0121
Phone: (202) 586-5772
Fax: (202) 586-3000
Web Site: http://www1.eere.energy.gov/femp




U.S. Federal Government - Green Power Purchasing Goal   

Last DSIRE Review: 03/24/2014
Program Overview:
State: Federal
Incentive Type: Green Power Purchasing
Eligible Renewable/Other Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Municipal Solid Waste, Tidal Energy, Wave Energy, Ocean Thermal
Applicable Sectors: Fed. Government
Renewables % or Amount:10% in fiscal year 2015
15% in fiscal years 2016 and 2017
17.5% in fiscal years 2018 and 2019
20% in fiscal year 2020 and thereafter
Web Site: http://www1.eere.energy.gov/femp/regulations/requirements_by_subj...
Authority 1:
Date Enacted:
42 USC § 15852
8/8/2005
Authority 2:
Date Enacted:
Date Effective:
Executive Order 13423
01/24/2007
01/24/2007
Authority 3:
Date Enacted:
Date Effective:
Presidential Memorandum
12/05/2013
12/05/2013
Summary:

The federal Energy Policy Act of 2005 (EPAct 2005) extended and expanded several previous goals and standards to reduce energy use in existing and new federal buildings. Section 203 of EPAct 2005 required that, to the extent it is economically feasible and technically practicable, the total amount of renewable electric energy consumed by the federal government during 2013 and thereafter shall not be less than 7.5%. That target was updated and expanded by a Presidential Memorandum on December 5, 2013, which states that, to the extent economically feasible and technically practicable, the following percentages of the total amount of electric energy consumed by each agency during any fiscal year shall come from renewable energy:

  • 10% in fiscal year 2015
  • 15% in fiscal years 2016 and 2017
  • 17.5% in fiscal years 2018 and 2019
  • 20% in fiscal year 2020 and thereafter

Agencies can meet these targets through the following means, which are listed in order of priority:

  1. installing agency-funded renewable energy on-site at Federal facilities and retain renewable energy certificates;
  2. contracting for energy that includes the installation of a renewable energy project on-site at a Federal facility or off-site from a Federal facility and the retention of renewable energy certificates for the term of the contract;
  3. purchasing electricity and corresponding renewable energy certificates; and
  4. purchasing renewable energy certificates (RECs).
The amount of renewable-energy credit is doubled for electricity produced and used on-site at a federal facility, produced on federal lands and used at a federal facility, or if it is produced on Indian land as defined in title XXVI of the Energy Policy Act of 1992 and used at a federal facility.

Renewable electrical energy technologies defined in this section include solar, wind, biomass, landfill gas, ocean (including tidal, wave, current and thermal), geothermal, municipal solid waste, and new hydroelectric generation capacity achieved from increased efficiency or additions of new capacity at an existing hydroelectric project. Executive Order 13423, issued in January 2007, requires at least half of the mandated renewable energy consumed by an agency in a fiscal year to be generated by systems placed into service after January 1, 1999.

The Federal Energy Management Program (FEMP) has issued guidelines to help federal agencies meet energy management and renewable energy requirements for complying with EPAct 2005 and Executive Order 13423. For an overview of these requirements and for updates on progress in meeting the federal renewable-energy goals, see the FEMP web site

Within 180 days of the date of the memorandum the Department of Energy(DOE) is required to issue an update to its Renewable Energy Requirement Guidance for EPACT 2005 and Executive Order 13423 to address the new requirements created by the memorandum. 

Within 120 days of the date of the memorandum, DOE, through FEMP, and in coordination with the EPA, the Department of Defense, the Department of Veterans Affairs, GSA, and other agencies, shall provide recommendations to the Chair of the Council on Environmental Quality on procurement, reporting, and accounting procedures related to agency use of renewable energy certificates in meeting the targets, including procedures and policies on the appropriate certification and tracking of RECs, and the sale and purchase of RECs. 


 
Contact:
  Public Information - FEMP
U.S. Department of Energy
Federal Energy Management Program
EE-2L
1000 Independence Ave., SW
Washington, DC 20585-0121
Phone: (202) 586-5772
Fax: (202) 586-3000
Web Site: http://www1.eere.energy.gov/femp




Interconnection Standards for Small Generators   

Last DSIRE Review: 10/01/2012
Program Overview:
State: Federal
Incentive Type: Interconnection
Eligible Renewable/Other Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, CHP/Cogeneration, Anaerobic Digestion, Small Hydroelectric, Tidal Energy, Wave Energy, Ocean Thermal, Microturbines, Other Distributed Generation Technologies
Applicable Sectors: Commercial, Industrial, Residential, Nonprofit, Schools, Local Government, State Government, Tribal Government, Fed. Government, Agricultural, Institutional
Applicable Utilities:FERC standards generally apply to all transmission-level interconnection; state standards generally apply to distribution-level interconnection
System Capacity Limit:20 MW
Standard Agreement:Yes
Insurance Requirements:"Additional liability insurance" required only "if necessary as a function of owning and operating a generating facility"
External Disconnect Switch:Not addressed
Net Metering Required:No
Authority 1:
Date Enacted:
FERC Order No. 2006
5/12/2005
Authority 2:
Date Enacted:
FERC Order No. 2006-A
11/22/2005
Authority 3:
Date Enacted:
FERC Order No. 2006-B
7/20/2006
Summary:

The Federal Energy Regulatory Commission (FERC) adopted "small generator" interconnection standards for distributed energy resources up to 20 megawatts (MW) in capacity in May 2005.* The FERC's standards apply only to facilities subject to the jurisdiction of the commission; these facilities mostly include those that interconnect at the transmission level. The FERC's standards generally do not apply to distribution-level interconnection, which is regulated by state public utilities commissions. However, the FERC has noted that its interconnection standards for small generators should serve as a useful model for state-level standards.

The FERC's standards include Small Generator Interconnection Procedures (SGIP) and a Small Generator Interconnection Agreement (SGIA). The SGIP contains the technical procedures that the small generator and utility must follow in the course of connecting the generator with the utility's lines. The SGIA contains the contractual provisions for the interconnection and spells out who pays for improvements to the utility's electric system (if needed to complete the interconnection). The standards include provisions for three levels of interconnection:

  • The "10-kilowatt (kW) Inverter Process," for certified, inverter-based systems no larger than 10 kW;
     
  • The "Fast Track Process," for certified systems no larger than 2 MW; and
     
  • The default "Study Process," for all other systems no larger than 20 MW.

The standards include technical screens for each level of interconnection. Notably, the FERC standards do not require systems to include an external disconnect switch. Utilities and customers must follow specific timelines, and guidelines for interconnection and study fees are established. Customers must obtain liability insurance "sufficient to insure against all reasonably foreseeable direct liabilities given the size and nature of the generating equipment being interconnected, the interconnection itself, and the characteristics of the system to which the interconnection is made." Additional liability insurance must be obtained "only if necessary as a function of owning and operating a generating facility."


* The FERC adopted interconnection standards for facilities larger than 20 MW in July 2003. (See FERC Order Nos. 2003, 2003-A, 2003-B and 2003-C.) FERC's standards for larger generators include standard Large Generator Interconnection Procedures (LGIP) and a standard Large Generator Interconnection Agreement (LGIA).


 
Contact:
  Public Information - FERC
Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426
Web Site: http://www.ferc.gov




NCSU - home
Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2014 - 2015 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.