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Iowa

Iowa

Incentives/Policies for Renewables & Efficiency

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Renewable Energy Production Tax Credits (Corporate)   

Last DSIRE Review: 07/16/2013
Program Overview:
State: Iowa
Incentive Type: Corporate Tax Credit
Eligible Renewable/Other Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydrogen, Anaerobic Digestion
Applicable Sectors: Commercial, Industrial, Schools, Rural Electric Cooperative, Agricultural, Institutional
Amount:1.5¢/kWh (IA Code § 476C) or 1.0¢/kWh (IA Code § 476B) for 10 years after facility begins producing energy
Maximum Incentive:1.5¢/kWh (IA Code § 476C)
Eligible System Size:Iowa Code 476B: 2 MW – 30 MW generally for applications after March 1, 2008; Schools, Hospitals: Minimum 750 kW for applications after June 30, 2009
Iowa Code 476C: Non-wind facilities may be no more than 60 MW nameplate capacity. Facilities that consume energy on-site must be at least 750 kW nameplate capacity. For both wind and non-wind facilities, an individual facility's capacity eligibility is limited to 2.5 MW per qualifying owner.
Equipment Requirements:Facilities must be certified by the Iowa Utilities Board (IUB)
Carryover Provisions:Credits in excess of tax liability in a given year may be carried forward up to 7 years
Start Date:06/15/2005
Web Site: http://www.state.ia.us/government/com/util/energy/renewable_tax_c...
Authority 1:
Date Enacted:
Date Effective:
IA Code § 476C
6/15/2005 (subsequently amended)
6/15/2005
Authority 2:
Date Enacted:
Date Effective:
IA Code § 476B
6/15/2005 (subsequently amended)
6/15/2005
Authority 3:
IAC 199-15.18 et seq.
Summary:

In June 2005, Iowa enacted legislation creating two separate production tax credit programs for energy generated by eligible wind and renewable energy facilities. An eligible facility can qualify for only one of the two credits, codified as Iowa Code § 476C and § 476B. In January 2006, the Iowa Utilities Board (IUB) adopted rules governing the facility eligibility process (Docket No. RMU-05-08), and issued a final rule amendment in July 2008 (IUB Docket No. RMU-08-04). The rules were incorporated into the administrative code (IAC 199-15.18 through 199-15.21). The legislature has periodically amended sections 476B and 476C, most recently with HF 672 (May 2011) and HF 590 (July 2011). The corresponding rule changes (Docket No. RMU-2011-0003) are effective October 26, 2011.

Iowa Code § 476C Tax Credit – Wind and Other Renewable-Energy Facilities

Under Iowa Code § 476C, a production tax credit of 1.5¢ per kilowatt-hour is available for energy generated by eligible wind energy generators and other renewable energy facilities, including biomass and solar. In addition, Iowa offers $4.50 per million BTUs of biogas used to generate either electricity or heat for commercial purposes, or $1.44 per thousand cubic feet of hydrogen fuel generated and sold by an eligible renewable energy facility. These credits may be applied toward the state's personal income tax, business tax, financial institutions tax, or sales and use tax. All tax credits are transferable.

To qualify for the credit, a renewable energy facility must be at least 51% owned by specifically defined qualifying owners, and must be approved as eligible by the IUB. Furthermore, facilities must be placed into service on or after July 1, 2005, and before January 1, 2015.

The maximum total amount of wind generating capacity eligible for this credit was increased from 180 megawatts (MW) to 330 MW in April 2009, then increased to 363 MW in May 2011. The maximum total eligibility for other renewable technologies is 53 MW (increased from 20 MW in May 2011). Of this 53 MW, 10 MW is reserved for eligible facilities incorporated within or associated with an ethanol plant engaged in the sale of ethanol to states to meet a low carbon fuel standard. For both wind and non-wind facilities, an individual facility's capacity eligibility is limited to 2.5 MW per qualifying owner, and facility owners may not have an ownership interest in more than two eligible facilities. In addition, for non-wind applications filed on or after July 1, 2011, the total nameplate capacity size of the facility may not exceed 60 MW, and the facility's total capacity eligibility is limited to 10 MW.

Facilities must be operational within 30 months of IUB approval to maintain eligibility status. If the facility is not operational within the initial 30 month period, a 12-month extension can be requested. Afterward, further 12-month extensions can be requested if the facility is still expected to become operational. If the applicant does not apply for extensions, the facility will lose its eligibility status.

H.F. 672 added a provision that allows facilities to use generated renewable energy for on-site consumption. However, for applications filed on or after July 1, 2011, facilities that are less than .75 MW do not qualify for the tax credit if any the renewable energy produced is consumed on site.

As of October 2011, the total amount of eligibility requested exceeds the 363 MW (more than 390 MW in active applications). If there is a reduction in capacity for any of the eligible facilities, or if any of the facilities are not operational within the statutory time limits, released capacity will become available to those who did not receive a full allocation of requested capacity, or who filed an application after capacity limits were fully subscribed. If any capacity is released, applications will be processed in the order received.

After eligibility status is granted, the facility may apply for tax credit certificates over a 10-year period, beginning when the facility initiates energy production. Credits will not be issued for renewable energy produced or purchased for on-site consumption after December 31, 2024. The IUB will verify the number of kilowatt-hours or BTUs sold by each eligible facility. The Iowa Department of Revenue will review the tax credit application and IUB verification, and issue and track the tax credit certificates. Credit certificates in excess of a taxpayer’s liability for a taxable year may be carried forward for a maximum of seven years. Certificates may be transferred or sold one time to a third party. Transferred certificates may be used against a different type of tax than that noted on the original certificate.

Solar facilities taking a credit under this provision cannot claim a credit under the Solar Energy Systems Tax Credit.

Iowa Code § 476B Tax Credit – Wind-Energy Facilities Only

Under Iowa Code § 476B, a production tax credit of 1.0¢ per kilowatt-hour is available for electricity generated by eligible wind energy facilities, including electricity that is sold or used for on-site consumption. The tax credit may be applied toward the state's personal income tax, business income tax, financial institutions tax, sales and use tax, or energy replacement generation tax. All tax credits are transferrable. The credits were formerly not available to facility owners that received the state's property tax exemption for renewable energy systems, the local option special assessment of wind energy devices, or the sales tax exemption for wind energy equipment. However, the April 2009 legislation removed this restriction effective for the 2008 tax year and thereafter. (See the DSIRE records for more information on these incentives).

To qualify for the credit, a wind energy facility must be approved as eligible by the IUB. There are no specific ownership criteria for individual projects; however, facility owners may not own more than two eligible facilities, and must have an executed power purchase agreement or interconnection agreement (except when the electricity is used for on-site consumption). Facilities must be placed into service on or after July 1, 2005, but before July 1, 2012. In May 2011, the maximum total program eligibility was reduced from 150 MW to 50 MW. For applications filed on or after March 1, 2008, the total nameplate capacity of the facility cannot be less than 2 MW or greater than 30 MW. Applications from schools, colleges, universities, and hospitals filed on or after July 1, 2009 must have a minimum nameplate capacity of 750 kW. Facilities must be operational within 18 months of IUB approval to maintain eligibility status. Facility owners may apply for a 12-month extension of the 18-month limit if they are unable to obtain generating equipment.

As of October 2011, the total amount of eligibility requested exceeds the 50 MW program limit (140 MW in active applications). If there is a reduction in capacity for any of the eligible facilities, or if any of the facilities lose their eligibility status, released capacity will become available to those who did not receive a full allocation of requested capacity, or who filed an application after capacity limits were fully subscribed. If any capacity is released, applications will be processed in the order received.

Once the IUB determines that a facility is eligible, facility owners may apply for wind energy tax credit certificates over a 10-year period, beginning with the initial production of electricity. The IUB will verify the number of kilowatt-hours sold or claimed for self-use by each eligible facility. The Iowa Department of Revenue will review the tax credit application and IUB verification, and issue and track the tax credit certificates. Credit certificates in excess of a taxpayer’s liability for a taxable year may be carried forward for a maximum of seven years. The certificates are freely transferable (i.e., they can be transferred more than once). Transferred certificates may be used against a different type of tax than that noted on the original certificate.


 
Contact:
  Brenda Biddle
Iowa Utilities Board
1375 E. Court Avenue
Des Moines, IA 50319
Phone: (515) 725-7305
E-Mail: Brenda.biddle@iub.iowa.gov
Web Site: http://www.state.ia.us/iub
 
  Public Information
Iowa Department of Revenue
Hoover State Office Building
Des Moines, IA 50319
Phone: (800) 367-3388
Phone 2: (515) 281-3114
Fax: (515) 242-6487
Web Site: http://www.iowa.gov/tax/index.html
 
  Ellen Shaw
Iowa Utilities Board
1375 E. Court Avenue
Des Moines, IA 50319
Phone: (515) 725-7348
E-Mail: ellen.shaw@iub.iowa.gov
Web Site: http://www.state.ia.us/iub
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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 2013 - 2014 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.