Iowa
Incentives/Policies for Renewables & Efficiency
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Last DSIRE Review: 05/04/2009
| Incentive Type: |
Corporate Tax Credit |
| State: |
Iowa |
| Eligible Renewable/Other Technologies: |
Solar Thermal Electric,
Photovoltaics,
Landfill Gas,
Wind,
Biomass,
Hydrogen,
Anaerobic Digestion
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| Applicable Sectors: |
Commercial,
Industrial,
Schools,
Rural Electric Cooperative,
Agricultural,
Institutional
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| 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) |
| Carryover Provisions: | Credits in excess of tax liability in a given year may be carried forward up to 7 years |
| 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: Facility's combined capacity may not exceed 2.5 MW per qualifying owner
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| Equipment/Installation Requirements: | Facilities must be certified by the Iowa Utilities Board (IUB) |
| Project Review/Certification: | Energy production/sales data subject to review and verification by the IUB prior to the issuance of a tax credit certificate by the Department of Revenue |
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Web Site: |
http://www.state.ia.us/
government/com/util/energy/renewable_tax_credits.html
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Authority 1:
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IA Code § 476C
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| Date Enacted: | 6/15/2005 |
| Date Effective: | 6/15/2005 |
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Authority 2:
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IA Code § 476B
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| Date Enacted: | 6/15/2005 |
| Date Effective: | 6/15/2005 |
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Authority 3:
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IAC 199-15.18 et seq.
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| Date Effective: | 10/01/2008 (latest revision) |
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Authority 4:
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S.F. 456
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| Date Enacted: | 04/23/2009 |
| Date Effective: | 01/01/2008 (retroactive to 2008 tax year) |
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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. On January 26, 2006, the Iowa Utilities Board (IUB) adopted rules governing the facility eligibility process (Docket No. RMU-05-08). Subsequent amendments resulted in further rule changes, culminating with the issuance of a final rule amendment by the IUB in July 2008 (IUB Docket No. RMU-08-04), which has now been incorporated into the administrative code (IAC 199-15.18 through 199-15.21). Sections 476B and 476C were amended yet again in April 2009 by S.F. 456, which will necessitate further administrative code changes in the future.
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 and sold by eligible wind energy generators and other renewable energy facilities, including biomass and solar. Under the same law, 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.
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, 2012. The maximum total amount of wind generating capacity eligible for this credit was increased from 180 megawatts (MW) to 330 MW in April 2009. The maximum total eligibility for other renewable technologies is 20 MW. A facility's combined capacity may not exceed 2.5 MW per qualifying owner, and facility owners may not have an ownership interest in more than two eligible facilities. Facilities must be operational within 30 months of IUB approval to maintain eligibility status, although for wind energy facilities that are delayed by equipment availability issues, the April 2009 legislation allows an additional 24 months for the facility to become operational.
Regarding total maximum eligibility limits, as of March 2009 active applications on file with the IUB exceeded the 20 MW maximum (30.2 MW in active applications) for other renewable technologies, and the 330 MW maximum (353 MW in active applications) for wind. 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.
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.
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 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. This credit was 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. For applications filed on or after March 1, 2008, facilities must have a minimum nameplate capacity of at least 2 MW and a maximum capacity of 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. The maximum total amount of generating capacity eligible for the credit is 150 MW (decreased from 450 MW in April 2009). 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.
If there is a reduction in capacity for any of the eligible facilities, or if any of the facilities are not operational within 18 or 30 months, 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. 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 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.
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