Kentucky - Energy tax credit, solar rebates and incentives

Kentucky Renewable and Solar Energy Incentives

TVA - Generation Partners Program

Incentive Type: Performance-Based Incentive
Eligible Renewable/Other Technologies: Photovoltaics, Landfill Gas, Wind, Biomass, Municipal Solid Waste, Small Hydroelectric
Applicable Sectors: Commercial, Residential
Amount: $1000 plus $0.12/kWh above the retail rate for solar and $0.03/kWh above the retail rate for all other eligible renewables

Summary: Tennessee Valley Authority (TVA) and participating power distributors of TVA power offer a production-based incentive program to Valley homeowners and businesses for the installation of renewable generation systems from the following qualifying resources: solar, wind, low-impact hydropower, and biomass called Generation Partners. The energy generated from these renewable generation systems will count towards TVA's green power pricing program, Green Power Switch. 
 
TVA will purchase 100% of the output from a qualifying system at a premium of $0.12 per kilowatt-hour (kWh) on top of the retail electricity rate for solar and $0.03 per kilowatt-hour on top of the retail electricity rate for wind, low-impact hydro, and biomass. TVA will retain all rights to any renewable energy credits (including tradable renewable credits or green tags) or other associated benefits of energy generated from the renewable nature of the qualifying system. 
Payment is made in the form of a credit issued by the local power company on the monthly power bill for the home or business where the generation system is located. If a qualifying system produces more electricity than it consumes, payment for the excess generation will be issued either monthly or annually, at the discretion of the power company. All new participants in the Generation Partners program will receive a $1000 incentive to offset the upfront cost of the qualifying system. 
 
The installed capacity goal for the entire program is 200 megawatts (MW). The contract term is 10 years. Qualifying systems must have a minimum output of 500 watts AC and a maximum output of 999 kilowatts. Installations must also comply with local codes and adhere to guidelines established by the program. All equipment must be in compliance with environmental regulations and national standards, certified by a licensed electrician, and meet all applicable codes. Systems are dual-metered and must have an external disconnect switch, must complete an interconnection agreement, and be grid-tied. 
 
As of October 2009, there are 91 distributors in the Valley that participate in the Generation Partners program; participation is at the discretion of the power company. rst year production of the system. This amount is verified through monthly monitoring over the first year of operation. Rebate checks are mailed out quarterly, as production is verified. The rebate for PV systems is $1.50 per kilowatt-hour (kWh) for systems sized 25 kW or less and $0.75/kWh for systems over 25 kW. The rebate for wind systems is $1.25/kWh for systems sized 20 kW or less and $0.625/kWh for systems over 20 kW. Wind systems over 20 kW must be specially approved on a case-by-case basis to receive a rebate. Rebates for solar water heating systems are based on collector area. Systems that are 320 square feet or less will receive $30/square foot; systems that are greater than 320 square feet will receive $15/square foot. Solar water heating systems must be SRCC-certified and must be installed on a residential or small commercial building. Rebates are available through March 31, 2012, or whenever program funds run out.

Renewable Energy Tax Credit (Corporate)

Incentive Type: Corporate Tax Credit
Eligible Renewable/Other Technologies: Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Photovoltaics, Wind, Geothermal Heat Pumps, Combination Active Solar Space-Heating and Water Heating System
Applicable Sectors: Commercial, Industrial, Agricultural
Amount: PV: $3/W DC
All other systems: 30% of eligible costs
Maximum Incentive: $1,000 per taxpayer for installations on multi-family residential rental units or commercial property; $500 for single family residential rental unit
Equipment Requirements: Solar water heaters must use OG-100 SRCC certified collectors with minimum 5-year warranty.
PV systems must meet the requirements of Article 690 of the National Electrical Code, and use solar photovoltaic panels and inverters that are rated and listed by Underwriters Laboratories.
Closed loop geothermal heat pumps must have EER of 14.1 and COP of 3.6
Open loop geothermal heat pump must have EER of 16.2 and COP of 3.5
DX geothermal heat pump must have EER of 15 and COP of 3.5
Wind turbines must meet AWEA's wind industry consensus standards. 
Installation Requirements: Solar hot water, active solar space heating, and PV systems must be installed by a NABCEP-certified installer.
Carryover Provisions: Excess credit may be carried forward for one year
Program Start Date: 1/1/2009
Program Expiration Date: 12/31/2015

Summary: In April 2008, Kentucky enacted legislation (H.B. 2) establishing a 30% state income tax credit for certain solar, wind and geothermal installations on single or multi-family residences and on commercial property.* Kentucky corporate taxpayers may take the 30% credit on any of the following equipment installed on commercial property:
Active or passive solar space-heating systems
Combined active solar space-heating and water-heating systems
Solar hot water systems
Wind turbines
In addition, Kentucky corporate taxpayers may take a credit equal to $3.00 per watt (DC) of rated capacity for the installation of a photovoltaic (PV) system. Solar and wind technologies have a maximum tax credit of $500 if installed on a single family residential rental unit, and $1,000 for multi-family residential rental units or commercial property. 
 
Kentucky corporate taxpayers may also take a 30% tax credit, up to $250, for closed-loop geothermal heat pumps, open-loop geothermal heat pumps, direct expansion (DX) geothermal heat pumps installed on single or multi-family rental residential properties which they own. This is not applicable to any other commercial property. 
 
To be eligible, wind and solar hot water equipment must have a manufacturer’s warranty of five years or more. Solar hot water systems must also have an installer's warranty of two years or more, and must use collectors certified by the Solar Rating and Certification Corporation (SRCC) under OG-100. Solar energy systems must be installed by a North American Board of Certified Energy Practitioners (NABCEP)-certified installer. PV panels and inverters must meet article 690 of the National Electrical Code (NEC) and be certified by Underwriters Laboratories (UL). 
 
Wind turbines must meet the wind industry consensus standards developed by the American Wind Energy Association (AWEA) and U.S. Department of Energy. Wind turbines must also meet the requirements of article 705 of the NEC, and must be UL-certified. Geothermal systems must meet certain guidelines for their Energy Efficiency Ratio (EER) and Coefficient of Performance (COP). 
 
The credit may be carried forward for one year. It is effective for taxable years 2009-2015.
 

Federal Energy Tax Credit (Residential/Commercial)

Taxpayers and commercial business owners are granted an energy tax credit of 30% of the total expenses, which include installation of residential or commercial solar panel (PV) systems, solar thermal systems, fuel cells and labor expenses.  Residential wind energy installations and geothermal pumps are also subject to a tax exemption.  

• Solar electric systems and solar thermal heaters have no maximum incentive.
• If there is excess federal tax credit, it may be carried over to the subsequent taxable year.  
• This may continue on through consecutive years until 2016, under which unused credit may or may not be expunged.

Federal Energy Conservation Subsidy Exclusion (Residential)

• Public utilities provide residential purchasers with an exemption of 100% of energy conservation subsidies.  
• The overall worth of an installation or renewable utility regardless of the energy conservation capacity, will be excluded from the buyer’s gross income.  
• Customers who participate in a utility company’s energy conservation program may be given a reduced rate of electricity utilized or a nonrefundable credit of the price of electricity on the customer’s monthly electric bill.

Energy-Efficient Mortgages (Residential)

• With this federal loan program, homeowners may utilize energy-efficient mortgages (EEM) to either supplement or completely fund renewable energy systems.