Michigan - Energy tax credit, solar incentives and rebates

Michigan Renewable and Solar Energy Incentives

Photovoltaic Purchase Tariff – Consumers Energy (Residential/Commercial)

The state of Michigan offers residential and commercial owners a buy-back tariff option for solar panel installations (PV) that generate electricity.

Tariff rates:

• Residential: $0.65/kWh for systems obtainable by May 1, 2010 (up to 250 kW in capacity); $0.525/kWh for systems that do not qualify for premium incentive level.
• Non-Residential: $0.45/kWh for systems obtainable by May 1, 2010 (up to 750 kW in capacity); $0.375/kWh for systems that do not qualify for premium incentive level.
• There is no cap on incentives for this program.

A fixed rate agreement must be signed for up to 12 years and subsequent system access charges may be charged ($6-$50) during that time period, which constitutes metering costs.

Residential systems must be from 1 kW to 20 kW in size and Commercial solar installations must be from 20 kW to 150 kW in size to be eligible.

Property Tax Exemption for Alternative Energies (Commercial)

In 2002, the state of Michigan devised a personal property tax exemption program set to promote the development and manufacturing of alternative energies.  Alternative energies are 100% exempt of property tax equivalent to the added value that the system instills on the property.

• Qualified technologies: solar water heat, solar thermal electric, solar space heat, solar thermal process heat, solar panel installation (PV), wind turbines, biomass, CHP/cogeneration, biomass, fuel cells, microturbines, stirling engines, hybrid vehicles, anaerobic digestion, renewable fuels.
• Individual systems must not exceed 2 MW in size.  There is a 10 MW capacity for integrated/combination alternative energy technologies excluding wind, PV and fuels cells, which have no size capacity.

Residential energy conservation subsidy exclusion

This exclusion exempts 100% of energy conservation subsidies that come from public utilities. The price of buying/installing any energy conservation measure by a resident of Michigan (e.g. PV, solar water heat or solar space heat) will not be incurred as an expense in the resident’s gross income. If a customer is from an electrical utility company and participates in the utitlity’s energy conservation program, they may be eligible to receive a reduced rate on electricity furnishing or a nonrefundable credit towards the cost of that electrical unit every month on the electricity bill

Energy-efficient mortgages

In this federally created loan program, Michigan residents may use EEM (energy-efficient mortgages) as financing towards renewable energy systems in a house.

Michigan net metering

Residents with renewable energy equipment are able to receive net metering on wind, geothermal, biomass, solar or hydroelectrical power. Net metering has the ability to calculate the flow of electricity in two directions. This offer is only available to alternative electric suppliers or rate-regulated utilities. A resident receives a credit of the net excess generated at the utitlites price rate if the system is 20KW or less. In order to receive this offer, systems must meet all qualifying criteria set out by the state.

Utility Rebate Programs (Residential/Commercial)

• Michigan offers various rebate programs through its energy distribution companies for subscribers of participating utility companies.
• The majority of the programs are reserved for PV systems and energy efficient appliances.  For qualifying systems, rebates are typically governed on a one-time basis.

Renewable energy rebates – WPPI Energy:

Michigan residents and customers of a number of WPPI Energy utilities that have installed a renewable energy system at their house, may be able to receive reimbursement on their solar system. A $30/sq foot rebate is available for owners of solar thermal systems or solar water heating systems. There is a $3,500 or 35% of the total cost limit on the rebate (whichever number is less). If electricity produces more than 50% of the heat from a solar thermal heating system, the rebate is not applicable. Additionally, a Michigan resident can receive a rebate of $3/KWH on a PV system that goes up to 20 KW and has been installed onto a new construction. If the PV system is installed by a NABCEP certified installer onto a pre-existing structure, Michigan residents may receive up to $2.50/KWH. If the system isn’t installed by a NABCEP certified installer, the rebate drops to $2/KWH. Michigan residents are able to receive a 25% rebate for for a small wind energy system that produces a maximum of 20 KW. This rebate has a limit of $10,000 in reimbursement. For the owners of wind energy, solar water, solar heating or solar water systems, there is a 50% reimbursement for the price of service and repairs on their system. 

Federal Tax Credit (Residential/Commercial)

Taxpayers are granted a personal tax credit of 30% of the total expenses, which include installation of residential solar-electric 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 limit to the 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.

Example: 4KW System – Residential Solar Installation Cost

Average Electric Bill: $250/mo
Projected Annual Bill Escalation: 5%
Cost Per Watt: $6.50

- Estimated System Cost: $26,000
- Federal/State Tax Credit: $7,800
- State/Utility Rebate: $0
- Net Cost: $18,200
- Cumulative Lifetime Savings (25 Years): $25,063
- Investment Return: 5.0%

Savings of 30% on the total cost of your solar system through incentives