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Tennessee - Energy tax credit, solar rebates and incentives

Tennessee Renewable and Solar Energy Incentives

Generation Partners Program – TVA (Residential/Commercial)

The Tennessee Valley Authority along with affiliated utility companies grant a power generation incentive for homeowners and commercial businesses that utilize renewable energy systems.

  • Qualifying systems: biomass, small hydropower, solar panel and wind turbines.
  • Incentive amount is dependent upon the type of system.  For solar systems, customers will receive a premium rate of $0.12/kWh.  All other renewable energies are offered $0.03/kWh plus retail rates (small hydropower, biomass and wind energy systems).
  • New subscribers will receive a $1,000 bonus for joining that can be put toward installation costs of a given system.
  • There is currently no maximum incentive for this program.
  • Reimbursement is represented in the form of credit on the participant’s monthly electric bill.  For net excess generation produced, energy distribution companies will issue payment based on their company’s pre-established rates.
  • Systems must be greater than 500 watts and no larger than 999 kilowatts to participate.

Use and Sales Tax Credit for Renewable/Clean Energy Manufacturing Facilities (Commercial)

A tax credit is offered to commercial businesses that produce/manufacture renewable or clean energy technologies.  Clean energy technologies are qualified as those that utilize geothermal, hydrogen, hydropower, landfill gas, solar, wind, or biomass-derived energy with the purpose to mitigate environmentally harmful waste output.

  • A credit of 99.5% of use and sales tax is granted to qualifying manufacturing facilities.
  • Taxpayers that apply for this benefit must make an initial $100 million or greater investment, host at least 50 full-time jobs over 10 years that pays its employees at least 1.5 times the average occupational wage.  Applicants must also pay franchise and excise taxes for their business.
  • Applications can be found and submitted to the Department of Revenue.

Property Tax Exemption for Wind Energy Systems (Commercial)

Commercial wind energy systems in Tennessee receive a special property tax exemption, administered by the Tennessee Comptroller of the Treasury.

  • Systems are granted an exemption of 67% of the total cost of installation.
  • Utility-Sponsored/State Rebate and Loan Programs (Residential/Commercial)
  • There are various rebate and loan programs that are offered through utility companies and state programs for both residential and commercial customers.
  • Program specifics and requirements vary on a program-to-program basis.
  • Loans typically maintain zero to low-interests to aid in the purchase and installation costs of renewable energy and energy efficient technologies.
  • Rebate amounts are generally established on a per-watt basis and are dependent upon both size and type of system.

Federal Energy 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 maximum incentive.
  • If there is excess federal tax credit, it may be carried over to the subsequent taxable year only if it surpasses tax liability.  
  • 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 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: $7,500
- State/Utility Rebate: $1,000
- Net Cost: $17,500
- Cumulative Lifetime Savings (25 Years): $22,121
- Investment Return: 9.8%

Savings of 33% on the total cost of your solar system through incentives

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