Who Can Qualify for the Utah Renewable Energy Systems Tax Credit?

In General, What Systems or Improvements Are Eligible?

Systems qualifying for the Utah Renewable Energy Systems Tax Credit must use certain types of renewable energy (specified below) to provide heat, electricity, or mechanical energy to a home or a business. Systems used by a business to provide energy for sale are also eligible. (Note that non-profit and public institutions – which do not pay income taxes – are not eligible to receive tax credits.) Measures intended to improve the efficiency by which a home or business consumes energy are not eligible.

There are some differences between the eligibility of systems placed in homes and those used for businesses.

Eligible Residential Systems include:

Active solar thermal
Passive solar thermal
Solar photovoltaic (systems that use solar panels to convert sunlight into electricity)
Wind turbines
Hydro (water) energy for generating electricity or mechanical power
Ground source heat pumps
Water source heat pumps
Direct use geothermal
Biomass systems using animal or plant wastes to produce electricity
Biomass systems using animal or plant wastes to produce heat, except for the burning of wood for space heating

Eligible Business Systems include:

Active solar thermal
Passive solar thermal
Solar photovoltaic (systems that use solar panels to convert sunlight into electricity)
Wind turbines
Hydro (water) energy for generating electricity or mechanical power
Electric generation or heat from landfill, sewage or other waste treatment methane
Biomass systems using animal or plant wastes to produce electricity
Biomass systems using animal or plant wastes to produce heat, except for the burning of wood for space heating
Ground source heat pumps
Water source heat pumps
Direct use geothermal
Geothermal electricity generation

For each type of system listed above, there may also be specific requirements for eligibility. These are listed below under System-Specific Eligibility Requirements.

In most cases, systems that involve the combustion (i.e., burning) of any fuel are not eligible for the credit.

Exceptions:

Systems using methane generated from solid or liquid wastes to generate heat or electricity for a business
Burning of plant or animal wastes for purposes other than space heating for a business.

In General, What Systems or Improvements Are NOT Eligible?

Energy efficiency measures are not eligible for the Utah Renewable Energy Systems Tax Credit. However, some energy efficiency measures may be eligible for tax credits against your federal income tax.

Some forms of renewable energy are not specified in Utah law as eligible for the Utah Renewable Energy Systems Tax Credit. These include geothermal energy as well as renewable liquid fuels such as ethanol and biodiesel. No system that uses conventional fuels (oil, diesel, gasoline, natural gas, propane, etc.) is eligible for the credit.

Building systems and improvements that are NOT eligible include:

Insulation
New or upgraded windows
Weather sealing
High-efficiency furnaces and air conditioners
Blinds, curtains, and other window coverings (unless integrated into a complete passive solar thermal system; see System-Specific Eligibility Requirements below)

Energy production or generation systems that are NOT eligible include:

Generators powered by diesel, gasoline, used oil, propane, natural gas, or any other type of fossil fuel
Fireplaces
Wood stoves or any wood-burning appliance used for space heating

No system that uses more energy to power its associated equipment than is actually produced by the overall system is eligible (e.g., a photovoltaic system that uses electric motors to allow panels to follow the sun must produce more electricity than is consumed by the motors and other system components).

What Costs are Eligible for Credit?

The costs of installing a new renewable energy system or upgrading an existing system are generally eligible for the Renewable Energy Systems Tax Credit. Maintenance and repair costs of existing systems are not eligible. Upgrades include measures that increase the capacity of the existing system or that improve its efficiency of operation.

In general, the only equipment that is eligible for credit is system components that are unique to the renewable energy system. For example, a solar photovoltaic system's eligible costs could include solar panels, controllers, inverters, batteries, and isolator switches, but not the portion of a building's electrical system that would typically be installed for an ordinary grid-tied building (e.g., in-house wiring, breakers and fuses, outlets, etc.). Similarly, a solar thermal system's eligible costs could include solar collectors, heat storage components, and blowers and motors to distribute heat from collectors and storage elements throughout the building, but would not include a furnace and associated ductwork, or the motors or blowers used to distribute heat from the furnace. Stated slightly differently, eligible components stop where the system meets the normal energy distribution system of a building.

Design and installation costs are eligible, but only those costs associated with the installation of eligible equipment (see previous paragraph) can be credited. The cost (if any) of obtaining an easement necessary for the installation of a renewable energy system is also eligible.

To be certified as eligible, all costs should be documented as completely as possible through invoices, catalog listings, receipts, designs, etc. For projects that may include ineligible costs (such as a complete heating system revamp that includes solar thermal elements), the costs attributable to the renewable energy system should be clearly distinguished from other costs. This includes equipment, design, and installation costs. (Hint: Be sure that your contractor or vendor is aware of this requirement at the time you are billed and that your receipts and invoices clearly specify charges attributable to the renewable energy system.)

Click here for more information (go to section 4(H) - pdf).

System-Specific Eligibility Requirements

Special requirements apply to some systems. These are in addition to the general requirements outlined above.

Read about these requirements in administrative rule R638-2. Renewable Energy Systems Tax Credits (pdf) (Utah Administrative Code). Each section listed below is bookmarked within the pdf document.

Active Solar Thermal - Section 6

Passive Solar Thermal - Section 8

Photovoltaic (Solar Electric) - Section 7

Wind Turbines - Section 9

Heat Pumps - Section 10

Geothermal Electricity - Section 11

Geothermal Direct Use - Section 12

Hydropower - Section 13

Biomass - Section 14

Application and Documentation

In order to receive a tax credit, a taxpayer must complete and submit an application to the Utah State Energy Program (USEP). Tax credits may not be claimed until USEP has supplied a completed Utah State Tax Commission Form TC-40E certifying the amount of credit eligibility. Application forms and instructions are found at Application for Tax Credit Certification.

Along with the appropriate application forms, taxpayers must submit appropriate documentation of their system in order to receive a tax credit. This includes (at a minimum) copies of paid, itemized receipts, system diagrams and schematics, and photographs. Certain technology types also require additional documentation. Some technologies also require certification by contractors or inspectors, as well as information about and the signatures of designers and installers. If you are having a renewable energy system installed, be sure that you have reviewed the appropriate forms before work begins so that you know what certifications and documentation are required. You should also have your forms printed out so that the professionals who work on your system can complete and sign their sections of the forms when they have completed their work.

For questions, please contact Elise Brown, Renewable Energy Coordinator, 801.537.3365.