Renewable Energy Systems Tax Credits

In 2007, the Utah Legislature revised the State’s Renewable Energy Systems Tax Credit to allow credits for additional technologies, to clarify the State Energy Program’s rulemaking authority, and to create a new production tax credit for large wind, biomass, and geothermal systems that produce electricity. Because of this revision, different rules apply for systems installed before and after January 1, 2007. In addition, 2007 saw the creation of a production tax credit for certain large electricity-producing renewable energy systems.

Investment Credits: Systems Installed in 2007 or Later
Utah offers a state income tax credit for renewable energy systems. The investment tax credit for residential systems is 25 percent of the equipment and installation cost up to a maximum of $2,000.

Commercial systems receive a 10 percent investment tax credit up to a maximum of $50,000. Commercial systems that use wind, biomass, or geothermal energy and have a production capacity greater than 600 kilowatts are not eligible for an investment tax credit but are eligible for a production tax credit of 0.35 cents per kilowatt hour of electricity produced.

The technologies included are: solar electric, solar thermal, passive solar, wind, hydropower, ground source heat pumps, water source heat pumps, direct use geothermal, geothermal for electricity, and biomass. The new tax credits enacted in 2007 do not expire.

Click here to view the latest Renewable Energy Systems Tax Credit rules (pdf).
Click here to view a current qualification guide.
Click here to download application forms and instructions.
Note: These forms must be used for all systems installed in 2007 or later.
Click here to view the individual income tax legislation for residential systems Utah Code 59-10-1014.
Click here to view the individual income tax legislation for commercial systems Utah Code 59-10-1106.
Click here to view the corporate income tax legislation, Utah Code 59-7-614.

Investment Credits: Systems Installed Before January 1, 2007
Utah offers a state income tax credit for renewable energy systems. The credit for residential systems is 25 percent of the equipment and installation cost up to a maximum of $2,000. Commercial systems receive a 10 percent tax credit up to a maximum of $50,000.

The technologies included are: solar electric, solar thermal, passive solar, wind, and hydropower. Businesses can also receive the tax credit for biomass systems. This tax credit expired on December 31, 2006.

Click here to view a qualification guide.
Click here to download an application (pdf).
Click here to view pre-2007 Renewable Energy Systems Tax Credit rules (pdf).

Production Tax Credits
Utah offers a production tax credit for wind, geothermal, and biomass energy systems that produce electricity and have a generating capacity 660 kilowatts or greater. The credit is equal to 0.35 cents per kilowatt-hour of electricity sold or produced and awards credits for the first four years of a system’s operation. Note that systems that are eligible for production tax credits are not also eligible for investment tax credits and vice versa.

Click here to view eligibility, certification, and validation instructions (pdf).
Click here to download certification Form PTC-1 (pdf).
Click here to download validation Form PTC-2 (pdf).

Solar and Geothermal Business Tax Credit

Enacted in 1978, the Solar and Geothermal Business Tax Credit is a 10 percent corporate tax credit, with a maximum of $25,000 per year, plus 25 percent of the total tax remaining after the credit is taken, for commercial or industrial facilities using solar water heat, solar space heat, solar thermal electric, solar thermal process heat, photovoltaics, or geothermal electric technologies. Please contact the IRS at 800.829.1040 for more information.

Renewable Energy Production Tax Credit

The Renewable Energy Production Tax Credit provides a 1.9 cent-per-kilowatt-hour tax credit for electricity generated by wind, solar, closed-loop biomass, and geothermal resources. This credit expires on December 31, 2005, and cannot be used in conjunction with the Solar and Geothermal Business Tax Credit. Forms for this credit can be found at http://www.irs.gov/pub/irs-pdf/f8835.pdf. Please contact the IRS at 800.829.1040 for more information.

Farm Bill Grant, Section 9006

Pursuant to Section 9006 of the 2002 Farm Bill, the U.S. Department of Agriculture (USDA) makes funds available for energy efficiency and renewable energy projects undertaken by agricultural producers and small businesses in rural areas.

USDA funds are available to those who can demonstrate financial need, are situated in rural areas of less than 50,000 people, and get 50 percent or more of their income from the production of agricultural products or own a small, rural business. In 2005, $22.8 million was available nationally.

The UGS State Energy Program along with the U.S. Department of Energy's Wind Powering America, Geopowering the West and National Renewable Energy Laboratory, Utah Clean Energy, and the USDA Utah Rural Business-Cooperative Services, annually host a series of grant-writing workshops around the state to help Utahns learn about grants and loans available from the Section 9006 program. These seminars provide training to successfully organize, write, and submit an application for funding assistance.

2006 workshops were held on February 8, 9, and 10 in St. George, Provo, and Logan respectively. Workshop presentations.

More information on the USDA Section 9006 Program is available at http://www.rurdev.usda.gov/rbs/farmbill/.

Renewable Energy Sales and Use Tax Exemption

The Utah Sales and Use Tax Exemption for Energy Related Equipment and Machinery exempts the purchase or lease of equipment used to generate electricity from wind, solar, biomass, landfill gas, anaerobic digestion, hydroelectricity, and geothermal resources from the state sales tax.

A facility is eligible if it has a generation capacity of 20 kW or greater or if it increases its generation capacity by one or more MW as a result of the machinery or equipment.  Eligible purchases or leases must be made for or by a renewable energy production facility on or after July 1, 2004, and before June 30, 2009. All leases must be made for at least seven years. This exemption expires on June 30, 2009.

Net Metering Program

On March 15, 2002, Governor Leavitt signed into law House Bill 7, Net Metering of Electricity.

This law requires all electric utilities and cooperatives in Utah (municipal utilities are excluded) to allow customers to connect renewable energy systems to the grid for their own use and to supply excess electricity to the electric grid.

The utility will "net" the customer's electricity use and production over the monthly billing period, in essence, paying the customer retail price for the electricity they produce. If net metering results in excess customer-generated electricity over the billing period, the utility will credit the customer for the electricity at the avoided cost rate – i.e., the cost the utility would otherwise incur to generate power if it did not purchase electricity from another source.

The customer may use the credit to offset purchases of electricity during future billing periods in the same year. Any unused credits expire at the end of the calendar year.

Customer generated electricity may be from solar, wind, small hydropower, or fuel cell systems of up to 25 kW in size. The net metering law caps total participation in the program at 0.1 percent of the cumulative generating capacity of the utility's peak demand during 2001.

Utilities are prohibited from imposing additional charges or fees on customers with net metering unless authorized by the Utah Tax Commission.

Rocky Mountain Power’s net metering program (outside link)
St. George Energy Services Department's net metering policy (pdf, outside link)

StEPP Foundation

The StEPP Foundation is a national, non-profit organization that helps match energy efficiency, clean energy, and pollution-prevention projects with funding sources. For more information, visit the StEPP Foundation Web site (http://www.steppfoundation.org/default.htm).

Database of State Incentives for Renewable Energy (DSIRE)

The Database of State Incentives for Renewable Energy (DSIRE) is a comprehensive source of information on state, local, utility, and selected federal incentives that promote renewable energy. For more information, visit the DSIRE Web site (http://www.dsireusa.org).