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Federal Solar Tax Incentives

February 2009 Federal Stimulus Bill Summary by Solar Energy Industries Assoc. (SEIA)

Key  Provisions  Benefiting  the  Solar  Energy  Industry  in  H.R.  1,  the  American  Recovery  and  Reinvestment  Act  of  2009  

The  key  provisions  have  been  placed  in  categories  to  reflect  how  solar  energy  companies,  their  clients  or  the  industry  in  general  will  benefit  from  and  gain  access  to  specific  funding  for  solar  projects.  

  • Federal  guidance  pending:  Agency  guidance  in  the  next  60  to  90  days;  member  alerts  will  be  issued  accordingly.  
  • Tax  code  provision:  Effective  upon  enactment  unless  noted  otherwise;  Solar  Tax  Manual  will  be  updated.   
  • Enhanced  funding  for  existing  State  programs:  Federal  funds  will  be  directed  to  States  for  distribution.  State  agencies  will  provide  access  to  funds.
  • Agency  specific  appropriations:  Funds  directed  to  specific  agencies  for  programs  or  projects  that  are  most  likely  already  in  the  pipeline. 

    Download these federal law details above in SEIA Guide to the American Recovery & Reinvestment Act (.pdf) 2/25/09 
    [CLICK HERE

To  access  the full federal law  citations  ARRA see SEIA excerpts below:  

Div.  A  http://www.seia.org/galleries/pdf/Recovery_Bill_Div_A.pdf   

Div.  B  http://www.seia.org/galleries/pdf/Recovery_Bill_Division_B.pdf    

See more on 2009 ARRA on SEIA web site [CLICK HERE]

 

Earlier 2008 Federal Bail-Out Bill Solar Tax Changes:

Federal Solar Tax Credits Extended for 8 Years
US Poised to Become Largest Solar Market in the World

Solar Energy Industries Association www.seia.org
October 3, 2008 News Release

Industry Leaders Forecast Dramatic Growth in the U.S. Solar Market by 2016 with Extension of Credit

WASHINGTON - Today, by a vote of 263 to 171, the U.S. House of Representatives passed historic legislation that extends the 30-percent federal investment tax credit for both residential and commercial solar installations for 8 years. This landmark legislation is part of H.R. 1424, the Emergency Economic Stabilization Act of 2008, designed to address the U.S. financial crisis. It is the most significant federal policy ever enacted for the solar industry. President Bush has vowed to sign the bill into law. The Senate passed the bill on Wednesday night.

"This bill is a major step in our long journey toward energy independence and ensures that solar energy will be a significant part of America's energy future," said SEIA president Rhone Resch. "This long-term extension of the solar tax credits will create a domestic solar industry with hundreds of thousands of jobs while providing clean, affordable, carbon-free energy to millions of American families, businesses, and communities."

"On behalf of the 60,000 Americans employed by the solar energy industry, we would like to thank Leaders Reid and McConnell and Senators Baucus, Grassley, Cantwell and Ensign for their dogged support of the solar tax credit extension. In the House we are thankful to Leaders Pelosi, Hoyer, Boehner, and Blunt, and Chairman Rangel, Ranking Republican McCrery and Rep. Camp among many others who have long worked to bring solar energy to the mainstream. These leaders have broken through partisan politics and have provided a bright future for solar energy in the United States," said Resch.

"By passing this bill, Congress has finally given the solar energy industry 'policy certainty' that will attract investment, expand manufacturing and lower the cost of solar energy to consumers," said Roger Efird, SEIA chairman and president of Suntech America, a leading Chinese solar power manufacturing company. "This will allow companies like mine to move forward with expansion plans to serve the growing U.S. market."

"This bill puts the sun to work for every American," added Resch. "And by 2016, we expect solar energy to be the least expensive source of electricity for consumers."

The solar investment tax credit (ITC) provisions will:

· Extend for 8 years the 30-percent tax credit for both residential and commercial solar installations;

· Eliminate the $2,000 monetary cap for residential solar electric installations, creating a true 30-percent tax credit (effective for property placed in service after December 31, 2008);

· Eliminate the prohibition on utilities from benefiting from the credit;

· Allow Alternative Minimum Tax (AMT) filers, both businesses and individuals, to take the credit;

· Authorize $800 million for clean energy bonds for renewable energy generating facilities, including solar.

The solar tax credits were originally enacted in the 2005 and have created unprecedented growth in the U.S. The amount of solar electric capacity installed in 2007 was double that installed in 2006.

"Over the last 2 years, these tax credits have turned the solar industry from a small, cottage industry into an economic engine for America. Electricians, plumbers, roofers and construction workers can now get back to work. These jobs are the backbone of the American economy and the solar industry is creating them at a time when they are needed the most," said Resch.

According to a new economic study by Navigant Consulting, Inc., the 8-year extension of the ITC will create 440,000 permanent jobs and unleash $325 billion in private investment in the solar industry. This study did not factor in elimination of $2,000 monetary cap on the residential credit, so the actual job creation and investment could be even greater.

"This is a big boost for the residential market in particular, allowing homeowners to contribute to our nation's energy independence," said Efird. "It also opens the floodgates for building large, utility-scale solar power projects that need longer timeframes to complete."

To date, there are 27 such utility-scale solar power projects totaling 5,400 megawatts of power in various stages of development; most were on hold due to uncertainty surrounding the expiring tax credits.

Because solar energy components are manufactured near their markets, this extension will create manufacturing and installation jobs in all 50 states. The states that will enjoy the largest economic boost are California, Florida, Arizona, New Mexico, Nevada, New Jersey, Massachusetts, New York, Oregon, and Washington.

Similarly, the economies of Pennsylvania, Michigan, Ohio and the rest of the Great Lakes region will grow significantly as a result of the extension. This area of the country has suffered greatly from a huge decline in jobs in the automotive and traditional manufacturing industries.

According to the same study, more than 28 gigawatts of electricity will be produced from solar energy by 2016 - enough to power more than 7 million homes.

"Success has not come easy. It required a strategic campaign that included dedicated SEIA staff, a committed board, and active membership all focused on one goal. It took seven votes in the House and 10 votes in the Senate, but in the end, Congress came through. This effort has established SEIA as a major energy player on Capitol Hill," said Resch. "We have a lot of opportunity in front of us and will be back next year to work on critical issues such as transmission infrastructure, renewable electricity standards, and combating global warming."


###
Contact:
Monique Hanis, 202-682-0556, ext. 4,
mhanis@seia.org  
Jared Blanton, 202-682-0556, ext. 96,
jblanton@seia.org  
Mark Sokolove (Tiger Communications), 703-302-8382,
mark@tigercomm.us  

Background Resources:

9.15.08 Navigant Consulting, Inc. "Economic Impacts of Extending Federal Solar Tax Credits":
http://seia.org/galleries/pdf/Navigant%20Consulting%20Report%209.15.08.pdf  

H.R. 1424 Bill Summary:
http://seia.org/galleries/pdf/HR_1424_Solar_Memo.pdf  

H.R. 1424 Full Bill Text:
http://seia.org/galleries/pdf/Fin_Stab_Bill_Text.pdf  

Background on the ITC:
http://seia.org/cs/federal_issues/itc_resources  

2007 Solar Energy Industry Year in Review:
http://seia.org/galleries/pdf/Year_in_Review_2007_sm.pdf  

House Solar Voting Scorecard:
http://seia.org/galleries/pdf/House_Score_Sheet_110_Congress_new.pdf  

Senate Solar Voting Scorecard:
http://seia.org/galleries/pdf/Senate_Score_Sheet_110_Congress.pdf  

About SEIA:
Solar Energy Industries Association is the national trade association of 750 solar energy manufacturers, project developers, distributors, contractors, installers, architects, consultants and financiers. Established in 1974, SEIA works to expand the use of solar technologies in the global marketplace, strengthen research and development, remove market barriers, and improve education and outreach for solar. Learn more at
www.seia.org.  

News on Federal Solar Tax Credits
Effective January 1, 2006 for Two Years/Extended Through 2008

Washington Extends Federal Solar Tax Credits in December 2006.
In its waning hours, the 109th Congress passed legislation that would extend the 30% solar energy investment tax credit for homeowners and businesses for one additional year, through the end of 2008. The bill contains the following provisions: (1) Residential Solar Tax Credit: Extends a 30-percent tax credit, created in the Energy Policy Act of 2005, for the purchase of residential solar water heating, photovoltaic equipment, and fuel cell property. Expires after December 31, 2008; and (2) Business Solar Tax Credit and Fuel Cell Tax Credit; Extends a 30-percent business credit, established in the Energy Policy Act of 2005, for the purchase of fuel cell power plants, solar energy property, and fiber-optic property used to illuminate the inside of a structure. After December 31, 2008, the credit reverts to a permanent 10-percent level. The Solar Energy Industries Association applauded the one-year extension of the solar ITC in H.R. 6111, the Tax Relief and Health Care Act of 2006. At the same time, the industry cautioned that the lifespan of the credits is too short to encourage significant industry growth and cost reductions. [CLICK HERE].

Businesses Get More Time to Cash in on Solar-Energy Tax Breaks 
          Columbus Dispatch, January, 2007

Sites on Federal Tax Incentives, Including Solar Tax Credits

Database of State Incentives for Renewable Energy (DSIRE)  http://www.dsireusa.org

Residential Solar and Fuel Cell Tax Credit - Solar Water Heat, Photovoltaics, Fuel Cells

Business Energy Tax Credit - Eligible Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Geothermal Electric, Fuel Cells, Solar Hybrid Lighting, Direct Use Geothermal, Microturbines Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Geothermal Electric, Fuel Cells, Solar Hybrid Lighting, Direct Use Geothermal, Microturbines

Internal Revenue Service Assistance - Web site: http://www.irs.gov
Highlights of Energy Policy Act for Individual 2006-14 Jan.2006 http://www.irs.gov/newsroom/article/0,,id=153397,00.html

Information Specialist - IRS
Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040

Energy Star  http://www.energystar.gov/index.cfm?c=products.pr_tax_credits

US Dept. of Energy  http://www.energy.gov/taxbreaks.htm

Tax Incentives Assistance Project www.EnergyTaxIncentives.org

Alliance to Save Energy http://www.ase.org/content/article/detail/2654

San Diego Regional Energy Office - Federal Tax Incentives for Solar Energy Investments

Solar Energy Industries Association - SEIA Guide to Federal  Tax Incentive for Solar Energy
                                                           http://www.seia.org/manualdownload.php  

Frequently Asked Questions on Solar Tax Credit (.pdf)
Solat Energy Industries Association - August 8, 2005

This FAQ sheet should answer many of the questions facing companies in the solar energy industry about the federal solar tax credits. While we have to be very clear that SEIA cannot offer you tax advice, which can ultimately only come from your tax professional , this document should provide some initial guidance based on the legislative text.  In the coming weeks, SEIA will be working with the IRS to obtain formal guidance on these issues, and will keep you informed about the forms and procedures you will need to claim this valuable credit.  We encourage you to send questions to us at info@seia.org, so that we can obtain clarity on these key issues for you as soon as possible.  Download SEIA FAC .pdf above.

NOTE:  Federal Tax Credits Coupling with State of Ohio Incentives

The new Federal solar tax credits described below may possibly be coupled with State of Ohio low-interest loans and grants administered by the Ohio Department of Development's Office of Energy Efficiency (OEE).  See the OEE web site for the Energy Loan Fund and Grants announced at http://www.odod.state.oh.us/cdd/oee/. Consult a tax advisor on relationship between state incentives and the Federal solar tax credits as use of both is dependent on federal tax rulings.

More on these state incentives on GEO's Ohio Clean Energy Incentives page with additional Ohio incentives of Net Metering and Ohio Air Quality Development Authority measures. 

Knock $4,000 off your taxes for going solar

Save even more by adding state incentives to those in the new federal energy bill, the first in 20 years.
August 29, 2005
By Forbes.com
http://moneycentral.msn.com/content/Savinganddebt/Savemoney/P126521.asp


In the new energy law, the U.S. Congress lavished tax breaks on its usual fossil-fuel favorites -- there's $1.6 billion in tax credits for new coal technology, $1 billion for gas distribution lines, another $1 billion for oil and gas exploration costs, $400 million for oil refineries, and so on.

But the solar energy industry is betting that its comparatively tiny share of the energy bill spoils will be enough to jump-start the industry.

The cost of the solar tax breaks to the U.S. Treasury -- less than $52 million out of a $14.5 billion energy package -- may seem trifling. But the handout shows that Washington supports solar, and that should encourage more states to offer breaks too, solar supporters say.

"For anybody who has ever considered installing a solar system, Washington is telling you to do it now," says Rhone Resch, president of the Solar Energy Industries Association in Washington, D.C. That's good news for solar equipment manufacturers like General Electric (GE, news, msgs) and Evergreen Solar (ESLR, news, msgs).

Claiming the credit
The law both increases tax credits for commercial solar installations and offers individual homeowners a credit for the first time in 20 years. (An earlier personal-use solar credit was in effect from 1979 to 1985.)

After Touring National Solar Thermal Test Facility,
President Bush Signs Pro-Solar Energy Bill

(August 8, 2005 - Washington, DC) - "The Solar Energy Industries Association (SEIA) applauds President Bush and the Congress for producing the strongest national policy for solar power in two decades," said SEIA President Rhone Resch.

"The President toured the National Solar Thermal Test Facility at Sandia National Laboratories today, underscoring the message that Washington wants solar power to play a significant role in our nation's future energy supply. The solar tax provisions in this Energy Bill will help the U.S. solar industry to meet that challenge.

For the first time since 1985, homeowners who install solar energy systems will receive a tax credit worth 30% of the system cost, capped at $2,000. Businesses that purchase solar equipment will also receive a credit worth 30% of the system cost. These tax credits will bring solar power costs over the tipping point in many areas of the country, and the United States has the best solar resources of any country in the industrialized world."

"With the solar provisions in this Energy Bill, Washington is supporting individual Americans who make a real contribution towards U.S. energy independence. Installing solar energy on your roof is one of the most meaningful steps an individual can take to reduce our reliance on foreign sources of energy and help declare energy independence. Now solar comes with a more affordable price tag, and more consumers will take a step towards energy independence by choosing solar power. That means cleaner air, more jobs, and greater energy security for all."

The Energy Bill:

-Increases the permanent 10 percent business energy credit for solar to 30% for two years. Eligible technologies include photovoltaics, solar water heaters, concentrating solar power, and solar hybrid lighting. The credit reverts back to the permanent 10 percent level after two years.

-Establishes a 30 percent residential energy credit for solar for two years. For residential systems, the tax credit is capped at $2,000.

SEIA Hails Passage of Landmark Solar Provisions in Federal Energy Bill

NEWS RELEASE: Washington, DC (July 27, 2005) - "The Solar Energy Industries Association (SEIA) applauds Congress for producing the strongest national policy for solar power in two decades," said SEIA President Rhone Resch.

"For the first time since 1985, homeowners who install solar energy systems will receive a tax credit worth 30% of the system cost, capped at $2,000. Businesses that purchase solar equipment will also receive a credit worth 30% of the system cost. These tax credits will bring solar power costs over the tipping point in many areas of the country.

"With the solar provisions in this Energy Bill, Congress is supporting individual Americans who make a real contribution towards U.S. energy independence. Installing solar energy on your roof is one of the most meaningful steps an individual can take to reduce our reliance on foreign sources of energy and help declare energy independence. Now solar comes with a more affordable price tag, and more consumers will take a step towards energy independence by choosing solar power. That means cleaner air, more jobs, and greater energy security for all."

The Energy Bill:

  • Increases the permanent 10 percent business energy credit for solar to 30% for two years.   Eligible technologies include photovoltaics, solar water heaters, concentrating solar power, and solar hybrid lighting. The credit reverts back to the permanent 10 percent level after two years.
  • Establishes a 30 percent residential energy credit for solar for two years.   For residential systems, the tax credit is capped at $2,000.

*Have a question about this legislation?  See updates on the SEIA web site at www.seia.org or Email info@seia.org

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