Transcript Federal and State Incentives for Community Wind

Bringing Wind Home: Incentives
for Community Wind
Community Wind Across America
Mid-Atlantic Regional Conference
February 9, 2011
Justin Barnes
North Carolina Solar Center
Database of State Incentives for Renewables and Efficiency (DSIRE)
www.dsireusa.org
Things to Cover…
• DSIRE and wind energy
incentives
• The federal incentive
landscape
• State incentives
options and examples
DSIRE and Wind…
The DSIRE Search Tool is your best friend: http://www.dsireusa.org/searchby/index.cfm?ee=1&RE=1
The Federal Incentive Landscape
• Tax Incentives
- Business Energy Investment Tax Credit (ITC)
- Renewable Electricity Production Tax Credit (PTC)
- Modified Accelerated Cost Recovery System + Bonus
Depreciation
- New Market Tax Credits
• Other Programs
- Rural Energy for America (REAP): Grants + Loan Guarantees
- Department of Treasury 1603 Grant in Lieu of Tax Credit
- Clean Renewable Energy Bonds (CREBS)
- Renewable Electricity Production Incentive (REPI)
Renewable Electricity PTC
• Placed in service by 12/31/2012
• Inflation adjusted 1.5 cents/kWh (1993 dollars). Currently set at 2.2
cents/kWh
• Available for first 10 years of facility operation
• Electricity must be “produced by the taxpayer” and sold to an
“unrelated person”
• Subject to anti-double dipping haircuts (up to 50%)
• ITC or 1603 Grant election available
• Incentive terms and limitations generally make the PTC less
valuable than the ITC or the 1603 Grant for community wind
MACRS + Bonus Depreciation
• MACRS
- Allows wind property to be depreciated over five years (rather
than useful life) using a 200% declining balance method
- No expiration date
- Basis is reduced by 50% of tax credit or 1603 grant claimed
- Non-taxable incentives also reduce basis
• Bonus Depreciation
- 100% first year depreciation for facilities placed in service from
September 8, 2010 through 2011
- 50% first year through 2012
- Bonus depreciation reduces the depreciable basis for claiming
normal MACRS depreciation by an equivalent amount
New Market Tax Credits
• Availability stems from a Qualified Equity Investment
in a Community Development Entity
• A CDE can invest in qualifying low-income businesses
for projects that may include community wind
projects.
• 39% investment tax credit is claimed over seven
years
- 5% for first three years, 6% for next four years
• Promising, but only recently used for clean energy
applications and may entail high transaction costs.
State Incentives and Examples
Major
Supplemental
• RPS (i.e., REC sales)
• Tax Incentives
• Direct Incentives:
Production, Grants, Loans
• Property Tax Incentives
• Sales Tax Incentives
Customer-Side Shared Ownership??
RPS Policies
www.dsireusa.org / January 2011
WA: 15% x 2020*
MN: 25% x 2025
MT: 15% x 2015
(Xcel: 30% x 2020)
SD: 10% x 2015 WI: Varies by utility;
10% x 2015 statewide
NV: 25% x 2025*
IA: 105 MW
CO: 30% by 2020
UT: 20% by 2025*
KS: 20% x 2020
CT: 23% x 2020
OH: 25% x 2025†
PA: ~18% x 2021†
IL: 25% x 2025
WV: 25% x 2025*†
NJ: 22.5% x 2021
VA: 15% x 2025*
MD: 20% x 2022
MO: 15% x 2021
AZ: 15% x 2025
OK: 15% x 2015
NM: 20% x 2020 (IOUs)
DE: 25% x 2026*
NC: 12.5% x 2021
(IOUs)
10% x 2018 (co-ops & munis)
10% x 2020 (co-ops)
DC
DC: 20% x 2020
PR: 20% x 2035
TX: 5,880 MW x 2015
HI: 40% x 2030
29 states +
DC and PR have
an RPS
Renewable portfolio standard
Renewable portfolio goal
RI: 16% x 2020
NY: 29% x 2015
(IOUs)
10% by 2020 (co-ops & large munis)*
CA: 33% x 2020
NH: 23.8% x 2025
New RE: 15% x 2020
(+1% annually thereafter)
x 2015*
5% - 10% x 2025 (smaller utilities)
ME: 30% x 2000
New RE: 10% x 2017
MA: 22.1% x 2020
MI: 10% + 1,100 MW
ND: 10% x 2015
OR: 25% x 2025 (large utilities)*
VT: (1) RE meets any increase
in retail sales x 2012;
(2) 20% RE & CHP x 2017
†
Includes non-renewable alternative resources
(7 states have goals)
RPS and Community Wind
The value of a renewable energy certificate (REC) depends
on a variety of factors but is based generally on supply and
demand
– Factors: RE target, eligibility, alternative compliance payments,
facilitating policy measures
– PA Tier I (08-09): $3.65/MWh ;NY Main Tier: ~$20/MWh
EXAMPLES:
Maine - New RE 10% by 2017, long-term bundled contract option, community
multiplier (1.5X), NE-ISO delivery
New York - ~8% incremental increase by 2015, central procurement, 10-year contracts
(REC only), no community bonus, NYISO delivery
State Tax Incentives for Community Wind
MA: 100% corporate excise tax
deduction and exemption
KY: Negotiated, up to
50% of capital exp.
MD: $0.0085/kWh for 5
yrs., up to $2.5M
NC: 35% up to $2.5M
State tax incentives may suffer from
the usefulness limitations similar to
federal tax incentives. Remedies may
include:
• Allow credits against a variety of
different taxes.
• Allow transfer or sale of credits
• Make the tax credit refundable
GA: 35% up to $500,000
A note on depreciation: Most states “generally”
conform to the MACRS system through coupling
with the federal tax system, but many disallow a
portion or all of federal bonus depreciation.
Direct Incentives
• Production incentives
- Vermont SPEED: Energy + RECs; $0.118/kWh (closed)
- NJ Grid-Connected Renewables: Incentive only, not energy or RECs; proposalbased but likely $0.02 - $0.029/kWh; option for limited up-front payment for
development costs.
• Grants & Loans
- Massachusetts Community Wind Initiative: Spectrum of grants and loans for
feasibility, pre-development, and construction
- Rhode Island Renewable Energy Fund: Combination of grants, recoverable grants,
and financing.
- Pennsylvania (multiple programs); Wind and Geothermal Incentives (grants &
loans); Alternative and Clean Energy Program (grants and loans); possibly
Sustainable Energy Funds; PEDA
- Vermont Clean Energy Development Fund: Loans, does not support feasibility
studies. Former CEDF grant program now closed.
Customer-Side Shared Ownership
• Might be referred to as “community renewables” or
“aggregated net metering”
• Comes in different flavors. The most expansive policies may
allow community-owned assets coupled with benefits
similar to traditional net metering
• A different model than a typical wholesale sale
EXAMPLES:
Rhode Island – Government/non-profit only, up to 10 electric accounts; 3.5 MW limit
Massachusetts – At least 10 residential customers; other customers, including commercial
eligible once minimum is met; up to 2 MW generally (10 MW for public)
Delaware – Regulations forthcoming; few apparent limits; customers on same distribution
feeder receive retail NEG credit, others energy supply rate NEG credit.
Sales Tax Incentives for Wind Property Tax Incentives for Wind
ME: Community wind only
(10 MW or less)
VT: 250 kW or less
MI: Alternative energy
personal property
VT: Local option
RI: Local option
NY: Local option
PA: Alternative assessment
KY: $1M investment
minimum
OH: Payment in lieu of
taxes for 250 kW or larger
Justin Barnes
North Carolina Solar Center
DSIRE (www.dsireusa.org)
[email protected]
919-513-0792