Alternative Energy Production Tax Credit (Corporate) (Pennsylvania)

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• Summary
• Quantitative Data

Last modified on February 12, 2015.

Financial Incentive Program

Place	Pennsylvania
Name	Alternative Energy Production Tax Credit (Corporate)
Incentive Type	Corporate Tax Credit
Applicable Sector	Commercial, Industrial, Residential
Eligible Technologies	Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Fuel Cells, Geothermal Heat Pumps, Municipal Solid Waste, CHP/Cogeneration, Anaerobic Digestion, Renewable Fuels, Other Distributed Generation Technologies, Unspecified technologies
Active Incentive	No
Implementing Sector	State/Territory
Energy Category	Renewable Energy Incentive Programs, Energy Efficiency Incentive Programs
Amount	15% of project costs
Carryover Provisions	Credit may be carried forward 5 years following the first year in which the taxpayer was entitled to claim the credit
Eligible System Size	Not specified
Equipment Requirements	Project must have a useful life of at least 4 years
Start Date	2008-07-09
Expiration Date	2016-12-31
Installation Requirements	All projects are subject to audit and on-site inspection to verify reported information
Maximum Incentive	1 million per taxpayer, per year; aggregate total limits vary by year
Program Administrator	Pennsylvania Department of Environmental Protection
Website	http://www.depweb.state.pa.us/energindependent/cwp/view.asp?a=3&q=547676
References	DSIRE

Summary

Note: The tax credit application window for projects completed during 2008 has now expired.

In July 2008, Pennsylvania enacted H.B. 1 during a special legislative session devoted solely to energy policy. One of the provisions included in this legislation is an tax credit of 15% on investments in alternative energy production projects located within the state of Pennsylvania with an expected useful life of 4 years or longer. The term "alternative energy production project" is broadly defined to include a wide variety of technologies, including facilities that produce energy from wind, solar, biomass, geothermal, waste coal, waste energy, and alternative fuels as defined under the [[Alternative Energy Portfolio Standard (AEPS).] Also eligible are facilities that manufacture alternative energy and energy efficiency products and components; facilities that perform alternative energy research and development; and projects for the development or enhancement of rail transportation systems that deliver alternative fuels or use high efficiency locomotives. Eligible taxpayers are those who pay personal income taxes, corporate income taxes, or the capital-stock and foreign franchise tax (referenced in the legislation as Articles III, IV, and VI of the Pennsylvania Tax Reform Code of 1971). Any taxpayer that "develops or constructs" an eligible project may apply for the tax credit.

Applications for the tax credit must be submitted to the Department of Environmental Protection (DEP) by September 15 of each year for project investments made during the previous calendar year. For 2009 applications, investments must have been made between July 9, 2008 (the effective date of the legislation) and December 31, 2008 in order to qualify for a tax credit.

The tax credit is available for all development, equipment and construction costs paid for qualifying alternative energy projects, but may not exceed $1 million per taxpayer per year. Taxpayers must deduct the amount of any federal, state, and local government grant or subsidy when determining their cost basis. Taxpayers that are unable to use whole amount of the credit during the year in which it is first approved may carry forward the remaining balance for up to five years following the first year of eligibility. Credits may not be carried back or used to generate a tax refund. For individuals it is important to note that the tax credit may not be applied to a joint tax return.

With the approval of the DEP, credits may be sold or assigned to another party if no claim for the credit is made within one year of application approval. Any party that purchases or is assigned a credit must claim the tax benefit immediately and may not carry any portion forward to another year. The amount of the credit claimed by a purchaser or an assignee may not exceed 50% of their qualified tax liability for that year.

Pass-through entities, defined as partnerships and S-corporations, are permitted to transfer all or part of the credit to shareholders, members, or partners in proportion to their share of the distributed income. Transferred credits must be redeemed during the year they are transferred. Credits obtained in this fashion do not effect alternative energy production tax credits to which a person is otherwise entitled. In other words, the credit available to a homeowner that installs a qualified system is treated entirely separately from credits transferred to the homeowner from a pass-through entity.

The law also defines the total amount of tax credits that may be approved each year as follows: ]]

• FY 2009 through FY 2012: $5 million
• FY 2013: $8 million
• FY 2014 through FY 2015: $10 million
• FY 2016: $2 million

If approved applications exceed these limits in a given year, each taxpayer's credit will be pro-rated so that the total value of approved credits complies with these restrictions. No credits may be approved after December 31, 2016. 

The DEP is required to submit a report to the legislature by September 1st of each year summarizing the effectiveness of the credit and including information such as claimant names, credits claimed, project types, and jobs created. Questions on tax credit applications and approvals should be directed to the Department of Environmental Protection, Office of Energy and Technology Deployment. The program website also contains the tax credit guidelines, application, and a list of frequently asked questions.

Authorities (Please contact the if there are any file problems.)

Authority 1:	73 P.S. § 1649.701 et seq.
Date Effective	2008-07-09
Date Enacted	2008-07-09
Expiration Date	2016-12-31

Incentive Contact

Contact Name	Public Information - Alternative Energy Tax Credit
Department	Pennsylvania Department of Environmental Protection
Division	Office of Energy and Technology Deployment
Address	Rachel Carson State Office Building
Address 2	400 Market Street, 15th Floor
Place	Harrisburg, Pennsylvania
Zip/Postal Code	17105-8776
Phone	(717) 783-0540
Website	http://www.depweb.state.pa.us/energy

• Incentive and policy data are reviewed and approved by the N.C. Solar Center's DSIRE project staff.

References

Tax Credits Concentrating Solar Power Incentives

CSP Commercial Tax Credit % Eligible Costs	15%
CSP Commercial Tax Credit Max $	$1,000,000

Tax Credits Solar Photovoltaic Incentives

PV Commercial Tax Credit % Eligible Costs	15%
PV Commercial Tax Credit Max $	$1,000,000

Tax Credits Solar Water Heating Incentives

SWH Commercial Tax Credit % Eligible Costs	15%
SWH Commercial Tax Credit Max $	$1,000,000

Tax Credits Solar Space Heating Incentives

SSH Commercial Tax Credit % Eligible Costs	15%
SSH Commercial Tax Credit Max $	$1,000,000

Tax Credits Wind Incentives

Wind Commercial Tax Credit % Eligible Costs	15%
Wind Commercial Tax Credit Max $	$1,000,000

• Incentive and policy data are reviewed and approved by the N.C. Solar Center's DSIRE project staff.

References