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SOLAR THERMAL INCENTIVES: Federal

The federal, state and many local governments recognize the benefits, both financially and environmentally of solar hot water installations. To encourage the adoption and installation, all 3 are offering significant saving opportunities. These incentives are extremely financially attractive, but do carry timelines for their availability in order to encourage property owners to make timely decisions.

Residential Renewable Energy Tax Credit
Incentive Type: 
Personal Tax Credit
Eligible Solar Thermal Technologies: Solar Water Heating
Eligible Sectors: 
Residential
Eligible Customers: 
Homeowners
Amount: 
30% of the eligible system costs, no maximum.
Details: Uses IRS Form 5695, expires December 31, 2016.  Solar water heating property must be certified by the SRCC, and at least half of the energy needed to heat the building’s water must be provided by the solar thermal system.  Solar pool and spa heating systems are not eligible, and the building does not have to be the taxpayer’s principal residence.
Website: http://www.energystar.gov/taxcredits

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Business Energy Investment Tax Credit (ITC)
Incentive Type:
 
Corporate Tax Credit
Eligible Solar Thermal Technologies: 
Solar Water Heating, Solar Space Heating, Solar Thermal Process Heating, Solar Cooling & Air Conditioning, Solar Thermal Electric
Eligible Sectors: 
Commercial, Industrial, Utility
Eligible Customers: 
Businesses investing in certain renewable energy systems
Amount: 
30% of the eligible system costs, no maximum.
Details: 
Uses IRS Form 3468, expires December 31, 2016.
Website: http://www.irs.gov/
 
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US Department of Treasury – Renewable Energy Grants
Incentive Type: 
Federal Grant Program
Eligible Solar Thermal Technologies: 
Solar Water Heating, Solar Space Heating, Solar Thermal Process Heating, Solar Cooling & Air Conditioning, Solar Thermal Electric
Eligible Sectors: 
Commercial, Industrial, Agricultural
Eligible Customers: 
Businesses eligible for the Energy Investment Tax Credit
Amount: 
30% of eligible project cost basis
Details: 
Grants are issued by the US Department of Treasury in lieu of the 30% Business Energy Investment Tax Credit.  Systems must be placed in service in the 2010 tax year to qualify for the grant.  Passive solar systems and solar pool heating systems are not eligible.  Grants are issued within 60 days of installation or grant application date, whichever is later.
Website: http://www.treas.gov/recovery/1603.shtml

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Modified Accelerated Cost Recovery System
Incentive Type: Corporate Depreciation
Eligible Solar Thermal Technologies: Solar Water Heating, Solar Space Heating, Solar Thermal Process Heating, Solar Thermal Electric
Eligible Sectors: Commercial, Industrial
Eligible Customers: Businesses investing in certain renewable energy technologies
Amount: 5-year accelerated depreciation schedule
Details: Solar thermal systems may be depreciated in as little as 5 years under this system, and it is possible that an additional 50% first-year bonus depreciation could become available during the 2010 fiscal year.
Website: http://www.irs.gov/
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USDA – Rural Energy for America Program (REAP) Grants
Incentive Type: Federal Grant Program
Eligible Solar Thermal Technologies: Solar Water Heating, Solar Space Heating, Solar Thermal Electric
Eligible Sectors: Commercial, Agricultural, Schools, Local/State/Tribal Governments, Rural Electric Coopertives, Public Power Entities
Eligible Customers: Homeowners
Amount: Varies; Maximum: 25% of project cost
Details: The program consists of grants and loan guarantees for energy efficiency and renewable energy, and grants for energy audits and renewable energy development assistance.  Funding has been allocated in the following amounts: $60 million, $70 million, and $70 million in fiscal years 2010, 2011, and 2012, respectively. Notices of Solicitation of Applications are issued periodically by the USDA’s local Rural Development offices.  Grants and loan guarantees can be combined, not to exceed 75% of the project’s total costs.
Website: http://www.rurdev.usda.gov/rbs/busp/bprogs.htm
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USDA – Rural Energy for America Program (REAP) Loan Guarantees
Incentive Type: Federal Loan Program
Eligible Solar Thermal Technologies: Solar Water Heating, Solar Space Heating, Solar Thermal Electric
Eligible Sectors: Commercial, Agricultural
Eligible Customers: Agricultural Producers and Rural Small Businesses
Amount: Varies; Maximum: $25 million per loan guarantee
Details: Assists customers in financing renewable energy projects, working with local lenders, who can apply for a loan guarantee from the Federal government through the USDA for up to 85% of the loan amount.
Website: http://www.rurdev.usda.gov/rbs/busp/bprogs.htm
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US Department of Energy – Loan Guarantee Program
Incentive Type: Federal Loan Program
Eligible Solar Thermal Technologies: Solar Thermal Process Heating, Solar Thermal Electric
Eligible Sectors: Commercial, Industrial, Agricultural, Nonprofit, Schools, Local/State Government, Institutional
Eligible Customers: Agricultural Producers and Rural Small Businesses
Amount: Varies.
Details: The American Recovery and Reinvestment Act of 2009 allows the DOE to issue loan guarantees for renewable energy projects that generate electricity or thermal energy.  $10 billion budget for loan guarantees for energy efficiency, renewable energy, and other related projects.  Terms not to exceed 30 years or 90% of the projected life of the system, whichever is less.
Website: http://www.lgprogram.energy.gov
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Energy-Efficient Mortgages (EEM)
Incentive Type: Federal Loan Program
Eligible Solar Thermal Technologies: Solar Water Heating, Solar Space Heating, Passive Solar Space Heating
Eligible Sectors: Residential
Eligible Customers: Homeowners
Amount: Varies
Details: Allows homeowners to pursue energy efficiency and renewable energy improvements, and secures lenders against loan default.  Options include a Conventional EEM through Fannie Mae and Freddie Mac, Department of Veterans Affairs EEM, and a Federal Housing Authority EEM.  Lenders who provide EEMs may become Energy Star lender partners providing other incentives.
Website: http://www.resnet.us/ratings/mortgages
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Residential Energy Conservation Subsidy Exclusion – Personal & Corporate
Incentive Type: Personal & Corporate Exemption
Eligible Solar Thermal Technologies: Solar Water Heating, Solar Space Heating
Eligible Sectors: Residential, Multi-family Residential
Eligible Customers: Homeowners and building owners
Amount: 100% of the subsidy
Details: Per Section 136 of the US Code, energy conservation subsidies provided by public utilities are non-taxable.
Website: http://www.irs.gov/publications/p525/index.html
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