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commercial & business financial incentives

For a current list of all state and federal incentives, please visit the Database for State Incentives for Renewables and Efficiency.

STATE

Pennsylvania Energy Development Authority (PEDA) Grants
2009 SOLICITATION CLOSED. RENEWED SOLICITATION EXPECTED SPRING 2010
The Pennsylvania Energy Development Authority (PEDA) issues periodic finding solicitations to provide support for innovative, advanced energy projects, and for businesses interested in locating or expanding their alternative energy manufacturing or productions operations in Pennsylvania. PEDA's most recent grant solicitation, issed in March 2007, offered $10 million in total funding to support in-state projects, manufacturing or research involving the following types of fuels, technologies or measures: clean, alternative fuels for transportation; solar energy; wind; low-impact hydropower; geothermal; biologically derived methane gas, including landfill gas; biomass; fuel cells; coal-mine methane; waste coal; integrated gasification combined cycle, demand measurement measures, including recycled energy and energy recovery, energy efficiency and load management.

The solicitation is open to corporations, partnerships, associations and other legal business entities; nonprofits; Pennsylvania colleges and universities; and any Pennsylvani municipality and any public corporation, authority or body. The maximum individual award under the March 2007 solicitation was $1 million.

Download the application from the Pennsylvania Department of Environmental Protection

Pennsylvania Energy Harvest Grants
2009 SOLICITATION CLOSED. RENEWED SOLICITATION EXPECTED SPRING 2010
The Pennsylvania Department of Environmental Protection (DEP) and the Pennsylvania Deparment of Agriculture initiated the Pennsylvania Energy Harvest program in 2003 to improve air quality, preserve land, protect local watersheds and provide economic opportunities for the state's agricultural community. The initiative finances the implementation of clean and renewable energy technologies that have measureable benefits in terms of pollution reduction, environmental quality and reduced energy use.

The solicitation is open to nonprofits, county and municipal governments, school districts, colleges and universities, conservation districts, and incorporated watersheds recognized by the DEP. For-profit entities are not eligible, but are encouraged to apply via an eligible sponsor. Visit the Pennsylvania Department of Environmental Protection for information about this program.


FEDERAL

Modified Accelerated Cost-Recovery System (MACRS)
Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. For solar, wind and geothermal property placed in service after 1986, the current MACRS property class is five years.

The federal Energy Policy Act of 2005 (EPAct 2005) classified fuel cells, microturbines and solar hybrid lighting technologies as five-year property as well. The federal Economic Stimulus Act of 2008, enacted in February 2008, included a 50% bonus depreciation provision for eligible renewable-energy systems acquired and placed in service in 2008. To qualify for bonus depreciation, a project must satisfy these criteria:
  • the property must have a recovery period of 20 years or less under normal federal tax depreciation rules;
  • the original use of the property must commence with the taxpayer claiming the deduction;
  • the property generally must be acquired during 2008; and
  • the property must be placed in service during 2008 (or, in certain limited cases, in 2009).

If property meets these requirements, the owner is entitled to deduct 50% of the adjusted basis of the property in 2008. The remaining 50% of the adjusted basis of the property is depreciated over the ordinary depreciation schedule. The bonus depreciation rules do not override the depreciation limit applicable to projects qualifying for the federal business energy tax credit. Before calculating depreciation for such a project, including any bonus depreciation, the adjusted basis of the project must be reduced by one-half of the amount of the energy credit for which the project qualifies.

For more information on the federal MACRS, see IRS Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562. The IRS web site provides a search mechanism for forms and publications. Enter the relevant form, publication name or number, and click "GO" to receive the requested form or publication.

Business Energy Tax Credit
The federal Energy Policy Act of 2005 expanded the federal business energy tax credit for solar and geothermal energy property to include fuel cells and microturbines installed in 2006 and 2007. These provisions of the tax credit were later extended through December 31, 2008, by Section 207 of the Tax Relief and Health Care Act of 2006. (A 10% credit was available to businesses that invested in or purchased solar or geothermal energy property in the United States prior to January 1, 2006.)

For eligible equipment installed from January 1, 2006, through December 31, 2008, the credit is set at 30% of expenditures for solar technologies, fuel cells and solar hybrid lighting; microturbines are eligible for a 10% credit during this two-year period. For equipment installed on or after January 1, 2009, the tax credit for solar energy property and solar hybrid lighting reverts to 10% and expires for fuel cells and microturbines. The maximum microturbine credit is $200 per kW of capacity. No maximum is specified for the other technologies.

Solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Energy property does not include public utility property, passive solar systems, or pool heating equipment.

If the project is financed in whole or in part by subsidized energy financing or by tax-exempt private activity bonds, the basis on which the credit is calculated must be reduced. (The formula is described in the tax credit instructions.) Subsidized energy financing means "financing provided under a federal, state, or local program, a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy." Therefore, a business must reduce the basis for calculating the credit by the amount of any such incentives received.

USDA Renewable Energy Systems and Energy Efficiency Improvements Program
This program was created under the Farm Security and Rural Investment Act of 2002, and offers direct loans, loan guarantees, and grants to agricultural producers and rural small businesses for the purchase of renewable energy systems and energy efficiency improvements. For the grant option, funds of up to 25% of eligible project costs are available. For renewable energy systems, the minimum grant is $2,500 and the maximum is $500,000.

There are two competitive windows for 2008 grants. The deadline for the first is April 15, 2008. The second window will be April 16, 2008 until June 16, 2008. (Applications submitted under the first competition that are not selected will automatically be considered under the second competition.)

Eligible renewable energy projects include wind, solar, biomass and geothermal; and hydrogen derived from biomass or water using wind, solar or geothermal energy sources.



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