Federal tax credits

• 30% tax credit for solar electric systems (photovoltaic)
  • This is for solar electric property "placed into service" on or after 1/1/2009.
  • Should I wait until 1/1/2009? If you sign a contract now, by the time the system is approved and "placed into service" it will likely be after 1/1/2009 so there is no point in waiting for 1/1/2009.
  • You can carry forward the tax credit until you have used it.
  • As of 2009 this can offset AMT (Alternative Minimum Tax).
  • 30% of what? It is 30% of the cost after any utility provided rebates. This is not exactly crystal clear in the statute or the tax forms. The best analysis of this I have found is by the Solar Energy Industries Association.
• 30% tax credit capped at $2000 for solar thermal (hot water) systems.
  • You can carry forward the tax credit until you have used it.
  • The system must be capable of providing 50% of hot water needs
  • The system must not be used for a pool or hot tub
  • It may be possible to extend the system in a later tax year and claim a credit subject to a fresh $2000 cap. Read the statute (I have seen different interpretations).
  • The system must be rated by Solar Rating Certification Corporation or a comparable entity endorsed by the government of the State in which such property is installed. It is unclear whether all components in a system must be rated or just the major components (panels).
  • As of 2009 this can offset AMT (Alternative Minimum Tax).
• 30% tax credit capped at $2000 for geothermal heating or cooling systems.
  • This appears to have largely the same rules as the solar thermal credit.
  • Geothermal units can be equipped with domestic hot water heaters (desuper heaters), which may qualify for a nonbusiness energy property credit.
• Tax credits are also available for:
  • Combined heat and power (CHP) systems $1500 per 0.5KW
  • Wind power (30% capped at $4000)
  • Fuel cells $1500 per 0.5KW
  • Micro turbines
  • $500 Nonbusiness energy property credit, for energy efficiency improvements like insulation and windows are extended for 2009, but may be limited by claims from prior years.
• The law.
  • Energy Policy Act of 2005. The statute can be found in the library of congress and in PDF format via GPO. On Aug 8, 2005 this Became Public Law No: 109-58. See Sec 25D pages 440 to 441 of the PDF.
  • As ammended by Emergency Economic Stabilization Act of 2008 (H.R. 1424). On Oct 3 2008 this became Public Law 110-343. It was part of what was referred to as 'pork' added to the $700,000,000,000 bail-out of 2008. This removed the $2000 cap on tax credits for photovoltaic systems.
• Tax forms
  • IRS Form 5695 & Instructions: Residential Energy Credits

NY state tax credits and incentives

• 25% tax credit capped at $5000 for solar electric systems (photovoltaic)
  • You can carry forward the tax credit for up to 5 days until you have used it.
  • 25% of what? It is 25% of the cost after any utility provided rebates. This is made clear in the statute.
  • This credit is subject to federal tax. For example, if you receive a state rebate in 2010 for a system placed into service in 2009, then in April 2011 you will owe federal income tax on the state rebate (thus reducing the value of the rebate).
  • The statute: NY law, article 22, part 1, section 606
  • Tax form (2007) go to NY Dept of Taxation for latest copy.
  • Sales tax exempt.
  • Most areas have property tax exemptions for solar and energy conservation improvements.
• Other incentives these are mostly outside of LIPA service region, NYSERDA excludes LIPA service region.

Other states' incentives

• www.dsireusa.org is the Database of State Incentives for Renewables and Efficiency. This is a very comprehensive list of incentives. Note that state tax credits are subject to federal tax.
• Check your local utility's web site. Here is a site for National Grid in the USA.

LIPA service region

• Solar Pioneer Program
  • Currently $3.50 per watt for solar electric installations
  • Capped at $35,000 (10KW)
• Home Performance with Energy Star
  • 10% capped at $3000 or discounted financing. For LIPA service region Home Performance with Energy Star energy efficiency upgrades. A whole house approach is used, an approved contractor will have to perform an energy audit (including a blower door test). This can be very informative.
• Ground source heat pumps
  • $1000 per installation. More details here