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Incentives for Energy Independence

Date Last Updated11/16/2012
Incentive TypeTax
State/FederalKY
Incentive Administrator/Contact OfficeKentucky Cabinet for Economic Development
Incentive Initiation Date1/1/2008
Incentive Size and Funding SourceFor companies that work on renewable energy facilities incentives may include the following:
  • A tax credit that allows approved facilities to receive a credit up to 100% of Kentucky income tax and the limited liability tax for projects that construct, retrofit or upgrade facilities that generate power from renewable resources.
  • A sales tax incentive of up to 100% of the Kentucky sales and use tax paid (on or after the activation date) on materials, machinery and equipment used to construct, retrofit or upgrade an eligible project.
  • Approved companies may also require that employees whose jobs were created as a result of the associated project, as a condition of employment, agree to pay a wage assessment of up to 4% of their gross wages. Employees will be allowed a Kentucky income tax credit equal to the assessment withheld from their wages.
  • Advanced disbursement of post-construction incentives.
The maximum recovery for a single project from all incentives, including the income and liability entity tax credit, sales tax refund and the wage assessment, may not exceed 50% of the capital investment.
Eligible RecipientThe Kentucky Incentives for Energy Independence Act provides incentives to companies that build or renovate facilities that use renewable energy.
Eligible FuelWoody Biomass; Biogas; Landfill Gas; Other
Eligible Project Size (MW)>1.0 MW
Minimum Efficiency Required (%)Does Not Specify
Other Selected Eligibility CriteriaA renewable energy facility is defined as one that generates at least 50 kW of electricity from solar power or at least 1 MW from wind power, biomass resources, landfill gas, hydropower or similar renewable resources. The electricity must be sold to an unrelated party. The minimum investment in any renewable energy facility must be $1 million in capital expenditure which is defined to include various non-capital costs such as labor.
Application Form(s)Application Instructions
Other Incentive DetailsPrior to making any capital investments in a project, each eligible company must submit an application for incentives to the Kentucky Economic Development Finance Authority. There is a $1,000 application fee. Each incentive contract is negotiated on a case-by-case basis to determine the conditions and termination date of the project, not to exceed 25 years from the project's activation date. There is also a 0.25% administrative fee assessed after the final incentives package is settled (capped at $50,000).
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