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Combined Heat and Power Partnership

Business Energy Investment Tax Credit (ITC)

dCHPP Glossary (PDF) (2 pp, 53K)

Date Last Updated1/28/2014
Incentive TypeTax
State/FederalU.S./Federal
Incentive Administrator/Contact OfficeU.S. Internal Revenue Service (IRS)
Incentive Initiation Date10/3/2008
Incentive Expiration Date12/31/2016
Incentive Size and Funding SourceThe federal business energy investment tax credit was expanded significantly by the Energy Improvement and Extension Act of 2008. This law extended the duration -- by 8 years -- of the existing credits for fuel cells and microturbines; increased the credit amount for fuel cells; established new credits for CHP systems; allowed utilities to use the credits; and allowed taxpayers to take the credit against the alternative minimum tax (AMT), subject to certain limitations.

For fuel cells the credit is equal to 30% of expenditures and is capped at $1,500 per 0.5 kilowatt (kW) of capacity with no stated maximum. (Note that the credit for property placed in service before October 4, 2008, is capped at $500 per 0.5 kW).

For microturbines the credit is equal to 10% of expenditures capped at $200 per kW of capacity.

For CHP the credit is equal to 10% of expenditures, with no stated maximum, for the first 15 MW of CHP property.
Eligible RecipientTax credits are available for eligible systems placed in service before January 1, 2017. In general, the original use of the equipment must begin with the taxpayer, or the system must be constructed by the taxpayer. The equipment must be operational in the year in which the credit is first taken.
Eligible FuelDoes Not Specify
Eligible Project Size (MW)Fuel cells: 0.5 kW or greater
Microturbines: 2 MW or less
CHP: 50 MW or less
Minimum Efficiency Required (%)Fuel Cells: >30%
Microturbine: >26%
CHP: >60% - The efficiency requirement does not apply to CHP systems that use biomass for at least 90% of the system's energy source, but the credit may be reduced for less efficient systems.
Application Form(s)IRS Form 3468 (PDF) (3 pp, 90.6K)
Other Incentive DetailsDISCLAIMER: This information is for informational purposes only and does not represent formal guidance from the U.S. EPA Combined Heat and Power Partnership or approval from the U.S. Department of Treasury.
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