Combined Heat and Power Partnership
Business Energy Investment Tax Credit (ITC)
|Date Last Updated||1/8/2013|
|Incentive Administrator/Contact Office||U.S. Internal Revenue Service (IRS)|
|Incentive Initiation Date||10/3/2008|
|Incentive Expiration Date||12/31/2016|
|Incentive Size and Funding Source||The 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. The credit was further expanded by The American Recovery and Reinvestment Act of 2009.|
For fuel cells the credit is equal to 30% of expenditures, with no maximum credit. However, the credit for fuel cells is capped at $1,500 per 0.5 kilowatt (kW) of capacity. (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, with no maximum credit limit stated (explicitly). The credit for microturbines is capped at $200 per kW of capacity.
For CHP the credit is equal to 10% of expenditures, with no maximum limit stated. The CHP credit applies to eligible property placed in service after October 3, 2008.
|Eligible Recipient||Tax credits are available for owners paying taxes on eligible systems placed in service on or before December 31, 2016. 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 also meet any performance and quality standards in effect at the time the equipment is acquired. The energy property must be operational in the year in which the credit is first taken.|
|Eligible Fuel||Does Not Specify|
|Eligible Project Size (MW)||Fuel cells: >0.5 kW|
Microturbines: <2.0 MW
CHP: <50 MW
|Minimum Efficiency Required (%)||Fuel Cells: >30%|
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 Details||The American Recovery and Reinvestment Act of 2009, which allows PTC-eligible facilities to use the 30% ITC, has implications for some technologies that were already potentially eligible for either incentive in some form. Certain geothermal and open- or closed- loop biomass systems (which may include certain types of biomass CHP projects) now qualify for a 30% tax credit through December 31, 2013, the begin construction deadline for these technologies under the PTC.|