Are you interested in installing an alternative energy system in your home, but can’t swallow the price of solar panels or wind turbines? Let the federal and state government help pay the bill! New tax credit laws have recently been passed by Congress and state legislatures, including Pennsylvania’s, which help corporate, business, private, non-profit and agriculture sectors, as well as homeowners, to pay for alternative energy systems. This is the government’s way of encouraging individuals and groups to save energy and money by utilizing the growing capabilities of energy systems that don’t depend on an outside power company. By creating your own power and either using it right away, storing it in a battery system, or selling it back to your electric company (see the article on Net Metering) you can keep tons-literally tons-of harmful pollutants from being released into the air, water and soil.

Why Use Alternative Energy Tax Credits?

Free money. Tax credits help you pay for a project that will help the environment and lower your future energy bills. Need we say more?

How to Access Alternative Energy Tax Credits

Both the federal and state governments offer tax credits in Pennsylvania but currently the state incentives are limited to property tax assessments for land on which there are wind turbines (More incentives are in process). The federal tax credits are much more extensive and include separate filings for business, corporate, industrial and residential energy systems. Please see the tables below for more extensive information on each.

Federal Tax Incentives

Residential Solar and Fuel Cell Tax Credit (Source)

Summary:

Solar water heating property must be certified for performance by the Solar Rating Certification Corporation or a comparable entity endorsed by the government of the State in which the property is installed. Note that the tax credit does not apply to solar water heating property for swimming pools or hot tubs.

The credit is calculated based on the individual’s expenditures excluding subsidized energy financing, which is defined as “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.” Expenditures include labor costs for the onsite preparation, assembly, or original installation of the system and for piping or wiring to interconnect the system to the dwelling.

Pennsylvania State Tax Incentive

Wind-Energy System Exemption (Source)

Summary

Wind turbines and any related structures are by law, not to be included in property tax assessment. Instead the land on which the structures are erected is to be assessed as “capitalized value,” or land that has been developed.

Further Resources

Below are listed some websites that can be helpful in your continuing research on tax incentives and alternative energy. There are more and more incentives being passed for this sort of thing. Keep your eye out for them!

- Database of State Incentives for Renewables and Efficiency

[1] Business Energy Tax Credit
[2] Renewable Electricity Production Tax Credit
[3] Residential Solar and Fuel Cell tax credit
[4] PA Wind Energy Tax Exemption

- The American Wind Energy Association

- American Solar Energy Society

- Homepower Magazine