Renewable Energy Investment Incentives

The number and variety of federal and state energy-related tax incentives have been changing rapidly in recent years. From incentives to encourage alternative energy investments to those for companies making their building and operations more energy efficient, resourceful companies can find a variety of tax savings opportunities to explore. And RSM has the team and experience to help realize the tax benefits from these investments.

Consider the following credits for renewable energy investments:

Energy investment credit (ITC)

Companies can qualify for a federal tax credit related to the cost basis of tangible personal property that is an integral part of the following types of qualified facilities:

  • Solar facilities
  • Geothermal facilities
  • Fuel cell power plants
  • Microturbine power plants
  • Combined heat and power systems
  • Certain wind turbines
  • Geothermal heat pump cooling systems

Renewable electricity production tax credit (PTC)

Companies producing electricity from renewable resources may be eligible for a federal tax credit based on annual production and used to offset alternative minimum tax. It is available to companies that produce and sell electricity from one of the following qualifying facilities:

  • Biomass (open loop or closed loop)
  • Geothermal
  • Certain wind turbine
  • Solar
  • Landfill gas
  • Trash combustion
  • Hydropower
  • Marine and hydrokinetic power
  • Refined coal
  • Steel industry fuel

There are many special rules applicable to the ITC and PTC credits that must be considered, as well as limitations on utilization, which often require complex partnership or lease structures to monetize these credits. We can help you determine the best approach.

C corporations with substantial regular tax liability and wealthy individuals with passive income can invest in renewable energy projects and earn substantial after-tax returns. Our team of renewable energy specialists can help developers, fund owners and investors:

  • Structure partnership flips, leasing structures, power purchase agreements or combination structures
  • Prepare financial projections
  • Perform qualified cost breakdowns
  • Provide cost certifications
  • Perform due diligence
  • Prepare tax opinions

State energy incentives

In addition to the above federal energy incentives, there are numerous programs offered by state and local governments. Though the program parameters vary, all of the programs create strong financial incentives to encourage businesses to invest in renewable energy. Capitalizing on these incentives starts with understanding your business operations and how they align with available programs. Our state and local tax specialists can help you determine where investments in renewable energy can benefit not only the environment, but your bottom line. Bundling state and federal incentives for a solar system installation, for example, can turn an environmentally conscious project into a profitable business investment.

Learn more about the renewable energy credits and incentives available from the federal government and how RSM can assist you in qualifying for and realizing the credits you are due.

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