Cogeneration Facility Sales Tax Exemption

July 12, 2005


Under the Energy Tax Reform Act, a sales tax is imposed on natural gas and electricity. However, there is an exemption for the purchase and use of natural gas and utility service that is used for cogeneration if the cogeneration facility was in operation or had filed a operating or construction permit on or before March 10, 1997. To apply for the exemption, the cogeneration facility will issue an Exempt Use Certificate (ST-4) to natural gas vendors. Exempt Use Certificate (ST-4): If the cogeneration facility came into operation after March 10, 1997, the purchase of natural gas and utility service may be tax exempt if it is used to generate electricity that is (1) used for resale or (2) sold to an end user other than the owner of the cogeneration facility. A Direct Pay Certificate will be issued to the facility and the facility will self-assess on a quarterly basis that the electricity generated fits into one of these two categories.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: New Jersey
Incentive Type: Sales Tax Incentive
Web Site:
Administrator: New Jersey Division of Tax Services
Start Date: January 1, 1998
Eligible Renewable/Other Technologies:
  • Combined Heat & Power
Incentive Amount: 100%
Maximum Incentive: None


Name: NJSA §54:32B-8.46
Date Enacted: July 14, 1997
Effective Date: January 1, 1998


Name: Denise Lambert
Address: PO Box 269
Trenton NJ 08695
Phone: (609) 292-6400

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.