Tax Credit for Renewable Energy Equipment Manufacturers

Summary

Note: The Tax Credit for Renewable Energy Resource Equipment Manufacturing Facilities has expired for new facilities. To be eligible for the credit, a manufacturing facility must have received preliminary certification prior to January 1, 2014. 

The Tax Credit for Renewable Energy Resource Equipment Manufacturing Facilities was enacted as a part of Oregon's Business Energy Tax Credit (BETC) in July 2007, with the passage of HB 3201. The tax credit equals 50% of the construction costs of a facility which will manufacture renewable energy systems, and includes the costs of the building, excavation, machinery and equipment which is used primarily to manufacture renewable energy systems. The credit may also be applied to the costs of improving an existing facility which will be used to manufacture renewable energy systems. The 50% credit is taken over the course of five years, at 10% each year. The original maximum credit of $10 million was expanded to $20 million (50% of a $40 million facility) upon the enactment of HB 3619 in March 2008. This legislation clarified the manufacturing credit and separated the revenue stream from the rest of BETC.

The credit applies to companies that manufacture systems that harness energy from wood waste or other wastes from farm and forest lands, non-petroleum plant or animal based biomass, the sun, wind, water, or geothermal resources. Prior to construction, a business must participate in a pre-screening process with the Oregon Business Development Department. In addition to this preliminary review, the manufacturing facility must apply for final certification. Another review required for manufacturing facilities is a financial feasibility review. The Oregon Business Development Department may establish other rules to govern the type of equipment, machinery or other manufactured products eligible for this credit, as well as minimum performance and efficiency standards for those manufactured products. The passage of HB 3680 in March 2010 set a sunset date for the tax credit. Renewable energy equipment manufacturing facilities must receive preliminary certification before January 1, 2014 in order to use the tax credit.