Renewable Energy Systems Tax Credit (Corporate)

March 22, 2023

Summary

Utah's individual income tax credit for renewable energy systems includes provisions for both residential and commercial applications. The Utah Office of Energy Development administers the tax credit and has responsibility for revising the tax credit rules and certifying systems as eligible for the credit. Legislation (section 5) enacted in 2007 extended these tax credits through at least 2012. On or before this time, and every five years thereafter, the Utah Tax Review Commission must review the tax credit and make recommendations as to whether the tax credit should be continued, modified, or repealed. 

Residential Systems:

The individual income tax credit for residential systems is 25% of the reasonable installed system costs up to a maximum credit of $2,000 per residential unit for systems other than PV solar. Credits for PV systems began at $1,600 for systems installed between 2018 - 2020, beginning in 2021, credits decrease by $400 every year until 2024, after which no credit will be granted. The residential credit is nonrefundable, but unused credit may be carried over up to four years. A non-business entity that leases a residential system is eligible for the credit and may use the credit for no more than seven years from the initiation of the lease. Eligible residential systems include active and passive solar thermal systems; solar electric systems; wind systems; hydro (water) energy; geothermal heat pumps; direct-use geothermal; and biomass. Note that eligible biomass systems must produce either fuel or electricity. Biomass heating systems are not eligible.

Commercial Systems:

The tax credit for commercial systems is structured as a refundable credit. Eligible commercial systems include active and passive solar thermal systems; solar electric systems; wind systems; hydro (water) energy; geothermal heat pumps; direct-use geothermal; and geothermal electricity; and biomass systems. Note that eligible biomass systems must produce either fuel or electricity. Biomass heating systems are not eligible. Renewable energy systems may be used to supply energy to a commercial unit or as a commercial enterprise selling the energy. S.B. 14, passed in 2015, clarified that the corporate tax credit can be applied by any taxpayer that owns a "commercial energy system", and thereby eliminated the requirement that a "business entity" is the only one who can take the corporate credit.

For wind, geothermal electric, solar, or biomass systems with a total capacity of less than 660 kW, solar photovoltaic (PV) systems up to 2 megawatts (MW), the credit is worth 10% of the reasonable installed costs up to $50,000 per commercial unit. A taxpayer that leases a commercial system is eligible for the credit and may use the credit for no more than seven years from the initiation of the lease. 

For commercial wind, solar, geothermal electric, or biomass systems with a total capacity of 660 kW or greater, the credit is 0.35¢/kWh ($0.0035/kWh) for four years. The credit may not be carried forward or back. A taxpayer that leases a commercial system is also eligible for the credit.

Hydrogen:

In 2021, H.B. 223 introduced a new provision for hydrogen systems. The refundable credit may not be combined with other commercial credits offered under this program and is limited to less than 5,600 metric tons of hydrogen per taxable year. The credit is 12¢/kg of hydrogen ($0.12/kg of hydrogen) for four years.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: Utah
Incentive Type: Corporate Tax Credit
Web Site: https://energy.utah.gov/tax-credits/renewable-energy-systems-tax-credit/
Administrator: State Energy Program, State Tax Commission
Start Date: 01/01/01, amendments effective 01/01/07
Eligible Renewable/Other Technologies:
  • Solar - Passive
  • Solar Water Heat
  • Solar Space Heat
  • Geothermal Electric
  • Solar Thermal Electric
  • Solar Thermal Process Heat
  • Solar Photovoltaics
  • Wind (All)
  • Biomass
  • Hydroelectric
  • Hydrogen
  • Geothermal Heat Pumps
  • Landfill Gas
  • Solar Pool Heating
  • Wind (Small)
  • Geothermal Direct-Use
  • Anaerobic Digestion
Incentive Amount: Residential systems: 25% of installed cost

Commercial wind, solar, geothermal electric, and biomass systems smaller than 600 kW, and solar smaller than 2 MW: 10% of installed cost

Commercial systems 660 kW or greater: 0.35¢/kWh ($0.0035/kWh)

Hydrogen systems: $0.12/kg of hydrogen
Maximum Incentive: Residential (other than PV): $2,000
Residential PV: $1,600 (reduces by $400 every year beginning 2021)
Commercial systems smaller than 600 kW, and solar smaller than 2 MW: $50,000
Commercial systems 660 kW or greater: No limit
Eligible System Size: Residential: not specified
Commercial Systems: dependent on incentive and system type
Hydrogen: max 5,600 metric tons of hydrogen
Equipment Requirements: System must be in compliance with all applicable performance and safety standards; must obtain certification from the State Energy Program
Carryover Provisions: Residential: Excess credit may be carried forward four years
Commercial: May not be carried forward or back

Incentives

This program has 6 incentives
Technologies: Solar - Passive, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Biomass, Hydroelectric, Geothermal Heat Pumps, Solar Pool Heating, Wind (Small), Geothermal Direct-Use
Sectors: Residential
Parameters: The incentive is 25.00 % of cost, The incentive has a minimum of $2000.00
Technologies: Geothermal Electric, Wind (All), Biomass, Hydroelectric, Geothermal Heat Pumps, Geothermal Direct-Use
Sectors: Commercial
Parameters: The system has a minimum of 660.00 kW, The incentive is 10.00 % of cost, The incentive has a minimum of $50000.00
Technologies: Geothermal Electric, Solar Photovoltaics, Wind (All), Biomass
Sectors: Commercial
Parameters: The system has a maximum of 660.00 kW, The incentive is 0.00 $/kWh (4 years)
Technologies: Solar - Passive, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Solar Photovoltaics
Sectors: Commercial
Parameters: The system has a minimum of 2.00 MW, The incentive is 10.00 % of cost, The incentive has a minimum of $50000.00
Technologies: Solar Photovoltaics
Sectors: Residential
Parameters: The incentive is 1600.00 $
Technologies: Hydrogen
Sectors: Commercial
Parameters: The system has a minimum of 5600.00 null, The incentive is 0.12 $/Unit

Authorities

Name: Utah Code 59-7-614
Date Enacted: 2001, amendments enacted 2007
Effective Date: 01/01/01, amendments effective 01/01/07
Expiration Date: Not specified (see summary)
Name: UAC R362-2

Contact

Name: Utah Department of Energy Development
Address: 60 East South Temple, Suite 300
Salt Lake City UT 84111
Phone: (801) 538-8732
Email: energytaxcredits@utah.gov

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.