Renewable Electricity Tax Credit
RENEWABLE ELECTRICITY PRODUCTION CREDIT
Administered by: Internal Revenue Service
Annual funding: N/A
Established: The REPC was established by the Energy Policy Act of 1992, extended in March 2002 as part of the Job Creation and Worker Assistance Act of 2002 and renewed by the 2004 Working Families Tax Relief Act of 2004. The Energy Policy Act of 2005 modified the credit and extended it once again through December 31, 2007.
Scheduled termination: January 1, 2008 for renewable resources; tax credit applies to the first 10 years of operation
The Renewable Electricity Production Credit (REPC) is a per kilowatt-hour tax credit for electricity generated by qualified energy resources. Section 710 of the "American Jobs Creation Act of 2004", expanded REPC to include additional eligible resources – geothermal energy, open-loop biomass, solar energy, small irrigation power, landfill gas, municipal solid waste combustion, and refined coal – in addition to the formerly eligible wind energy, closed-loop biomass, and poultry-waste energy resources. The Energy Policy Act of 2005 (EPACT 2005) further expanded the credit to certain hydropower facilities. As a result of EPACT 2005, solar facilities placed into service after December 31, 2005 are no longer eligible for this incentive. REPC now applies to wind, closed-loop biomass, open-loop biomass, geothermal energy, small irrigation power (150 kW - 5 MW), municipal solid waste, landfill gas and hydropower.
The REPC provides a tax credit of 1.5 cents/kWh, adjusted annually for inflation, for wind, closed-loop biomass and geothermal. The adjusted credit amount for projects in 2005 is 1.9 cents/kWh. Electricity from open-loop biomass, small irrigation hydroelectric, landfill gas, municipal solid waste resources, and hydropower receive half that rate – currently 0.9 cents/kWh. The duration of the credit is 10 years. However, open-loop biomass geothermal, small irrigation hydro, landfill gas, and municipal solid waste combustion facilities placed into service after October 22, 2004 and before enactment of the Energy Policy Act of 2005 (August 8, 2005) are eligible for the credit for a five-year period. Note, however, that owners of geothermal projects who claim the federal business energy tax credit may not also claim this production tax credit.
A business can take the credit by completing Form 8835, "Renewable Electricity Production Credit," and Form 3800, "General Business Credit."
Qualified applicant: Taxpayers producing electricity from qualified resources who sell the electricity to an unrelated person during the taxable year
For more information: Contact an IRS Information Specialist at 1-800-829-1040 or visit IRS at http://www.irs.gov
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