Solar Rebates and Solar Tax Credits for Texas

Companies in Texas engaged solely in the business of manufacturing, selling, or installing solar or wind energy devices are exempt from the franchise tax. The franchise tax is Texas’s equivalent to a corporate tax. There is no ceiling on this exemption, so it can be a substantial incentive for solar and wind businesses.

For the purposes of this exemption, a solar energy device means "a system or series of mechanisms designed primarily to provide heating or cooling or to produce electrical or mechanical power by collecting and transferring solar-generated energy. The term includes a mechanical or chemical device that has the ability to store solar-generated energy for use in heating or cooling or in the production of power." Under this definition wind energy is also listed as an eligible technology.

Texas also offers a franchise tax deduction for solar energy devices which also includes wind energy as an eligible technology.

The Texas property tax code allows an exemption of the amount of 100% of the appraised property value increase arising from the installation or construction of a solar or wind-powered energy device that is primarily for the production and distribution of thermal, mechanical, or electrical energy for on-site use and devices used to store that energy.

Solar energy devices installed or constructed on or after January 1, 2014, used for a commercial purpose are subject to the cost method of appraisal, and the depreciated value must be calculated using a useful life of 10 years or less (H.B. 2500).

Eligible Technologies

"Solar" is broadly defined and includes a range of biomass technologies. "Solar energy device" means an apparatus designed or adapted to convert the radiant energy from the sun, including energy imparted to plants through photosynthesis employing the bio-conversion processes of anaerobic digestion, gasification, pyrolysis, or fermentation, but not including direct combustion, into thermal, mechanical, or electrical energy; to store the converted energy, either in the form to which originally converted or another form; or to distribute radiant solar energy or the energy to which the radiant solar energy is converted.

"Wind-powered energy device" means an apparatus designed or adapted to convert the energy available in the wind into thermal, mechanical, or electrical energy; to store the converted energy, either in the form to which originally converted or another form; or to distribute the converted energy.

Process

Those wishing to claim this exemption must fill out Form 50-123, “Exemption Application for Solar or Wind-Powered Energy Devices.”

More information can be found in the Solar and Wind-Powered Energy Device Exemption and Appraisal Guidelines.

Note: The Inflation Reduction Act of 2022 (H.R. 5376) made several significant changes to this tax credit, including expanding the eligible technologies, extending the expiration date, modifying the scheduled step-down in its value, providing for new bonus credits, and establishing new criteria to qualify for the full credit. It also phases out this tax credit under section 48 of the Internal Revenue Code and replaces it with a new technology-neutral tax credit under section 48E of the Internal Revenue Code. The summary below describes the current section 48 tax credit as modified by the Inflation Reduction Act, and below that, the new 48E tax credit.   

The federal Business Energy Investment Tax Credit (ITC) has been amended a number of times, most recently and most significantly by the Inflation Reduction Act of 2022. That bill established new prevailing wage and apprenticeship requirements for larger system to qualify for the full 30% tax credit. The Department of the Treasury issued Initial Guidance on these requirements on November 30, 2022 . According to law, the labor provisions apply to projects for which construction begins 60 days or more after Treasury publishes its guidance. Given the publishing date of November 30, 2022, the effective date for the labor provisions is January 30, 2023. The credit for different project types and available bonus credits is described below.

Base Credit

Projects under 1 MW (or larger projects that are commenced no more than 60 days after the Treasury Secretary develops labor guidelines) do not need to meet the new labor standards established by the Inflation Reduction to receive the full 30% tax credit. Such projects that begin construction after 2021 and before 2025 can receive the full tax credit of 30%. Note, projects that commence construction on or after January 1, 2025 can receive a tax credits under the new Clean Electricity Investment Tax Credit (48E) described below. 

Projects over 1 MW that begin construction 60 days after the Treasury Secretary releases labor guidelines (January 29, 2023) and no later than January 1, 2025 will receive a base tax credit of 6%. However, projects can qualify for the full 30% tax credit if they ensure that all laborers and mechanics involved in the construction of the project or the maintenance of the project for 5 years after project completion are paid wages at rates not less than prevailing wages. Projects must also ensure that a percentage of total labor hours are performed by qualified apprentices. The percent of hours increases over time to a maximum requirement of 15% in 2024 and thereafter. Note, projects that commence construction on or after January 1, 2025 can receive a tax credits under the new Clean Electricity Investment Tax Credit (48E) described below. 

Bonus Credits

Projects in which 100% of any steel or iron that is a component of the facility and 40% of the manufactured products that are components of the facility were produced in the United States can qualify for the Domestic Content Bonus. for projects that are under 1 MW and projects that are larger than 1 MW and meet the labor requirements specified above, the Domestic Content Bonus increases the tax credit by 10 percentage points. For larger projects that do not meet the labor requirements, the Domestic Content Bonus increases the tax credit by 2 percentage points. 

Projects that are located within an energy community can receive the Energy Community Bonus. To qualify, a facility must be located at one of the following: (i) a brownfield site, (ii) a metropolitan or non-metropolitan statistical area which (A) has (or, at any time during the period beginning after December 31, 2009, had) 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas, or (B) has an unemployment rate above the national average for the previous year, or (iii) a census tract or a census tract that is adjoining a census tract in which a coal mine has closed after 1999 or a coal-fired electric generating unit was retired after 2009. For projects that are under 1 MW and projects that are larger than 1 MW and meet the labor requirements specified above, the Energy Community Bonus increases the tax credit by 10 percentage points. For larger projects that do not meet the labor requirements, the Energy Community Bonus increases the tax credit by 2 percentage points. 

Solar and wind facilities less than 5 MW may also be eligible for low-income bonuses. A project built in a low-income community as defined by the New Markets Tax Credit or on Indian Land can receive an increased tax credit of 10 percentage points. A project associated with a low-income residential building project or a low-income economic benefit project can receive an increased tax credit of 20 percentage points. 

Eligible Technologies

• Solar Technologies
• Fuel Cells
• Wind Turbines 
• Geothermal Systems
• Microturbines
• Combined Heat and Power (CHP)
• Offshore Wind
• Waste Energy Recovery. Qualified waste energy recovery property means property that generates electricity solely from heat from buildings or equipment if the primary purpose of such building or equipment is not the generation of electricity. The term “waste energy recovery property” does not include any property that has a capacity in excess of 50 megawatts.
• Energy Storage Systems, both paired with generation and installed as a stand-alone system
• Thermal Energy Storage Systems
• Qualified Biogas Property
• Microgrid Controllers
• Interconnection Property associated with the installation of energy property with a maximum net output of not greater than 5 MW-AC to provide for the transmission or distribution of the electricity produced or stored by such property, and which are properly chargeable to the capital account of the taxpayer.

Credit Monetization

Section 13801 of The Inflation Reduction Act of 2022 also established procedures for other parties to monetize certain tax credits, including this one, for equipment placed in service on or after January 1, 2023 and through December 31, 2032. 

The direct pay option allows non-taxable entities to directly monetize certain tax credits. The provisions apply to nonprofits, a state or political subdivision thereof, the Tennessee Valley Authority, Indian tribal governments (as defined in Section 30D(g)(9)), any Alaska Native Corporation (as defined in Section 3 of the Alaska Native Claims Settlement Act), or any corporation operating on a cooperative basis which is engaged in furnishing electric energy to persons in rural areas. Such applicable entities can elect to be treated as having made a tax payment equal to the value of the tax credit they would otherwise be eligible to claim. The entity can then claim a refund for the excess taxes they are deemed to have paid. The option effectively makes this tax credit refundable for these entities. 

The act also allows eligible taxpayers to transfer all or a portion of their eligible tax credits to an unrelated taxpayer. Transfers must be reported to IRS and only one transfer is permitted. Must be elected no later than the due date for tax filing for the tax year the tax credit is claimed.

Clean Electricity Investment Tax Credit (48E)

Section 13702 of the Inflation Reduction Act created a new tax credit, the Clean Electricity Investment Tax Credit to replace the traditional ITC for systems placed in service on or after January 1, 2025. The tax credit is functionally similar to the ITC, but is not technology-specific. It applies to all generation facilities and energy storage systems that have an anticipated greenhouse gas emissions rate of zero. The credit amount is generally calculated in the same manner as described above, but will be phased out as the U.S. meets greenhouse gas emission reduction targets. For a project whose construction is commenced in the year following the year in which greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25% of the 2022 levels, the tax credit will not be reduced. However, for projects commenced in the second year following the target being met, the tax credit will be worth 75% of what it would otherwise be. Projects commenced in the third year will receive a credit worth 50%, and all projects commenced after then will not be eligible for a tax credit. 

According to Section 136 of the U.S. Code, energy conservation subsidies provided (directly or indirectly) to customers by public utilities* are non-taxable. This exclusion does not apply to electricity-generating systems registered as "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 (PURPA). If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).

The term "energy conservation measure" includes installations or modifications primarily designed to reduce consumption of electricity or natural gas, or to improve the management of energy demand. Eligible dwelling units include houses, apartments, condominiums, mobile homes, boats and similar properties. If a building or structure contains both dwelling units and other units, any subsidy must be properly allocated.

The definition of "energy conservation measure" implies that utility rebates for residential solar-thermal projects and photovoltaic (PV) systems may be non-taxable. However, the IRS has not ruled definitively on this issue. Taxpayers considering using this provision for a renewable energy system should discuss the details of the project with a tax professional. Other types of utility subsidies that may come in the form of credits or reduced rates might also be non-taxable, according to IRS Publication 525.


* The term "public utility" is defined as an entity "engaged in the sale of electricity or natural gas to residential, commercial, or industrial customers for use by such customers." The term includes federal, state and local government entities.

Note: The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023. 

Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property (26 USC § 168(e)(3)(B)(vi)) under the MACRS, which refers to 26 USC § 48(a)(3)(A), often known as the energy investment tax credit or ITC to define eligible property. Such property currently includes*:

• a variety of solar-electric and solar-thermal technologies
• fuel cells and microturbines
• geothermal electric
• direct-use geothermal and geothermal heat pumps
• small wind (100 kW or less)
• combined heat and power (CHP)
• the provision which defines ITC technologies as eligible also adds the general term "wind" as an eligible technology, extending the five-year schedule to large wind facilities as well.

In addition, for certain other types of renewable energy property, such as biomass or marine and hydrokinetic property, the MACRS property class life is seven years. Eligible biomass property generally includes assets used in the conversion of biomass to heat or to a solid, liquid or gaseous fuel, and to equipment and structures used to receive, handle, collect and process biomass in a waterwall, combustion system, or refuse-derived fuel system to create hot water, gas, steam and electricity. Marine and hydrokinetic property includes facilities that utilize waves, tides, currents, free-flowing water, or differentials in ocean temperature to generate energy. It does not include traditional hydropower that uses dams, diversionary structures, or impoundments.

The 5-year schedule for most types of solar, geothermal, and wind property has been in place since 1986. The federal Energy Policy Act of 2005 (EPAct 2005) classified fuel cells, microturbines and solar hybrid lighting technologies as five-year property as well by adding them to § 48(a)(3)(A). This section was further expanded in October 2008 by the addition of geothermal heat pumps, combined heat and power, and small wind under The Energy Improvement and Extension Act of 2008.

Bonus Depreciation

Bonus Depreciation has been sporadically available at different levels during different years. Most recently, The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023.

Bonus Depreciation History

The 50% first-year bonus depreciation provision enacted in 2008 was extended (retroactively for the entire 2009 tax year) under the same terms by the American Recovery and Reinvestment Act of 2009 (H.R. 1), enacted in February 2009. It was renewed again in September 2010 (retroactively for the entire 2010 tax year) by the Small Business Jobs Act of 2010 (H.R. 5297). In December 2010 the provision for bonus depreciation was amended and extended yet again by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R. 4853). Under these amendments, eligible property placed in service after September 8, 2010 and before January 1, 2012 was permitted to qualify for 100% first-year bonus depreciation. The December 2010 amendments also permitted bonus depreciation to be claimed for property placed in service during 2012, but reverted the allowable amount from 100% to 50% of the eligible basis. The 50% first-year bonus depreciation allowance was further extended for property placed in service during 2013 by the American Taxpayer Relief Act of 2012 (H.R. 8, Sec. 331) in January 2013. The Tax Increase Prevention Act Of 2014 (H.R. 5771, Sec. 125), extended  these provisions through to December 31, 2014, and thus retroactively for the 2014 tax year.

For more information on the federal MACRS, see IRS Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562. The IRS web site provides a search mechanism for forms and publications. Enter the relevant form, publication name or number, and click "GO" to receive the requested form or publication. For guidance on bonus depreciation, including information relating to the election to claim either 50% or 100% bonus depreciation, retroactive elections to claim 50% bonus depreciation for property placed in service during 2010, and eligible property, please see IRS Rev. Proc. 2011-26.


*Note that the definitions of eligible technologies included in this entry are somewhat simplified versions of those contained in tax code, which often contain additional caveats, restrictions, and modifications. Those interested in this incentive should review the relevant sections of the code in detail prior to making business decisions.

According to Section 136 of the U.S. Code, energy conservation subsidies provided (directly or indirectly) to customers by public utilities* are non-taxable. This exclusion does not apply to electricity-generating systems registered as "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 (PURPA). If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).

The term "energy conservation measure" includes installations or modifications primarily designed to reduce consumption of electricity or natural gas, or to improve the management of energy demand. Eligible dwelling units include houses, apartments, condominiums, mobile homes, boats and similar properties. If a building or structure contains both dwelling units and other units, any subsidy must be properly allocated.

The definition of "energy conservation measure" implies that utility rebates for residential solar-thermal projects and photovoltaic (PV) systems may be non-taxable. However, the IRS has not ruled definitively on this issue. Taxpayers considering using this provision for a renewable energy system should discuss the details of the project with a tax professional. Other types of utility subsidies that may come in the form of credits or reduced rates might also be non-taxable, according to IRS Publication 525. 


* The term "public utility" is defined as an entity "engaged in the sale of electricity or natural gas to residential, commercial, or industrial customers for use by such customers." The term includes federal, state and local government entities.

Note: The Inflation Reduction Act of 2022 (H.R. 5376) made several significant changes to this tax credit, including extending the expiration date, providing for new bonus credits, and establishing new criteria to qualify for the full credit. It also phases out this tax credit under section 45 of the Internal Revenue Code at the end of 2024 and replaces it with a new technology-neutral tax credit under section 45Y of the Internal Revenue Code. The summary below describes the current section 45 tax credit as modified by the Inflation Reduction Act, and below that, the new 45Y tax credit.   

The federal renewable electricity production tax credit (PTC) is an inflation-adjusted per-kilowatt-hour (kWh) tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year. The duration of the credit is 10 years after the date the facility is placed in service.

Originally enacted in 1992, the PTC has been renewed and expanded numerous times, most recently by the Inflation Reduction Act of 2022. That bill established new prevailing wage and apprenticeship requirements for larger system to qualify for the full value of the tax credit -- 2.6 cents per kilowatt-hour (kWh) for wind, closed-loop biomass, and geothermal energy; 1.3 cents per kWh for open-loop biomass facilities, small irrigation power facilities, landfill gas facilities and trash facilities. In late-2022 or 2023, the Treasury Secretary will issue guidance for these new labor provisions. The credit for different project types and available bonus credits is described below.

Base Credit

Projects under 1 MW (or larger projects that are commenced no more than 60 days after the Treasury Secretary develops labor guidelines) do not need to meet the new labor standards established by the Inflation Reduction to receive the full 1.3 or 2.6 cents/kWh (depending on the facility type) tax credit. This amount may be adjusted annually for inflation. Such projects that begin construction after 2021 and before 2025 can receive the full tax credit. Note, projects that commence construction on or after January 1, 2025 can receive a tax credit under the new Clean Energy Production Tax Credit (45Y) described below. 

Projects over 1 MW that begin construction 60 days after the Treasury Secretary releases labor guidelines and no later than January 1, 2025 will receive a base tax credit of 0.5 cents/kWh. However, projects can qualify for the full tax credit if they ensure that all laborers and mechanics involved in the construction of the project or the maintenance of the project for the entire 10-year PTC period are paid wages at rates not less than prevailing wages. Projects must also ensure that a percentage of total labor hours are performed by qualified apprentices. The percent of hours increases over time to a maximum requirement of 15% in 2024 and thereafter. Note, projects that commence construction on or after January 1, 2025 can receive a tax credit under the new Clean Energy Production Tax Credit (45Y) described below. 

Bonus Credits

The Domestic Content Bonus increases the credit amount by 10% for projects in which 100% of any steel or iron that is a component of the facility and 40% of the manufactured products that are components of the facility were produced in the United States. Note, the required percentage of domestic manufactured products for offshore wind facilities is 20%. 

The Energy Community Bonus increases the credit amount by 10% for projects that are located at one of the following: (i) a brownfield site, (ii) a metropolitan or non-metropolitan statistical area which (A) has (or, at any time during the period beginning after December 31, 2009, had) 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas, or (B) has an unemployment rate above the national average for the previous year, or (iii) a census tract or a census tract that is adjoining a census tract in which a coal mine has closed after 1999 or a coal-fired electric generating unit was retired after 2009. 

Credit Monetization

Section 13801 of The Inflation Reduction Act of 2022 also established procedures for other parties to monetize certain tax credits, including this one, for equipment placed in service on or after January 1, 2023 and through December 31, 2032. 

The direct pay option allows non-taxable entities to directly monetize certain tax credits. The provisions apply to nonprofits, a state or political subdivision thereof, the Tennessee Valley Authority, Indian tribal governments (as defined in Section 30D(g)(9)), any Alaska Native Corporation (as defined in Section 3 of the Alaska Native Claims Settlement Act), or any corporation operating on a cooperative basis which is engaged in furnishing electric energy to persons in rural areas. Such applicable entities can elect to be treated as having made a tax payment equal to the value of the tax credit they would otherwise be eligible to claim. The entity can then claim a refund for the excess taxes they are deemed to have paid. The option effectively makes this tax credit refundable for these entities. 

The act also allows eligible taxpayers to transfer all or a portion of their eligible tax credits to an unrelated taxpayer. Transfers must be reported to IRS and only one transfer is permitted. Must be elected no later than the due date for tax filing for the tax year the tax credit is claimed.

Clean Energy Production Tax Credit (45Y)

Section 13701 of the Inflation Reduction Act created a new tax credit, the Clean Energy Production Tax Credit to replace the traditional PTC for systems placed in service on or after January 1, 2025. The tax credit is functionally similar to the PTC, but is not technology-specific. It applies to all generation facilities that have an anticipated greenhouse gas emissions rate of zero. The credit amount is generally calculated in the same manner as described above, and all technologies that satisfy the labor requirements will be eligible for the full value of the tax credit as adjusted for inflation. The credit will be phased out as the U.S. meets greenhouse gas emission reduction targets. For a project whose construction is commenced in the year following the year in which greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25% of the 2022 levels, the tax credit will not be reduced. However, for projects commenced in the second year following the target being met, the tax credit will be worth 75% of what it would otherwise be. Projects commenced in the third year will receive a credit worth 50%, and all projects commenced after then will not be eligible for a tax credit. 

Homeowners can take advantage of energy efficient mortgages (EEM) to either finance energy efficiency improvements to existing homes, including renewable energy technologies, or to increase their home buying power with the purchase of a new energy efficient home. The U.S. federal government supports these loans by insuring them through Federal Housing Authority (FHA) or Veterans Affairs (VA) programs. This allows borrowers who might otherwise be denied loans to pursue energy efficiency, and it secures lenders against loan default.

FHA Energy Efficient Mortgages
The FHA allows lenders to add up to 100% of energy efficiency improvements to an existing mortgage loan with certain restrictions. FHA mortgage limits vary by county, state and the number of units in a dwelling. See their website for more details. These mortgages were previously limited to $8,000.The maximum amount of the portion of an energy efficient mortgage allowed for energy improvements is now the lesser of 5% of:

• The value of the property,
• 115% of the median area price of a single-family dwelling, or
• 150% of the Freddie Mac conforming loan limit

Loan amounts may not exceed the projected savings of the energy efficiency improvements. These loans may be combined with FHA 203 (h) mortgages available to victims of presidentially-declared disasters and with financing offered through the FHA 203 (k) rehabilitation program. FHA loan limits do not apply to the EEM. Borrowers must obtain a home energy assessment by a qualified energy rater, assessor, or auditor using whole-assessment standards, protocols, and procedures. 

Borrowers may include closing costs and the up-front mortgage insurance premium in the total cost of the loan. The loan is available to anyone who meets the income requirements for FHA’s Section 203 (b), provided the applicant can meet the monthly mortgage payments. New and existing owner-occupied homes of up to two units qualify for this loan. Cooperative units are not eligible. Homebuyers should submit applications to their local HUD Field Office through an FHA-approved lending institution.

Department of Veterans Affairs (VA) Energy Efficient Mortgages
The VA insures EEMs to be used in conjunction with VA loans either for the purchase of existing homes or for refinancing loans secured by the dwelling. Homebuyers may borrow up to $3,000 if only documentation of improvement costs or contractor bids is submitted, or up to $6,000 if the projected energy savings are greater than the increase in mortgage payments. Loans may exceed this amount at the discretion of the VA. Applicants may not include the cost of their own labor in the total amount. No additional home appraisal is needed, but applicants must submit a HER, contractor bids and certain other documentation. The VA insures 50% of the loan if taken by itself, but it may insure less if the total value of the mortgage exceeds a certain amount.

This mortgage is available to qualified military personnel, reservists and veterans. Applicants should secure a certificate of eligibility from their local lending office and submit it to a VA-approved private lender. If the loan is approved, the VA guarantees the loan when it is closed.

Conventional EEMs
Conventional mortgages are not backed by a federal agency. Private lenders sell loans to Fannie Mae and Freddie Mac, which in turn allows homebuyers to borrow up to 15% of an existing home’s appraised value for improvements documented by a HER.

Fannie Mae also lends up to 5% for Energy Star new homes. Fannie Mae EEMs are available to single-family, owner-occupied units, and Fannie Mae provides EEMs to those whose income might otherwise disqualify them from receiving the loans by allowing approved lenders to adjust borrowers’ debt-to-income ratio by 2%. The value of the improvements is immediately added to the total appraised value of the home.

Freddie Mac offers GreenChOICE mortgages to "provide greater affordability for borrowers, offer more flexibility and combine the flexibilities of Home Possible Mortgages to offer borrowers additional affordable financing opportunities." Borrowers should apply directly to the lender. Click here for more details.

ENERGY STAR Partnership for Lenders
To promote EEMs and lenders who offer them, the federal ENERGY STAR program offers a partnership program for lenders who provide EEMs to borrowers. Becoming a partner allows lenders to utilize the Energy Star brand to promote themselves as Energy Star partners offering EEMs. To become a lender, partner lenders must first provide proof that they know how to write EEMs. To maintain their partnership benefits, lenders must write a certain number of EEMs per year. Energy Star does not have a lender certification program or process. Click here for more information about ENERGY STAR's lender partnership program, and here to access the partner locator tool. ENERGY STAR requires that its lender partners provide EEMs to qualified borrowers regardless of whether it is an FHA EEM, Fannie Mae EEM, or VA EEM.

Note: The U.S. Department of Agriculture's Rural Development issues periodic Notices of Solicitation of Applications for the Rural Energy for America Program (REAP) in the Federal Register. The FY 2018 solicitation for the REAP program includes a total budget of approximately $800 million. 

The Rural Energy for America Program (REAP) provides financial assistance to agricultural producers and rural small businesses in America to purchase, install, and construct renewable energy systems, make energy efficiency improvements to non-residential buildings and facilities, use renewable technologies that reduce energy consumption, and participate in energy audits and renewable energy development assistance.

Renewable energy projects for the Renewable Energy Systems and Energy Efficiency Improvement Guaranteed Loan and Grant Program include wind, solar, biomass and geothermal, and hydrogen derived from biomass or water using wind, solar, or geothermal energy sources. These grants are limited to 25% of a proposed project's cost, and a loan guarantee may not exceed $25 million. The combined amount of a grant and loan guarantee must be at least $5,000 (with the grant portion at least $1,500) and may not exceed 75% of the project’s cost. In general, a minimum of 20% of the funds available for these incentives will be dedicated to grants of $20,000 or less. For more information on grant, loan guarantees, loan financing, and opportunities for combinations thereof, visit the USDA website. 

Application due dates are published annually in the Notice of Funding Availability. 

Eligibility

Grants and Guaranteed Loans are generally available to small businesses and agricultural producers and other entities as determined by USDA. To be eligible for REAP grants and guaranteed loans, applicants must demonstrate sufficient revenue to cover any operations and maintenance expense as well as any applicable debt service of the project for the duration of the guaranteed loan or grant. Rural small businesses must be located in rural areas, but agricultural producers may be located in non-rural areas.

Eligible project costs include purchasing energy efficiency improvements or a renewable energy system, energy audits or assessments, permitting and licensing fees, and business plans and retrofitting. For new construction the replacement of older equipment with more efficient equipment may be eligible as a project cost only when a new facility is planned to be more efficient and similarly sized than the older facility. Working capital and land acquisition are only eligible for loan guarantees.

For more information regarding applicant and project eligibility for loans and grants, visit the USDA REAP eligibility webpage, read the eligibility requirements in the most recent Solicitation of Applications for REAP funding in the Federal Registry, and/or contact your state rural energy coordinator.

Regional rural energy coordinators provide loan and grant applications upon request.

History

The Food, Conservation, and Energy Act of 2008 (H.R. 2419), enacted by Congress in May 2008, converted the federal Renewable Energy Systems and Energy Efficiency Improvements Program,* into the Rural Energy for America Program (REAP). Similar to its predecessor, the REAP promotes energy efficiency and renewable energy for agricultural producers and rural small businesses through the use of (1) grants and loan guarantees for energy efficiency improvements and renewable energy systems, and (2) grants for energy audits and renewable energy development assistance. Congress has allocated funding for the new program in the following amounts: $55 million for FY 2009, $60 million for FY 2010, $70 million for FY 2011, and $70 million for FY 2012. REAP is administered by the U.S. Department of Agriculture (USDA). In addition to these mandatory funding levels, up to $25 million in discretionary funding may be issued each year. The American Taxpayer Relief Act of 2012 (H.R. 8) extended discretionary funding for FY 2013. The 2014 Farm Bill reauthorized the USDA to offer these programs and removed the mandate to offer grants for feasibility studies.

* The Renewable Energy Systems and Energy Efficiency Improvements Program was created by the USDA pursuant to Section 9006 of the 2002 federal Farm Security and Rural Investment Act of 2002. Funding in the amount of $23 million per year was appropriated for each fiscal year from FY 2003-2007. In March 2008, the USDA announced that it would accept $220.9 million in applications for grants, loan guarantees, and loan/grant combination packages under the Renewable Energy Systems and Energy Efficiency Improvements Program. The application deadline was June 16, 2008.

Land grant colleges and universities are referred to in the summary table as "schools" and "institutional" eligible sectors. K-12 schools are not eligible for this grant.

The U.S. Department of Energy's (DOE) Office of Indian Energy Policy and Programs promotes tribal energy sufficiency, economic growth, and employment on tribal lands through the development of renewable energy and energy efficiency technologies. The program provides financial assistance, technical assistance, and education and training to tribes for the evaluation and development of renewable energy resources and energy efficiency measures.

DOE's program offerings consist of program management through DOE headquarters, program implementation and project management through DOE's field offices, and technical support through DOE laboratories. Program management is carried out by DOE's Weatherization and Intergovernmental Program, which provides programmatic direction and funding to DOE field offices for program implementation. DOE's Golden Field Office solicits, awards, administers, and manages financial assistance agreements.

Program funding is awarded through a competitive process. Click here to view current program funding opportunities, and here to apply for technical assistance.

Rebates will only be paid for approved systems installed by approved solar contractors according to the established technical requirements. All systems must conform to the utility's equipment and installation standards in order to qualify for a rebate. These standards include the use of pre-approved equipment; equipment warranty requirements; and the use of a program-approved, NABCEP-certified, and appropriately insured solar installer. Participants must meet a detailed set of home energy efficiency requirements in order to qualify for a solar rebate. Participants must also complete a solar education course to receive the rebate.

Renewable Energy Credits and other environmental credits associated with renewable energy generated from the system belong to Austin Energy.

The Texas LoanSTAR (Saving Taxes and Resources) low-interest revolving loan program finances energy-related cost reduction retrofits for state, public school, college, university, and non-profit hospital facilities. Borrowers repay loans through the stream of cost savings realized from their energy cost-reduction projects. The LoanSTAR Program Administrator should be contacted for information on current loan interest rates.

As of May 2020, LoanSTAR has funded over 325 loans totaling over $545 million. 

Eligible Projects

Energy cost reduction measures (ECRMs) financed through the program include, but are not limited to, energy-efficient lighting systems; high-efficiency heating, ventilation, and air conditioning systems; energy management systems; energy recovery systems; building shell improvements; load management projects; and systems commissioning. Utility dollar savings are the most important criterion; therefore, ECRMs are not limited to measures that save energy. The evaluation of on-site renewable energy options (e.g., solar water heating, photovoltaic systems, small wind turbines) is encouraged in the analysis of potential projects.

All LoanSTAR projects must be analyzed by a Professional Engineer and meet other criteria specified in the technical guidelines, which can be found on the program website. Projects financed by LoanSTAR must have an average simple payback of 10 years or less.

Process

Each April and October, the State Energy Conservation Office (SECO) publishes a Notice of Loan Fund Availability and request for applications of LoanSTAR loans. The notice is published in the Texas Register, on the Comptroller’s website, and on the SECO Funding & Incentives webpage. Applications are scored by a review committee, with the highest scoring applicants receiving funding commitments first.  Scoring is based largely on the following considerations.

1. Information provided in the application including the application and one of the following: Engineering Assessment Report / Utility Assessment Report, Preliminary Energy Assessment, or Project Assessment Commitment;
2. Location of proposed project; and
3. Public access to the projects’ energy savings information.

Selected institutions will be asked to sign a Memorandum of Understanding (MOU) agreeing to complete and submit an Energy Assessment Report (EAR) or a Utility Assessment Report (UAR) within 120 days. With an executed MOU, SECO reserves funding for the institution.

SECO performs design review, design specification review, and on-site construction monitoring at 50% and 100% completion of each project phase.  Repayment of the loans does not begin until after construction is 100% completed and it has been determined that the project was designed and constructed in accordance with the LoanSTAR Technical Guidelines.

More information, including project applications and a detailed program guidebook, are available on the program website above. 

Note: Section 13302 of The Inflation Reduction Act of 2022 (H.R. 5376) extended the expiration date and modified the phase down of this tax credit. It also made stand-alone energy storage systems eligible for the credit, and biomass heaters ineligible for the credit. Biomass heaters are now eligible for the residential energy efficiency tax credit. The summary below reflects the credit after the enactment of H.R. 5376.

A taxpayer may claim a credit for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is at a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.

Solar-electric property

• 30% for systems placed in service by 12/31/2019
• 26% for systems placed in service after 12/31/2019 and before 01/01/2022
• 30% for systems placed in service after 12/31/2021 and before 01/01/2033
• 26% for systems placed in service after 12/31/2032 and before 01/01/2034
• 22% for systems placed in service after 12/31/2033 and before 01/01/2035
• There is no maximum credit for systems placed in service after 2008.
• Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
• The home served by the system does not have to be the taxpayer’s principal residence.

Solar water-heating property

• 30% for systems placed in service by 12/31/2019
• 26% for systems placed in service after 12/31/2019 and before 01/01/2022
• 30% for systems placed in service after 12/31/2021 and before 01/01/2033
• 26% for systems placed in service after 12/31/2032 and before 01/01/2034
• 22% for systems placed in service after 12/31/2033 and before 01/01/2035
• There is no maximum credit for systems placed in service after 2008.
• Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
• Equipment must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.
• At least half the energy used to heat the dwelling's water must be from solar in order for the solar water-heating property expenditures to be eligible.
• The tax credit does not apply to solar water-heating property for swimming pools or hot tubs.
• The home served by the system does not have to be the taxpayer’s principal residence.

Fuel cell property

• 30% for systems placed in service by 12/31/2019
• 26% for systems placed in service after 12/31/2019 and before 01/01/2022
• 30% for systems placed in service after 12/31/2021 and before 01/01/2033
• 26% for systems placed in service after 12/31/2032 and before 01/01/2034
• 22% for systems placed in service after 12/31/2033 and before 01/01/2035
• Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
• The maximum credit is $500 per half kilowatt (kW).
• The fuel cell must have a nameplate capacity of at least 0.5 kW of electricity using an electrochemical process and an electricity-only generation efficiency greater than 30%.
• In case of joint occupancy, the maximum qualifying costs that can be taken into account by all occupants for figuring the credit is $1,667 per 0.5 kW. This does not apply to married individuals filing a joint return. The credit that may be claimed by each individual is proportional to the costs he or she paid.
• The home served by the system must be the taxpayer’s principal residence.

Small wind-energy property

• 30% for systems placed in service by 12/31/2019
• 26% for systems placed in service after 12/31/2019 and before 01/01/2022
• 30% for systems placed in service after 12/31/2021 and before 01/01/2033
• 26% for systems placed in service after 12/31/2032 and before 01/01/2034
• 22% for systems placed in service after 12/31/2033 and before 01/01/2035
• There is no maximum credit for systems placed in service after 2008.
• Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
• The home served by the system does not have to be the taxpayer’s principal residence.

Geothermal heat pumps

• 30% for systems placed in service by 12/31/2019
• 26% for systems placed in service after 12/31/2019 and before 01/01/2022
• 30% for systems placed in service after 12/31/2021 and before 01/01/2033
• 26% for systems placed in service after 12/31/2032 and before 01/01/2034
• 22% for systems placed in service after 12/31/2033 and before 01/01/2035
• There is no maximum credit for systems placed in service after 2008.
• Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
• The geothermal heat pump must meet federal Energy Star criteria.
• The home served by the system does not have to be the taxpayer’s principal residence

Battery Storage Systems (Standalone Systems)

• 0% for systems placed in service before 1/1/2023
• 30% for systems placed in service after 12/31/2022 and before 01/01/2033
• 26% for systems placed in service after 12/31/2032 and before 01/01/2034
• 22% for systems placed in service after 12/31/2033 and before 01/01/2035
• The system must have a capacity of at least 3 kilowatt hours
• The home served by the system does not have to be the taxpayer’s principal residence.

Significantly, The American Recovery and Reinvestment Act of 2009 repealed a previous limitation on the use of the credit for eligible projects also supported by "subsidized energy financing." For projects placed in service after December 31, 2008, this limitation no longer applies.

Energy Storage

Prior to the enactment of the Inflation Reduction Act of 2022, the federal tax code did not explicitly reference energy storage, so stand-alone energy storage systems did not qualify for the tax credit.  However, the IRS issued Private Letter Rulings in 2013 and 2018, which address energy storage paired with PV systems. In both cases, the IRS ruled that the energy storage equipment when paired with PV met the statutory definition of a "qualified solar electric property expenditure," as was eligible for the tax credit. It is important to note that Private Letter Rulings only apply to the taxpayer who requested it, and do not establish precedent. Any taxpayer considering the purchase of an energy storage system should consult their accountant or other tax professional before claiming a tax credit.  

History

Established by The Energy Policy Act of 2005, the federal tax credit for residential energy property initially applied to solar-electric systems, solar water heating systems and fuel cells. The Energy Improvement and Extension Act of 2008 extended the tax credit to small wind-energy systems and geothermal heat pumps, effective January 1, 2008. Other key revisions included an eight-year extension of the credit to December 31, 2016; the ability to take the credit against the alternative minimum tax; and the removal of the $2,000 credit limit for solar-electric systems beginning in 2009. The credit was further enhanced in February 2009 by The American Recovery and Reinvestment Act of 2009, which removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.

Commercial Solutions

The Commercial Solutions Program is offered to any TNMP non-residential distribution customer, including retail, real estate, healthcare, hospitality and food service, manufacturing, and nonprofit organizations. Incentives are based on energy savings and awarded at the rates shown below.

CitySmart

The CitySmart Program is available to city, state, and federal government customers within the TNMP electric service territory. In addition to the incentives shown below, participants can benefit from no-cost services such as energy benchmarking, masterplanning, technical assistance, financing resources, and public relations support. Incentives for qualifying small schools and cities are at an additional $100/kW for eligible measures.

SCORE

The SCORE Program is available to school districts, private schools, community colleges, and universities. In addition to the incentives shown below, participants can benefit from no-cost services such as energy benchmarking, masterplanning, technical assistance, financing resources, and public relations support. Incentives for qualifying small schools and cities are at an additional $100/kW for eligible measures.

Small Business

The Small Business Program targets cost-effective equipment retrofits that replace inefficient technologies with high-efficiency technologies. Incentives are based on energy savings and awarded at the rates shown below.

CPS Energy offers a variety of rebates for energy efficiency related improvements to residential homes, including: appliances, HVAC equipment, and insulation. Rebate calculation methods, limits, and equipment requirements vary by technology and sometimes by existing home characteristics. All equipment and installation requirements must be met in order to receive rebate payments. View the program web site for additional details.

CPS Energy also offers energy efficiency rebates for commercial and industrial facilities, as well as rebates for solar photovoltaic (PV) and solar thermal systems. See website for full details regarding rebate incentives.

Denton Municipal Electric pays residential and small commercial customers to reduce energy demand and consumption in order to reduce the utility bills of DME customers, reduce peak load, reduce emissions, and promote energy conservation. The program offers rebates on the electric service bills of DME retail customers and cash incentives to builders, and applicants can qualify for multiple incentives simultaneously. Rebates are available for energy efficiency improvements, electric vehicles, solar pv and other standard offers.

An application form must be completed and sent to DME within 30 days of installation of the energy efficient upgrades. The energy efficiency upgrades must be deemed measurable and verifiable through the standards approved by the Public Utility Commission of Texas (PUCT), which requires that complete information be recorded for each installation. The installer that documents approved energy efficient upgrades must be registered as a DME Authorized Installer. After submitting a Request for Payment, customers can expect to receive the rebate credit in 4 to 10 weeks.

The Program will be in effect each fiscal year beginning on October 1. Confirm with the utility that rebates are available before making investments. For full details, see the program manual available on the utility's web site. For full details, see the program manual available on the utility's web site.

Note: The Tax Cuts and Jobs Act of 2017 repealed section 54C of the Internal Revenue Code, which authorized the use of New CREBs. IRS Notice 2018-15  announced that the IRS will no longer process applications for or issue allocations of New CREBs. The summary below describes CREBs before they were repealed, and is here for historical purposes only. 

Clean renewable energy bonds (CREBs) may be used by certain entities -- primarily in the public sector -- to finance renewable energy projects. The list of qualifying technologies is generally the same as that used for the federal renewable energy production tax credit (PTC). CREBs may be issued by electric cooperatives, government entities (states, cities, counties, territories, Indian tribal governments or any political subdivision thereof), and by certain lenders.  The bondholder receives federal tax credits in lieu of a portion of the traditional bond interest, resulting in a lower effective interest rate for the borrower.* The issuer remains responsible for repaying the principal on the bond.

The Energy Improvement and Extension Act of 2008 (Div. A, Sec. 107) allocated $800 million for new Clean Renewable Energy Bonds (CREBs). In February 2009, the American Recovery and Reinvestment Act of 2009 (Div. B, Sec. 1111) allocated an additional $1.6 billion for New CREBs, for a total New CREB allocation of $2.4 billion. The Energy Improvement and Extension Act of 2008 also extended the deadline for previously reserved allocations ("Old CREBs") until December 31, 2009, and addressed several provisions in the existing law that previously limited the usefulness of the program for some projects. A separate section of the law extended CREBs eligibility to marine energy and hydrokinetic power projects.

Participation in the program is limited by the volume of bonds allocated by Congress for the program. Participants must first apply to the Internal Revenue Service (IRS) for a CREBs allocation, and then issue the bonds within a specified time period. The New CREBs allocation totaling $2.4 billion does not have a defined expiration date under the law; however, recent IRS solicitations for new applications require the bonds to be issued within 3 years after the applicant receives notification of an approved allocation (see History section below for information on previous allocations). Public power providers, governmental bodies, and electric cooperatives are each reserved an equal share (33.3%) of the New CREBs allocation. IRS Notice 2015-12, however, divided the remaining volume cap differently: $516,565,691.35 for public power providers, $597,134,963.60 for governmental bodies, and $280,778,469.00 for cooperative utilities.

The tax credit rate is set daily by the U.S. Treasury Department. Under past allocations, the credit could be taken quarterly on a dollar-for-dollar basis to offset the tax liability of the bondholder. However, under the new CREBs allocation, the credit has been reduced to 70% of what it would have been otherwise. Other important changes are described in IRS Notice 2009-33.

CREBs differ from traditional tax-exempt bonds in that the tax credits issued through CREBs are treated as taxable income for the bondholder. The tax credit may be taken each year the bondholder has a tax liability as long as the credit amount does not exceed the limits established by the federal Energy Policy Act of 2005. Treasury rates for prior CREB allocations, or "Old" CREBs are available here, while rates for New CREBs and other qualified tax credit bonds are available here.

In April 2009, the IRS issued Notice 2009-33, which solicited applications for the New CREB allocation and provided interim guidance on certain program rules and changes from prior CREB allocations. The expiration date for New CREB applications under this solicitation was August 4, 2009. Further guidance on CREBs is available in IRS Notices 2006-7 and 2007-26 to the extent that the program rules were not modified by 2008 and 2009 legislation. In October 2009, the Department of Treasury announced the allocation of $2.2 billion in new CREBs for 805 projects across the country. A new solicitation (IRS Announcement 2010-54) was issued in September 2010 for roughly $191 million in unallocated New CREB bond volume available only to electric cooperatives. The award announcement for this allocation was made in March 2011. It remains to be seen if or when the IRS will issue new funding announcements for Old CREB allocations which were not issued by the December 31, 2009 deadline, or New CREB allocations which miss the three-year issuance period.

History
The federal Energy Policy Act of 2005 (EPAct 2005) established Clean Energy Renewable Bonds (CREBs) as a financing mechanism for public sector renewable energy projects. This legislation originally allocated $800 million of tax credit bonds to be issued between January 1, 2006, and December 31, 2007. Following the enactment of the federal Tax Relief and Health Care Act of 2006, the IRS made an additional $400 million in CREBs financing available for 2008 through Notice 2007-26.

In November 2006, the IRS announced that the original $800 million allocation had been reserved for a total of 610 projects. The additional $400 million (plus surrendered volume from the previous allocation) was allocated to 312 projects in February 2008. Of the $1.2 billion total of tax-credit bond volume cap allocated to fund renewable-energy projects, state and local government borrowers were limited to $750 million of the volume cap, with the rest reserved for qualified municipal or cooperative electric companies.

For further information on CREBs, contact Zoran Stojanovic or Timothy Jones of the IRS Office of Associate Chief Counsel at (202) 622-3980. Questions on recent IRS Notice 2009-33 can be directed to Janae Lemley at (636) 255-1202.


*In March 2010 Congress enacted H.R. 2847 (Sec. 301) permitting New CREB issuers to make an irrevocable election to receive a direct payment -- a refundable tax credit -- from the Department of Treasury equivalent to and in lieu of the amount of the non-refundable tax credit which would otherwise be provided to the bondholder. This option only applies to New CREBs issued after the March 18, 2010 enactment of the law. In April 2010 the IRS issued Notice 2010-35 providing guidance on the direct payment option.

The Rural Energy for America Program (REAP) provides financial assistance to agricultural producers and rural small businesses in rural America to purchase, install, and construct renewable energy systems, make energy efficiency improvements to non-residential buildings and facilities, use renewable technologies that reduce energy consumption, and participate in energy audits and renewable energy development assistance.

Renewable energy projects for the Renewable Energy Systems and Energy Efficiency Improvement Guaranteed Loan and Grant Program include wind, solar, biomass and geothermal, and hydrogen derived from biomass or water using wind, solar, or geothermal energy sources. These grants are limited to 25% of a proposed project's cost, and a loan guarantee may not exceed $25 million. The combined amount of a grant and loan guarantee must be at least $5,000 (with the grant portion at least $1,500) and may not exceed 75% of the project’s cost. In general, a minimum of 20% of the funds available for these incentives will be dedicated to grants of $20,000 or less. For more information on grant, loan guarantees, loan financing, and opportunities for combinations thereof, visit the USDA website.

Application due dates are published annually in the Notice of Funding Availability.

Eligibility

Grants and Guaranteed Loans are generally available to small businesses and agricultural producers and other entities as determined by USDA. To be eligible for REAP grants and guaranteed loans, applicants must demonstrate sufficient revenue to cover any operations and maintenance expense as well as any applicable debt service of the project for the duration of the guaranteed loan or grant. Rural small businesses must be located in rural areas, but agricultural producers may be located in non-rural areas.

Eligible project costs include purchasing energy efficiency improvements or a renewable energy system, energy audits or assessments, permitting and licensing fees, and business plans and retrofitting. For new construction the replacement of older equipment with more efficient equipment may be eligible as a project cost only when a new facility is planned to be more efficient and similarly sized than the older facility. Working capital and land acquisition are only eligible for loan guarantees.

For more information regarding applicant and project eligibility for loans and grants, visit the USDA REAP eligibility webpage, read the eligibility requirements in the most recent Solicitation of Applications for REAP funding in the Federal Registry, and/or contact your state rural energy coordinator.

Regional rural energy coordinators provide loan and grant applications upon request.

History

The Food, Conservation, and Energy Act of 2008 (H.R. 2419), enacted by Congress in May 2008, converted the federal Renewable Energy Systems and Energy Efficiency Improvements Program,* into the Rural Energy for America Program (REAP). Similar to its predecessor, the REAP promotes energy efficiency and renewable energy for agricultural producers and rural small businesses through the use of (1) grants and loan guarantees for energy efficiency improvements and renewable energy systems, and (2) grants for energy audits and renewable energy development assistance. Congress has allocated funding for the new program in the following amounts: $55 million for FY 2009, $60 million for FY 2010, $70 million for FY 2011, and $70 million for FY 2012. REAP is administered by the U.S. Department of Agriculture (USDA). In addition to these mandatory funding levels, up to $25 million in discretionary funding may be issued each year. The American Taxpayer Relief Act of 2012 (H.R. 8) extended discretionary funding for FY 2013. The 2014 Farm Bill reauthorized the USDA to offer these programs and removed the mandate to offer grants for feasibility studies.

* The Renewable Energy Systems and Energy Efficiency Improvements Program was created by the USDA pursuant to Section 9006 of the 2002 federal Farm Security and Rural Investment Act of 2002. Funding in the amount of $23 million per year was appropriated for each fiscal year from FY 2003-2007. In March 2008, the USDA announced that it would accept $220.9 million in applications for grants, loan guarantees, and loan/grant combination packages under the Renewable Energy Systems and Energy Efficiency Improvements Program. The application deadline was June 16, 2008.

Land grant colleges and universities are referred to in the summary as "schools" and "institutional" eligible sectors. K-12 schools are not eligible for this grant.

Note: This program only applies to electric customers of CenterPoint Energy in the greater Houston area, Texas.

CenterPoint Energy's Commercial & Industrial Standard Offer Program pays incentives to service providers who install energy efficiency measures in commercial or industrial facilities that are located within its service territories. Participation steps can be found at the above link under the 2022 CSOP Program Manual.

Large commercial customers with a total, single-site maximum peak demand of more than 100 kW or multiple sites with a combined maximum peak demand greater than 250 kW are eligible to participate. Small commercial customers with a total, single-site maximum peak demand of less than 100 kW or multiple sites with a combined maximum peak demand no greater than 250 kW are also eligible Project Sponsors. The project must be implemented at a facility that is operated by a commercial or industrial CenterPoint Energy distribution customer. This "host customer" must be willing to commit to the project, enter an agreement with the Project Sponsor, and provide access to the facility for inspection. Standard Offer incentive vary based upon the technology implemented.

All large projects must achieve a total estimated summer demand reduction of at least 15kW and/or 100,000 kWh during peak summer hours (1 pm to 7 pm May 1st- September 30th excluding holidays). Small commercial facilities may save up to those same amounts. Project Sponsors are required to meet minimum eligibility criteria and sign a standard agreement with CenterPoint, which includes an estimate of how many kW and kWh the project will save and the associated incentive payment amount. Detailed information, including eligible measures and application materials may be found on the web site listed above. 

The Retro-Commissioning (RCx) Market Transformation Program offered by CenterPoint Energy promotes the tune-up of major energy-consuming systems in existing commercial buildings, including manufacturing facilities, hospitals, educational campuses, retail stores etc. Typical RCx Measures include HVAC Temperature Reset, Outside Air Reduction, Optimize HVAC Start-Up, Lighting (de-lamping, day-lighting, etc.), VFD’s; etc. The 2022 RCx Program Manual can be found at their website.

The Load Management Program is a program in which commercial customers curtail load when notified. Curtailments may occur during the summer peak demand period of each year, defined as weekdays, June 1 through Sept. 30, of each program year, between 1 and 7 p.m. The goal of the Load Management Standard Offer Program is to reduce summer peak demand in the CenterPoint Energy service territory in a cost-effective manner and to reach the demand savings goals established by the legislature and Public Utility Commission of Texas (PUCT) regulations. The 2022 LMP Program Manual can be found at their website. For more information, customers can email [email protected].

Note: Rebate Incentives are only available to CenterPoint Energy electric customers in the greater Houston area, Texas.

CenterPoint Energy's (CNP) Residential and Hard-to-Reach Standard Offer Program (RSOP & HTR) provides incentives to encourage contractors, service companies, community agencies and other organizations to install energy efficiency measures in homes and small businesses in CNP's designated service area. The HTR program specifically targets households at or below 200% of the Federal Poverty Guidelines.

Contractors who install energy efficiency measures at a facility that has a maximum demand of no more than 100 kW are eligible to participate in the program as a Project Sponsor. Multiple facilities can aggregate projects, but must not have a maximum combined demand of more than 250 kW. All payments to project sponsors are based solely on kW and kWh savings. Examples of eligible projects include:

• Weatherization (window caulking, repair/replace door and window seals
  
• Ceiling insulation
  
• Water-saving devices for electric water heaters. Devices include faucet aerators and low-flow shower heads
  
• ENERGY STAR Windows
  

Rebate incentives are also available for pool pumps and advanced lighting.

Note that CenterPoint Energy is not a party to the agreement between the customer and the project sponsor. CNP pays all incentives directly to the project sponsors, not to customers. Project sponsors are not required to provide any direct incentives to customers, but are required to execute a contract with customers indicating that the project sponsor is participating in a CNP program and is receiving incentives for participating.

NOTE: Tranches 1 and 2 have exhausted their funding. Only Tranche 3, exclusive to commercial customers, is available as of March 2023.

CPS Energy, San Antonio's municipal utility, offers rebates to customers who install solar photovoltaic (PV) systems on their homes, schools, or businesses. Third-party owned systems (e.g., leased PV systems) are not eligible for rebates (a customer must make the upfront financial investment). The rebate is available to all CPS Energy customers for systems of at least 1 kilowatt (kW)-AC.

Current funding will be allocated through three tranches. Each tranche will have a different rebate amount:

• Tranche 1: $2,500/project, plus $500 for locally-produced panels
• Tranche 2: $1,200/project, plus $500 for locally-produced panels
• Tranche 3 (commercial only): $0.60/watt, plus $0.10/watt for locally-produced panels

Oncor provides incentives to service providers and self-sponsors who install eligible energy efficiency measures at facilities serviced by Oncor through their Commercial Standard Offer Program (CSOP). Independent companies/contractors are eligible to participate. The program is divided into deemed projects and measurement & verification projects. Deemed projects offer incentives to service providers who complete projects with deemed kilowatt and kilowatt-hour savings. Measurement & verification (M&V) projects offer incentives to service providers and self-sponsors who complete measures requiring measurement and verification. Oncor will pay service providers a fixed price per kilowatt and kilowatt-hour saved based on the estimate of useful life of the approved measure(s). There is a minimum savings of $500 for Deemed Savings projects and $10,000 for Measurement & Verification projects.

To receive an incentive, projects must improve system efficiency above current state and/or federal energy efficiency guidelines. Project incentives are capped at 50% of total project costs and 20% of the total CSOP incentive budget. Further details surrounding the CSOP Program can be found on the following PDF. Visit the Oncor program web site for additional details.

Note: The Tax Cuts and Jobs Act (HR 1) of 2017 repealed the use of tax credit bonds effective January 1, 2018.  Issuers of QECBs that elected to receive direct payments from the Treasury issued on or before December 31, 2017, consistent with the Internal Revenue Code (Section 54D), will continue to receive direct payments. The summary presented below is for historical purposes. 

The Energy Improvement and Extension Act of 2008, enacted in October 2008, authorized the issuance of Qualified Energy Conservation Bonds (QECBs) that may be used by state, local and tribal governments to finance certain types of energy projects. QECBs are qualified tax credit bonds, and in this respect are similar to new Clean Renewable Energy Bonds or CREBs. The October 2008 enabling legislation set a limit of $800 million on the volume of energy conservation tax credit bonds that may be issued by state and local governments. The American Recovery and Reinvestment Act of 2009, enacted in February 2009, expanded the allowable bond volume to $3.2 billion. In April 2009, the IRS issued Notice 2009-29 providing interim guidance on how the program will operate and how the bond volume will be allocated. Subsequently, H.R. 2847 enacted in March 2010 introduced an option allowing issuers of QECBs and New CREBs to recoup part of the interest they pay on a qualified bond through a direct subsidy from the Department of Treasury. Guidance from the IRS on this option was issued in April 2010 under Notice 2010-35.

With tax credit bonds, generally the borrower who issues the bond pays back only the principal of the bond, and the bondholder receives federal tax credits in lieu of the traditional bond interest. The tax credit may be taken quarterly to offset the tax liability of the bondholder. The tax credit rate is set daily by the U.S. Treasury Department; however, energy conservation bondholders will receive only 70% of the full rate set by the Treasury Department under 26 USC § 54A. QECB rates are available here. Credits exceeding a bondholder's tax liability may be carried forward to the succeeding tax year, but cannot be refunded. Energy conservation bonds differ from traditional tax-exempt bonds in that the tax credits issued through the program are treated as taxable income for the bondholder.

For QECBs issued after March 18, 2010, the bond issuer may make an irrevocable election to receive a direct payment from the Department of Treasury equivalent to the amount of the non-refundable tax credit described above, which would otherwise accrue to the bondholder. The direct payment comes in the form of a refundable tax credit to the issuer in lieu of a tax credit to the bondholder. This option was formerly limited to Build America Bonds (see 26 USC § 6431, H.R. 2847 and IRS Notice 2010-35 for details). The advantage of either option is that it creates a lower effective interest rate for the issuer because the federal government subsidizes a portion of the interest costs.

In contrast to CREBs, QECBs are not subject to a U.S. Department of Treasury application and approval process. Bond volume is instead allocated to each state based on the state's percentage of the U.S. population as of July 1, 2008. Each state is then required to allocate a portion of its allocation to "large local governments" within the state based on the local government's percentage of the state's population. Large local governments are defined as municipalities and counties with populations of 100,000 or more. Large local governments may reallocate their designated portion back to the state if they choose to do so. IRS Notice 2009-29 contains a list of the QECB allocations for each state and U.S. territory. Implementing allocations and reallocations most often, but not always, takes place through State Energy Offices. As of this writing some states have yet to assign implementation responsibilities to a specific state agency.

The definition of "qualified energy conservation projects" is fairly broad and contains elements relating to energy efficiency capital expenditures in public buildings that reduce energy consumption by at least 20%; green community programs (including loans and grants to implement such programs); renewable energy production; various research and development applications; mass commuting facilities that reduce energy consumption; several types of energy related demonstration projects; and public energy efficiency education campaigns. In July 2012 the IRS issued Notice 2012-44 clarifying the meaning of "capital expenditures" and "green community program", and providing guidance on meeting the 20% energy consumption reduction requirement for energy -efficiency related capital expenditures in publicly-owned buildings (see 26 USC § 54D and IRS Notice 2012-44 for additional details). Renewable energy facilities that are eligible for CREBs are also eligible for QECBs.

NOTE: Beginning September 1, 2021, PV systems must have an energy storage backup system to qualify for an incentive.

Oncor Electric Delivery offers rebates to its customers that install photovoltaic (PV) systems on homes in its service area. Oncor residential customers are eligible to participate in the program. Rebates may be assigned to the customer, a service provider, or a third party.

Eligibility

A residential customer's home must have electric delivery service provided by Oncor. Systems must be new, connected to the grid on the customer side of the meter and meet all applicable code and utility interconnection requirements. All installations must be performed by service providers who meet specific program eligibility requirements. 

For more information, visit the program website.

New Braunfels Utilities offer a variety of programs encouraging its customers to improve their home's energy efficiency. Rebates are available for a variety of residential and commercial applications, including the following:

Residential:

• AC checkups

• Drought-tolerant trees
• High-efficiency toilets/washing machines
• Gardening guide rebates
  

• AC/Heat pumps
• Yard efficiency improvement projects
  
• Programmable/Smart Thermostats
• Solar
• Rain barrels

A custom, tailored rebate program is also available. See website for details.

American Electric Power Texas Central Company (AEP-TCC) offers rebates to any customer that installs photovoltaic (PV) systems on homes or other buildings. Rebates may be assigned to the customer, a service provider, or a third party. 

Rebates

Residential customers can receive a fixed incentive, while commercial customers can receive a tiered, capacity-based incentive. Incentive levels are as follows:

PV System Eligibility

Unless used for educational purposes by a school, systems must be at least 1 kW- DC in size to qualify for the rebate. Systems may not be sized to produce energy in excess of that required to meet annual on-site energy consumption. Each customer and point of service is eligible to participate in the program multiple times, subject to other program limitations (e.g., maximum per customer and per project incentive limits).

Systems must be new, connected to the grid on the customer side of the meter, meet minimum estimated performance requirements (80% of optimum), and meet all applicable code and utility interconnection requirements. Eligible systems must be covered by an all-inclusive warranty for at least five years from the date of installation.

Please refer to the Program Guidebook for additional details.

American Electric Power Texas North Company (AEP-TNC) offers rebates to any customer that installs photovoltaic (PV) systems on homes or other buildings. Rebates may be assigned to the customer, a service provider, or a third party.

Rebates

Residential customers can receive a fixed incentive, while commercial customers can receive a tiered, capacity-based incentive. Incentive levels are as follows:

PV System Eligibility

Unless used for educational purposes by a school, systems must be at least 1 kilowatt (kW)-DC in size to qualify for the rebate. Systems may not be sized to produce energy in excess of that required to meet annual on-site energy consumption. Each customer and point of service is eligible to participate in the program multiple times, subject to other program limitations (e.g., maximum per customer and per project incentive limits).

Systems must be new, connected to the grid on the customer side of the meter, meet minimum estimated performance requirements (80% of optimum), and meet all applicable code and utility interconnection requirements. Eligible systems must be covered by an all-inclusive warranty for at least five years from the date of installation. All installations must be performed by service providers who meet program eligibility requirements. AC disconnect switches and revenue-grade solar meters (provided by the service provider) are required. All installations shall utilize mounting/racking systems and hardware specifically designed for use with photovoltaic systems. Installations may be subject to a variety of inspection and performance monitoring requirements in the short- and long-term. 

Please refer to the Program Guidebook for additional details. 

The City of Sunset Valley offers rebates to local homeowners who install photovoltaic (PV) systems on their properties. The local rebate acts as an add-on to the PV rebates that are offered by Austin Energy to its electric customers.

The Sunset Valley rebate is $1.00 per watt (W) up to 3,000 W. In order to qualify for the Sunset Valley rebate, the system must first qualify for an Austin Energy rebate. In addition, the system installation cost must be $6 per kW or less.

The Sunset Valley rebates are in addition to the Austin Energy rebate of $2.50 per watt AC. In order to participate in the program, local residents must first be approved for a rebate through the Austin Energy program and meet the corresponding equipment, warranty, and installation requirements. This means that local residents of utilities other than Austin Energy are not eligible to participate in the Sunset Valley program.

Please see the program website or use the contact information below to obtain more information about this offer.

The CitySmart Program was designed to assist local government entities become more energy efficient through lowering operational costs, improving environmental quality on their jurisdictions, and helping to meet environmental and efficiency regulations. The program provides technical and financial support to help these local governments implement energy efficiency projects and improvements. Contact utility or program representative to see more details on the program, incentives, and technical assistance offered.

Austin Energy offers two incentives on the installation of a solar photovoltaic (PV) system to customers with a commercial Austin Energy account number. The first program is a performance-based incentive (PBI) which provides a credit on your business' bill for the power your solar PV system generates. The second is a capacity-based incentive, offering customers an up-front check for installed solar PV capacity.

The incentive rate varies based on capacity of  the program, though PV systems shall not be sized to produce more than 110% of the historical annual energy consumption of the connected load. In order to qualify for this program, PV modules must be new and be listed by the California Energy Commission. In addition, all equipment and installation measures must have a 10-year warranty. Licensed electrical contractors must obtain the appropriate permits and perform all electrical connections. Additional system conditions apply, see the above linked PDFs or program website for further details.

NOTE: The most recent solicitation for this program closed July 6, 2021. Please check the program website for information on future solicitations.

The U.S. Department of Agriculture (USDA) offers an ongoing grant program for the improvement of energy generation, transmission, and distribution facilities in rural communities. This program began in 2000. Eligibility is limited to projects in communities that have average home energy costs at least 275% above the national average. Retail power suppliers serving rural areas are eligible to apply for grant funding, including non-profits (cooperatives and limited dividend or mutual associations), commercial entities, state and local governments entities, and tribal governments. Under the most recent solicitation for projects, a total of $7 million was available for qualifying projects. Under this solicitation grants ranging from $100,000 to $3 million were available for a variety of activities, including:

• Electric generation, transmission, and distribution facilities;
• Natural gas or petroleum storage or distribution facilities;
• Renewable energy facilities used for on-grid or off-grid electric power generation, water or space heating, or process heating and power;
• Backup up or emergency power generation or energy storage equipment; and
• Weatherization of residential and community property, or other energy efficiency or conservation programs.

This grant program is not limited to renewable energy or energy conservation and efficiency measures, but these measures are eligible for this grant program.

Note: These guidelines and criteria for tax abatement were readopted by the City Council on May 4th, 2022, and absent further extension they will expire on May 19, 2024.

In September 2009, the City of Houston Tax Abatement Program was enacted (Ordinance No. 2009-858), establishing a partial tax abatement for U.S. Green Building Council Leadership in Energy and Environmental Design (LEED)-certified commercial buildings. The tax abatement was extended most recently in 2022 under ordinance 2022-344.

Program eligibility

1. It is a new commercial facility whose owner has registered with USGBC to apply for LEED certification for the facility;
2. Construction of the facility has not commenced prior to the application for abatement; and
3.  The total project cost is reasonably expected by the applicant to be at least $3,000,000. This type of tax abatement may be a stand-alone abatement or part of a standard economic development abatement.
   

Value and Terms

A tax abatement shall be granted on the January 1st valuation date of the year that both construction has finished and a LEED certification has been obtained for the facility. This abatement will be for the percentage of the increase in the facility's value over the base year value that corresponds to the following LEED certification levels:

• Silver             5%
• Gold             10%
• Platinum    15%

The City of San Marcos offers a Distributed Generation Rebate Program for the installation of grid-tied renewable energy systems. The Distributed Generation Rebate Program is offered to San Marcos Texas Utility customers. In order to qualify for the rebate, customers must be pre-approved by the utility. Single family homes must meet certain energy efficiency criteria determined by the utility. All systems must be professionally designed and installed. For more information, visit the program website.

The City of Plano established this loan program through the Department of Energy to support Plano homeowners seeking energy efficient home improvements.

In partnership with BTH Bank, financing will be provided to program participants, subject to credit approval. Loan terms and interest rate will be determined by BTH Bank. Loan amounts range from $2,500 to $25,000. This loan program will continue to offer future loans as existing loans are paid off. Due to Department of Energy and Energy Efficiency and Conservation Block Grant (EECBG) Template Guidelines, no pre-completed project can be funded through the Smart Energy Loan Program.

Eligibility requirements, application documents, and program flowchart can be found on www.smartenergyloans.com.

TXU GreenBack provides rebates for making energy-efficiency improvements to facilities that yield long-term savings. The TXU GreenBack program can help fund a new project or help pay for existing projects, such as changing to LED lighting.

NOTE: Only multifamily properties are eligible for the program. Single family homeowners are not eligible for this program. 

The Fannie Mae Green Financing Business provides mortgage financing to apartment buildings and cooperatives (with 5 or more units) to finance energy and water efficiency property improvements. Its green financing programs include Green Rewards, and preferential pricing for loans secured by a property with an eligible Green Building Certification. All Fannie Mae green loans are securitized as Green Mortgage Backed Securities (Green MBS). To learn more about these programs, multifamily property owners should coordinate with a Fannie Mae DUS Lender:  https://multifamily.fanniemae.com/about-multifamily/our-partners/dus-lenders

Green Rewards, launched in 2015, provides preferential pricing and up to an additional 5% of loan proceeds by including up to 75% of projected owner energy and water savings and 25% of projected tenant savings in the loan underwriting. Conventional and affordable multifamily properties, as well as cooperatives, seniors, military, and student housing properties are eligible for this program. To qualify for a Green Rewards loan the property owner must commit to making property improvements that are projected to reduce the whole property’s annual energy and water consumption by at least 30%, which a minimum of 15% must be attributable to savings in energy consumption. Properties may be located anywhere in US, and the selected property upgrades must be completed within 12 months of loan closing.

Fannie Mae also provides preferential pricing for an acquisition or refinance loan on a conventional or affordable property that has a current, eligible Green Building Certification per Fannie Mae Form 4250.

Please visit the Fannie Mae Green Financing website for more information and detailed program requirements.

A utility bill credit is available to encourage Garland Power and Light (GP&L) residential customers to install solar photovoltaic panels that meet the minimum requirements of the program. Please check the GP&L website to make sure the program is still available before purchasing equipment. Application to GP&L must be submitted and accepted prior to installation of solar panels.

Credit will be applied to GP&L (must be GP&L customer) customer utility bill once system is installed and approved as "Produced Energy Credit". Credit amounts are calculated based on the electric energy produced and delivered to the City by the Customer's Power Producing Facility and the effective City Recovery Adjustment Factor (RAF). Credits will be provided at a rate of $0.0469/kWh. System maximums are 10kW-AC and 600 volts. Please direct any questions to 972-205-2929 or email [email protected] or visit www.gpltexas.org for complete details.

Note: Additional rebates are available through August 31

Austin Energy offers incentives for multifamily and nonprofit property owners to install solar PV systems on two or more units. For more information, visit the program website.

Austin Energy provides rebates to small, medium, large, and extra large commercial customers and nonprofit customers who wish to install photovoltaic systems. There are two incentives available: a performance-based incentive ranging from $0.05-$0.09/kWh, and a capacity-based incentive ranging from $0.60-$1.00/W-DC. Contact Austin Energy or visit the program website for more information on this program.

 Oncor Electric Delivery offers rebates to its customers that install photovoltaic (PV) systems on businesses in its service area. Oncor commercial customers are eligible to participate in the program. Rebates may be assigned to the customer, a service provider, or a third party.

Eligibility

A commercial customer's business must have electric delivery service provided by Oncor. Systems must be new, connected to the grid on the customer side of the meter and meet all applicable code and utility interconnection requirements. All installations must be performed by service providers who meet specific program eligibility requirements.

For more information, visit the program website.