Topic:
LEGISLATION; ELECTRIC UTILITIES; TAX CREDITS; TAX EXEMPTIONS; WIND POWER; RENEWABLE RESOURCES; PROPERTY TAX; MUNICIPALITIES;
Location:
ENERGY - RENEWABLE RESOURCES; TAX EXEMPTIONS;

OLR Research Report


February 19, 2008

 

2008-R-0143

STATE AND FEDERAL TAX BENEFITS FOR WIND ENERGY

By: Kevin E. McCarthy, Principal Analyst

You asked for a description of Connecticut and federal tax benefits for wind energy, particularly for homeowners.

In Connecticut, CGS 12-81(57), as amended by PA 07-242, requires municipalities to exempt certain renewable energy systems from the property tax. The requirement applies to class 1 renewable resources, which include wind systems, installed on or after October 1, 2007 at dwellings with one to four units. PA 07-242 also requires municipalities to exempt any passive or active solar water or space heating system or geothermal energy resource in any type building.

Connecticut provides a number of non-tax incentives for wind systems. By law, electric companies and competitive suppliers must give a credit to their customers who generate electricity using class 1 resources. PA 07-242 expands this requirement to cover all customers with generation capacity up to two megawatts rather than just customers in one- to four-dwelling unit properties. The act provides for credits to customers who generate more power than they use in a given billing period, with annual reconciliation in which the customer is paid for any excess production at the avoided wholesale cost, and makes related changes. By law, the companies and suppliers also must obtain part of their power from renewable resources, including wind, and pay a premium for this power.

There are currently no federal tax incentives for residential wind systems. Federal law does provide a production tax credit to businesses that produce power from wind and certain other resources. In the case of wind systems, the credit is 2 cents per kilowatt-hour of power produced, and runs for 10 years.

Further information about incentives for wind and other renewable energy technologies is available at www.dsireusa.org/. This site discusses incentives provided by the federal government and by the states.

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