Residential Solar & Wind Incentives – Kentucky
For residential renewable energy systems in Kentucky, the federal government currently offers an unlimited 30% tax credit toward the purchase price of a solar electric, solar hot water, or wind energy system, including all materials and labor. This tax credit rolls over into future years if the tax credit exceeds your tax liability during the year you purchase the system. In addition, the State of Kentucky offers a $500 tax credit similar in all other aspects to the federal government credit except for this dollar amount.
The two tax credits described above reduce the overall net system cost. The next financial incentive pays back the renewable energy system owner over time - it is the cost of the generated energy itself. For solar electric and wind energy systems, this is the electricity that you save and/or sell back to the utility company, which averages $0.08 per kilowatt-hour (kWh) in Kentucky. For solar hot water, it is the water-heating fuel (typically natural gas, propane, oil, or electricity), which varies greatly depending on the fuel type.
For solar electric and wind energy systems, there is yet another financial incentive that pays pack the renewable energy system owner over time - renewable energy credits (REC's). For solar electric systems, these are called solar renewable energy credits (SREC's). Effectively, Kentuckians currently receive an additional ~$0.05 / kWh for all electricity generated by their solar electric system thanks to SREC's. SREC's aren't quite that simple, however, and take some explaining - see our explanation here
Some residents in the southern and western regions of Kentucky receive their electricity from the Tennessee Valley Authority (TVA), who has a rather unique program in place for owners of solar electric and wind energy systems, called the Generation Partners program. TVA pays the system owner an upfront grant, the amount of which has varied over the past few years (it was $1000 in 2011). In addition, TVA pays a premium to the system owner for every kWh produced by the system, a premium that is over and above the energy cost to the owner. For example, this premium was $0.12/kWh in 2011. If the owner was paying $0.10/kWh for his/her electricity, then TVA paid $0.22/kWh for the electricity generated by the system owner. Note that under this program, TVA owns SREC’s produced by the system. Click here
to learn more.
Appraisers also estimate that renewable energy systems increase a building’s resale value significantly, but this depends heavily on the home buying market and the buyers at the time of listing the home.
Commercial Solar & Wind Incentives – Kentucky
Commercial incentives in Kentucky are the same as the residential incentives described above except the Kentucky tax credit is $1000 instead of $500, and businesses may be eligible for accelerated 5 year depreciation as well as 50% bonus depreciation in 2012.
Click to view SREC Explanation