Government support is distinguished between Federal incentives and State incentives. Subsequently the most important incentives by the federal government, which are primarily designed for residents, businesses and other end-users, are listed. Additionally, financial incentives can be found in almost all states in the form of tax benefits (personal, corporate, sales and property), rebates, grants and loans. These incentives have been issued to additionally foster the development of renewable energies and can also be local incentives or utility sector incentives.
Business Energy Tax Credit
The "Energy Policy Act" of 2005 expanded the "Business Energy Tax Credit" for solar and geothermal energy property to include hybrid solar lighting systems installed in 2006. Eligible solar technology equipment installed in 2006 and 2007 receives a credit of 30% of expenditures. There is no maximum in funding specified for solar thermal technologies.
Energy Efficient Mortgages
"Energy Efficient Mortgages" (EEMs) can be used by homeowners to finance the installation of renewable energy technologies for energy efficiency improvement. The federal government supports these loans by insuring them through FHA or VA programs. Lenders are secured against loan default to encourage lending to a broader customer base.
Modified Accelerated Cost-Recovery System
The "Modified Accelerated Cost-Recovery System" (MACRS) allows businesses to recover investments in solar energy through depreciation deductions. Property may be depreciated over a time frame ranging from 3 to 50 years depending on a set of classes established by MACRS. The current MACRS property class for solar property placed in service after 1986 is five years.
Residential Solar and Fuel Cell Tax Credit
The "Energy Policy Act" of 2005 established a 30% tax credit with up to $2,000 for the purchase and installation of residential photovoltaic and solar water heating property. An individual can take both a 30% credit up to the $2,000 cap for a photovoltaics system and a 30% credit up to a separate $2,000 cap for a solar water heating system. A solar water heating property has to be certified by the Solar Rating Certification Corporation or a comparable entity endorsed by the government of the State in which the property is to be installed to become eligible for funding. The tax credit does not include funding for solar water heating property for swimming pools or hot tubs.
USDA Renewable Energy Systems and Energy Efficiency Improvements Program
The maximum grant award is 25% of eligible project costs up to $500,000 for renewable energy projects and up to $ 250,000 for energy efficiency improvements. Assistance to one individual or entity is not to exceed $ 750,000. The minimum grant request is $ 2,500 for renewable energy projects and $ 1,500 for efficiency projects. Eligible renewable energy projects include solar and hydrogen derived from water using solar energy sources. Applications must be submitted to the appropriate Rural Development State Office.
Guaranteed Loan Option
This option provides funds of up to 50% of eligible project costs. The maximum project cost is $ 10 million and the minimum amount of a guaranteed loan made to a borrower is $ 5,000. A combined grant and guaranteed loan under this program cannot exceed 50% of eligible project costs. The maximum percentage of guarantee ranges from 70% to 85% depending on the loan value. The borrower is responsible for having other funding sources for the remaining funds.The exact percentage for a given project is negotiated between the lender and the Rural Business-Cooperative Service. The interest rate is negotiated between the lender and the applicant. The repayment terms will be different for real estate, machinery and equipment, and working capital.