Combined Heat and Power Solutions
  Products & Service Estimate Your Savings Make Inquiry Home
   
  Federal Incentives for Combined Heat and Power Projects
  The CHP incentive program includes:
 
  • Tax Provisions
  • Grants/Production Incentives
  • Loan Guarantees
 
In 2008 and early 2009, two key federal bills were passed that include provisions that support CHP.
  • The Energy Improvement and Extension Act of 2008 (EIEA), passed by Congress on October 3, 2008, significantly expanded federal energy tax incentives and introduced the CHP investment tax credit.
     
  • The American Recovery and Reinvestment Act of 2009 (ARRA), passed in February 2009, expands and revises tax incentives for CHP and provides billions of dollars in funding opportunities for CHP and waste energy recovery.
  The Energy Improvement and Extension Act of 2008, signed into law October 3, 2008 as part of the Emergency Economic Stabilization Act (P.L. 110-343) included several provisions beneficial to the clean heat and power community, including:
  • a new 10% investment tax credit (ITC) for CHP and waste energy projects through 2016;
  • extension of existing investment tax credits for fuel cells (30%) and microturbines (10%) through 2016;
  • extension of renewable energy tax credits through 2010.
 

More Information
  CHP Depreciation Deductions
 
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. ARRA extended the five-year bonus depreciation schedule through 2010 and includes CHP, thereby allowing 50 percent of the depreciation value to be taken in the first year and the remainder over the following four years.

To qualify for bonus depreciation, a project must satisfy these criteria:

  • The property must have a recovery period of 20 years or less under normal federal tax depreciation rules.
  • The original use of the property must commence with the taxpayer claiming the deduction.
  • The property generally must have been acquired during 2009 or 2010.
  • The property must have been placed in service during 2009 or 2010.

The bonus depreciation rules do not override the depreciation limit applicable to projects qualifying for the federal business energy tax credit. Before calculating depreciation for such a project, including any bonus depreciation, the adjusted basis of the project must be reduced by one-half of the amount of the energy credit for which the project qualifies.
 

More Information
  State Tax Credits
  State tax credits function are often independent of federal tax credits, resulting in greater benefits. Consult your state to determine the CHP incentives they provide.
   
  CHP can greatly increase operational efficiency and decrease energy costs. CHP also reduces the emission of greenhouse gases, which contribute to global climate change.
   
  California Cogeneration rebate Program
  Recognizing the need for more power and the efficiency that cogeneration provides, the rebate program gives back to the owners of the facility $1/Watt or 30% of the total installed cost of the cogeneration project, whichever is lesser.
   
  Additional information on initiatives can be obtained here.
  Other Incentives
  Advanced Power Systems Technology Program
  Advanced Energy Manufacturing Credit
  CHP Investment Tax Credit
   
   
  Disclaimer: The information on this website, product or material presented herein, is provided for informational purposes only. The technical descriptions, details, requirements, and limitations expressed do not constitute an endorsement, approval, or acceptance of the subject matter by Capella Energy, Inc. There are no warranties, either expressed or implied, regarding the accuracy or completeness of this information.