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REBATES & INCENTIVES:
IRS Form 5695 for Residential Energy Tax Credits
OVERVIEW:
On both National and State levels, there are programs in place to help "level the economic
playing field" between green, renewable energy sources (like solar electricity) and polluting,
finite energy sources (such as fossil fuels and nuclear energy). The latter already
receive billions of dollars annually in subsidies and incentives, so we're extremely pleased
that renewable energy technologies are now receiving government assistance as well.
SUMMARY OF INCENTIVES IN COLORADO:
Residential Systems (smaller than 10.0kW):
- 50-60% utility rebate ($4.50 per DC watt) for Xcel customers
- 30% federal income tax credit (capped at $2,000)
- 15% rebate of City sales and use tax for projects within Boulder City limits
Small Commercial Systems (smaller than 10.0kW):
- 50-60% utility rebate ($4.50 per DC watt) for Xcel customers
- 30% federal income tax credit (no cap)
- 5-year MACRS accelerated depreciation schedule
- 15% rebate of City sales and use tax for projects within Boulder City limits
Large Commercial Systems (larger than 10.0kW):
- 25-30% utility rebate ($2.00 per DC watt) for Xcel customers
- 20-year utility payments for system's "REC" production for Xcel customers
- 30% federal income tax credit (no cap)
- 5-year MACRS accelerated depreciation schedule
- 15% rebate of City sales and use tax for projects within Boulder City limits
The Bottom Line
In practical terms, state and federal incentive programs can reduce your total “out-of-pocket” costs for a solar
electric (PV) system by as much as 60-70%!!!
Further details about these incentive programs can be found below.
THE ENERGY POLICY ACT OF 2005:
On August 8, 2005, President Bush signed the Energy Policy Act of 2005 into law.
The new energy bill provides tax credits to homes and businesses that install solar
systems from January 1, 2006 to December 31, 2007. In December of 2006 he signed a bill that extends this
tax credit through December 31, 2008. For residential systems the amount of the tax
credit is equal to 30% of the total cost of the solar system after other rebates and
incentives have been deducted, and it is capped at a maximum of $2,000. For commercial systems the amount
is 30% of the total cost of the system before other
incentives and there is no cap. There are also new tax credits avalailable for
solar thermal systems, hybrid cars and many other types of energy efficiency improvements. See the links
below for more details.
It is important to note that there are certain allowances and restrictions associated with the tax credits. For example,
for residential customers, the SEIA Tax Credit Manual states,
“An individual cannot use the residential credit to reduce his/her income taxes below the level at which the
alternative minimum tax kicks in. Therefore, taxpayers who pay minimum taxes -- and there is a growing number --
cannot use the residential tax credits immediately. The credits can be carried forward until the individual gets
off the minimum tax, but there is no carryback of residential credits.” When purchasing a system, we strongly recommend that
you contact a professional tax advisor to inquire about your specific situation.
Commercial customers should consult their accountant for the appropriate IRS tax forms. Residential customers can click
this link for the 2006 tax year federal tax form in PDF format:
IRS Form 5695 for Residential Energy Tax Credits
Learn more about the new federal tax credits by contacting us and/or visiting the following websites:
Colorado Solar Energy Industries Association (COSEIA):
http://www.coseia.org/Legislation.html
This link contains a nice summary of the new Energy Bill and answers to many FAQs
Solar Energy Industries Association (SEIA) Federal Tax Guide:
Guide to Federal Tax Incentives for SolarEnergy
The Solar Energy Industries Association (SEIA) has created a guide that explains all the details of
this program.
Energy Star:
http://www.energystar.gov/index.cfm?c=products.pr_tax_credits
The Energy Star website has a complete summary of tax credits available for energy efficiency improvements.
Article: Time to Go Solar?
http://www.forbes.com/2005/08/17/energy-solar-taxes-cz_ae_0817
beltway_print.html
An informative article about the Energy Bill from Forbes.com
COLORADO'S AMENDMENT 37:
In November of 2004, Colorado voters passed Amendment 37 (A37), mandating
that a certain percentage of Colorado's electricity come from renewable
sources such as wind and solar power. The rules were finalized and Xcel began paying out rebates
in the Spring of 2006. The incentive is divided into a $2.00 per watt rebate and a $2.50 per watt
Renewable Energy Credit payment (REC). Because a typical flush-mount roof array costs about $8 to $9 a watt, the
combination of rebate and REC from Xcel, along with the federal tax credit, means that your final out-of-pocket
cost can be reduced by about 50% to 60%. This assumes that your system can be installed such that it produces at
least 90% of what an optimally positioned array in a shade-free area would produce. If your installed system is predicted to
produce less than 90% of optimum, then the REC portion of the Xcel incentive (which is production-based) is reduced accordingly.
Namaste Solar has been actively involved in the rule-making process for Amendment 37 by testifying three times in
front of the PUC and submitting four sets of written comments and testimony (see links to our comments and testimony below). Learn more about Amendment 37 by contacting
us and/or visiting the following websites:
Xcel's Official Solar Rebate Program Website
http://www.xcelenergy.com/solar
Xcel's official website contains details about their "Solar*Rewards" solar rebate program, which began accepting applications
on March 1, 2006. An e-mail address for inquiries is available and you can sign up on their mailing list to receive program updates.
Article: "Colorado Voters Pass Renewable Energy Standard"
http://www.renewableenergyaccess.com/rea/news/story?id=17736
Amendment 37 Creates First Ever Voter-Approved Renewable Energy Standard.
Article: "Dirty Energy" (Boulder Weekly):
http://www.boulderweekly.com/archive/100605/newsspin.html
"Could Xcel Energy be sabotaging Colorado's new renewable-energy requirement?"
Colorado Renewable Energy Society (CRES):
http://www.cres-energy.org/procon37.html
CRES's summary of the "Pros and Cons of Amendment 37"
Article: "Science Group Backs Amendment 37" (Denver Business Journal)
http://www.bizjournals.com/denver/stories/2004/10/18/daily42.html?t=printable
A short article from the Denver Business Journal about the analysis of Amendment 37 by the renowned science group, the Union of Concerned Scientists (UCS)
PUC Website Listing Rulemaking Notices and Public Comments
http://www.dora.state.co.us/puc/rulemaking/
RecentRulemakingActivity.htm#05R112E
The source for all public notices and comments regarding Amendment 37
Namaste Solar's 1st Comments Submitted to PUC (May 13, 2005)
Click Here to View in PDF format
Namaste Solar's 1st set of comments submitted to the PUC regarding the draft rules for Amendment 37 that were issued in May, 2005
Namaste Solar's 2nd Comments Submitted to PUC (June 13, 2005)
Click Here to View in PDF format
Namaste Solar's 2nd set of comments submitted to the PUC June 13, 2005
Namaste Solar's 3rd Comments Submitted to PUC (August 24, 2005)
Click Here to View in PDF format
Namaste Solar's 3rd set of comments submitted to the PUC regarding the consensus rules for Amendment 37 that were issued in August, 2005
Namaste Solar's Testimonies on Behalf of CoSEIA Submitted to the PUC
Namaste Solar’s President and CoSEIA Board Member, Blake Jones, testified on behalf of CoSEIA to the PUC multiple times as follows:
PDF Format: 23-Feb-2007: Xcel Energy’s 2007 RPS Compliance Plan
PDF Format: 29-Feb-2008: Xcel Energy’s 2008 RPS Compliance Plan
PDF Format: 28-Mar-2008: Xcel Energy’s 2008 Resource Plan
CITY OF BOULDER REBATES & INCENTIVES:
Solar energy systems installed within Boulder city limits are currently
eligible for a tax rebate. Boulder City Council approved an ordinance in November 2006 to provide
rebates for a portion of sales and use tax on both solar electric (photovoltaic) and solar
thermal (hot water) systems. The ordinance was passed to encourage residents and businesses to
install renewable energy systems in the city of Boulder. The end effect is a 15% rebate on the
Boulder City sales and use taxes paid on a solar PV system.
Learn more about this new program by contacting us and/or visiting the following websites:
Article: "Rebates for solar-energy systems begin after Dec. 14" (City of Boulder website)
http://www.bouldercolorado.gov/index.php?option=com_content&task=view&id=
6253&Itemid=169
City of Boulder December 11, 2006 Press Release
FAQ page on the new Boulder City sales tax rebate
http://www.bouldercolorado.gov/index.php?option=com_content&task=view&id=
1058&Itemid=396
This page contains a link to FAQs provided by the City of Boulder's Division of Environmental Affairs.
Namaste Solar Electric actively assists the City of Boulder regarding solar photovoltaics, the Climate Action
Plan, the Green Points Program and other related issues. We strive to support the City of Boulder
and the Environmental Affairs Office staff in whatever ways that we are able. During consideration of this ordinance we spoke
at a Boulder City Council meeting in support of the proposed tax rebate for solar photovoltaic and
solar thermal systems (see links below).
Namaste Solar’s Comments to the Boulder City Council (October 3, 2006)
Click Here to View in PDF format
Namaste Solar’s comments to the Boulder City Council on October 3, 2006 regarding the proposal of Ordinance No. 7847 to establish sales and use tax rebates for
qualified photovoltaic and solar thermal system installations.
City of Boulder Council Agenda Item - Second reading of Ordinance No. 7487
http://www.ci.boulder.co.us/files/Clerk/Agendas/2006/10-03-06/5a.pdf
Please contact us or check our website regularly for more information.
Contact Info
Namaste Solar Electric, Inc.
In Boulder: 2639 Spruce Street, Boulder, CO 80302
In Denver: 1610 Wynkoop St. #105, Denver, CO 80202
Tel: (303) 447-0300 | Fax: (303) 443-8855
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