Tax Exemption for Large-Scale Renewable Energy Projects (Kentucky)
Last modified on February 12, 2015.
Financial Incentive Program
|Name||Tax Exemption for Large-Scale Renewable Energy Projects|
|Incentive Type||Sales Tax Incentive|
|Eligible Technologies||Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric|
|Energy Category||Renewable Energy Incentive Programs|
|Amount|| Up to 100% of sales and use tax|
Up to 100% of sales and use tax
|Equipment Requirements|| 50 kW minimum for solar power, 1 MW minimum for wind power, biomass, landfill gas, hydropower or similar resource|
Minimum Capital Investment for a renewable energy facility: 1,000,000
|Maximum Incentive||For all state tax incentives: 50% of capital investment in the eligible project|
|Program Administrator||Office of Energy Policy|
|References||DSIREDatabase of State Incentives for Renewables and Efficiency|
In August 2007 Kentucky established the Incentives for Energy Independence Act (IEIA) to promote the development of renewable energy and alternative fuel facilities, energy efficient buildings, alternative fuel vehicles, research & development activities, and other energy initiatives. For renewable energy facilities, IEIA provides incentives to companies that build or renovate facilities that utilize renewable energy. A renewable energy facility is defined as one that generates at least 50 kW of electricity from solar power or at least 1 MW from wind power, biomass, landfill gas, hydropower or similar renewable resources. The electricity must be sold to an unrelated party. The minimum investment in any renewable energy facility must be $1 million in capital expenditure which is defined to include various non-capital costs such as labor.
Companies may receive a sales tax incentive of up to 100% of the Kentucky sales and use tax paid (on or after the activation date) on materials, machinery and equipment used to construct, retrofit or upgrade an eligible project.
In addition the tax credit for renewable energy facilities allows approved facilities to receive a credit up to 100% of Kentucky income tax and the limited liability tax for projects that construct, retrofit or upgrade facilities that generate power from renewable resources. Approved companies may also require that employees whose jobs were created as a result of the associated project, as a condition of employment, to pay a wage assessment of up to 4% of their gross wages. Employees will be allowed a Kentucky income tax credit equal to the assessment withheld from their wages.
The maximum recovery for a single project from all incentives, including the income and liability entity tax credit, sales tax refund and the wage assessment, may not exceed 50% of the capital investment.
Prior to making any capital investments in a project, each eligible company must submit an application ($1000 fee) for incentives to the Kentucky Economic Development Finance Authority. Each incentive contract is negotiated on a case-by-case basis to determine the conditions and termination date of the project, not to exceed 25 years from the project's activation date.
|Contact Name||Don Goodin|
|Department||Kentucky Cabinet for Economic Development|
|Division||Department of Financial Incentives|
|Address||Old Capitol Annex|
|Address 2||300 West Broadway|
|Phone||(502) 564-4554 Ext:3413|
|Contact Name||Ricky Haven|
|Department||Kentucky Department of Revenue|
|Division||Sales and Use Tax Office of Sales and Excise Taxes|
|Address||501 High Street|
Authorities (Please contact the if there are any file problems.)
|Authority 1:||KRS § 139.517|
|Authority 2:||KRS § 154.27-010 et seq.|
|Authority 3:||103 KAR 31:190|
- Incentive and policy data are reviewed and approved by the N.C. Solar Center's DSIRE project staff.