REC Payment/Tax Incentives

Renewable Energy Credit (REC) payment and tax credits are available for producers of renewable energy.

For residential and small commercial members installing solar, wind or hydroelectric technology, LPEA offers a Renewable Generation REC payment per policy 359. For 2014, solar PV systems 10 kW or smaller can receive a one-time upfront payment valued at $350 per kW. A REC contract must be completed in order to receive these funds. The IRS requires that a W-9 form be completed and returned to LPEA.

 

Forms PDF

The Energy Policy Act allows tax credits for solar water heating and photovoltaic systems. For more information go to www.energystar.gov.

 

FAQs - Shading and PV systems

Q: Can a solar PV system owner qualify for a REC payment if there are trees, buildings, and other obstructions that might shade the solar array?

A: No. The REC Contract between LPEA and the solar PV owner provides that the solar array is free of shade - stated on the first page  “Representations” item “d.” Please refer to the REC contract above.

Q: Can a solar PV system that is shaded be interconnected and net metered to LPEA’s system?

A: LPEA does not recommend that a solar PV system have any shade in order to achieve the most efficient production of a solar PV system. LPEA recommends that a solar installer provide the estimated annual production of all systems they propose to install and identify the loss of production if shading is involved. LPEA will interconnect and net meter solar PV systems that are approved by the LPEA Engineering Department.

 

FAQs - Net Metered Solar Generators and Taxes

Q: Are REC payments that I receive for my renewable generation system from LPEA taxable and considered income?

A: We believe so.

As always, please consult a tax expert for your specific tax questions.

LPEA is purchasing the Renewable Energy Credits (REC) or Environmental Attributes when an Optional REC Contract is signed by the solar PV system owner. For this reason, the IRS requires that a Form W-9 be provided to LPEA for the purpose of issuing a REC Payment to the system owner. At the end of the year, LPEA will issue an IRS 1099-MISC to the system owner for the amount of the REC Payment, as long as the payment exceeds the IRS reporting threshold for the current tax year.

Q: If my system produces excess generation and a payment is made to me by LPEA (credit on my electric account or a check sent in the mail) for the wholesale value of the excess generation, is that taxable and considered income?

A: We believe so.

As always, please consult a tax expert for your specific tax questions.

LPEA is purchasing the excess generation from you.  For this reason, we believe that this may be considered income.

 

Other resources:

Database of State Incentives for Renewables & Efficiency (DSIRESOLAR)

Federal Tax Credit for Solar Energy