After 10 years, this Utah alternative energy tax credit still hasn’t paid out any money


The incentive program was to provide millions of dollars in tax breaks for energy projects ranging from solar to nuclear to oil shale.

(Susan Montoya Bryan | AP) Some of the 30,000 solar panels that make up the Public Service Company of New Mexico’s 2-megawatt photovoltaic array in Albuquerque. A Utah program offered tax relief for certain energy projects, including solar farms, for 10 years, but no company has ever collected it.

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Utah has offered tax relief for alternative energy projects for a decade, but the state has never paid a dime for the program.

The Alternative Energy Development Incentive was set up to allow companies to keep up to 75% of state tax revenue generated by the projects for 20 years. Eligible projects must produce at least two megawatts of electricity or 1,000 barrels of “oil equivalent” from hydroelectric, solar, biomass, geothermal, wind, nuclear or “certain unconventional resources”. These unconventional resources include oil sands and oil shales.

“Based on what we’re seeing, companies are finding other tax incentive programs that prove more beneficial, so they’re bypassing AEDI,” said Harry Hansen, director of communications for the Utah Office of Energy Development. “Two examples of this are both the Economic Development Tax Increase Funding (EDTIF) and the Rural Economic Development Tax Increase Funding (REDTIF). They seem to offer somewhat similar incentives, but businesses find these two to be better suited to their business.

Like EDTIF and REDTIF, the Alternative Energy Incentive was set up to be “post-performance”. In other words, companies must first prove that they have generated tax revenue before receiving any part of it. Such incentives reduce the risk to the state because no funding is granted until the results are proven.

The AEDI incentive originated from SB65, passed by the Utah Legislature in 2012. It was sponsored by current Senate President Stuart Adams, R-Layton. The home sponsor was former Rep. Mike Noel, R-Kanab.

“It’s too bad someone didn’t use it,” Adams said when asked about the incitement. The lawmaker said he supports the development of all forms of energy, including renewables and fossil fuels, but he could not recall the specifics of the bill or why no one had used it. “You would have to ask people in the industry. I do not know.”

(Rick Egan | The Salt Lake Tribune) Sen. Stuart Adams speaks in February 2022. An alternative energy development incentive tax credit he championed has yet to disburse any money.

The measure’s tax memo predicted that millions of dollars would be misappropriated from public funds. “Assuming the state has 20% of its energy in 2025 produced by the alternative energy sources identified in this bill, passage of this bill could result in a waiver of fund revenue for the education of approximately $60 million and a general fund revenue waiver of approximately $14 million.” in fiscal year 2025.

A 2017 performance audit from Utah’s Office of the Legislative Auditor General said: “Applicants have been approved to take over $30 million in alternative energy development tax credits, but do not haven’t claimed yet.”

Apparently they never did.

AEDI is one of many incentive programs available, and the other incentives have active participants.

The Renewable Energy Systems Tax Credit offers homeowners and businesses credits for installing renewable energy systems, though the homeowner’s share is being phased out, much to the disappointment of conservation advocates. clean energy. Utah once offered homeowners a tax credit covering 25% of the cost of installing rooftop solar panels, up to $2,000. The credit drops to a maximum of $800 in 2022 and $400 in 2023. It disappears in 2024.

For businesses, the tax credit covers 10% of the cost of the renewable energy system up to $50,000. In 2021, 95 projects were approved and $2,194,165 in credits were issued.

The production tax credit is available for renewable energy projects and provides a tax credit of approximately one-third of a penny on each kilowatt hour of renewable electricity produced during the first four years of production. Some 42 projects have participated in the programme, most of which have already reached the four-year limit. Nine projects are still eligible for credit.

The high-cost infrastructure tax credit is aimed at large infrastructure projects. These may include renewable energy projects, but the incentive is not exclusive to them. Thirteen projects participate in this tax credit, which targets infrastructure for energy systems, water supply systems, pipelines, transmission lines and the conversion of Tier 3 gasoline refineries.

Tim Fitzpatrick is the renewable energy reporter for the Salt Lake Tribune, a position funded by a grant from Rocky Mountain Power. The Tribune retains full control over editorial decisions independent of Rocky Mountain Power.


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