Business Tax Incentives
Fuel Cells & Microturbines
What are the tax incentives for fuel cells and microturbines?
These incentives are tax credits for two advanced distributed generation technologies: qualifying fuel cell and microturbine systems. Fuel cells generate electricity through a chemical process. They are somewhat similar to batteries, except fuel must be fed continuously to them. Microturbines are small power generation systems using a gas turbine engine, based on related turbines used in transportation. The credits are available for systems "placed in service" in prior to December 31, 2016.
Who is eligible for the tax incentives?
The credits are primarily for business use of this equipment, although individuals are eligible for the fuel cell tax incentive. Recent legislation extends the incentive to all utilities and telecommunications firms. This credit is permissible against the Alternative Minimum Tax (AMT).
What are the incentives and how do they work?
- For fuel cells:
- Credits are for 30% of the cost, up to $3000 per kW of power that can be produced.
- To qualify systems must have an efficiency of at least 30% and must have a capacity of at least 0.5 kW.
- For microturbines:
- Credits are for 10% of the cost, up to $200 per kW of power that can be produced.
- To qualify, systems must have an efficiency of at least 26% and must have a capacity of less than 2,000 kW.
What do I have to do to qualify for these incentives?
To qualify, taxpayers will probably need to have evidence regarding:
- The cost of the system (this includes the power generation system itself and "associated balance of plant components, including, in the case of microturbines, "secondary components located between the existing infrastructure for fuel delivery and the existing infrastructure for power distribution"),*
- The capacity of the system,
- The efficiency of the system, and
- When it was placed in service.
Where can I learn more about qualifying products?