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'''''Note: The American Recovery and Reinvestment Act of 2009 allows taxpayers eligible for the federal [http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=U...¤tpageid=1&ee=1&re=1 renewable electricity production tax credit] (PTC)** to take the federal business energy investment tax credit (ITC) or to receive a [http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=U...¤tpageid=1&ee=1&re=1 grant] from the U.S. Treasury Department instead of taking the PTC for new installations. The new law also allows taxpayers eligible for the business ITC to receive a [http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=U...¤tpageid=1&ee=1&re=1 grant] from the U.S. Treasury Department instead of taking the business ITC for new installations. The grant is only available to systems where construction begins prior to December 31, 2011. The Treasury Department issued [http://www.irs.gov/pub/irs-drop/n-09-52.pdf Notice 2009-52] in June 2009, giving limited guidance on how to take the federal business ITC instead of the federal renewable electricity production tax credit.''''' The federal business energy investment tax credit available under 26 USC § 48 was expanded significantly by the [http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.1424.enr: ''Energy Improvement and Extension Act of 2008''] (H.R. 1424), enacted in October 2008. This law extended the duration -- by eight years -- of the existing credits for solar energy, fuel cells and microturbines; increased the credit amount for fuel cells; established new credits for small wind-energy systems, geothermal heat pumps, and combined heat and power (CHP) systems; allowed utilities to use the credits; and allowed taxpayers to take the credit against the alternative minimum tax (AMT), subject to certain limitations. The credit was further expanded by [http://thomas.loc.gov/home/h1/Recovery_Bill_Div_B.pdf ''The American Recovery and Reinvestment Act of 2009''], enacted in February 2009. In general, credits are available for eligible systems placed in service on or before December 31, 2016: * '''Solar.''' The credit is equal to 30% of expenditures, with no maximum credit. Eligible solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Hybrid solar lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are ''not'' eligible. * '''Fuel Cells.''' The credit is equal to 30% of expenditures, with no maximum credit. However, the credit for fuel cells is capped at $1,500 per 0.5 kilowatt (kW) of capacity. Eligible property includes fuel cells with a minimum capacity of 0.5 kW that have an electricity-only generation efficiency of 30% or higher. (Note that the credit for property placed in service before October 4, 2008, is capped at $500 per 0.5 kW.) * '''Small Wind Turbines.'''* The credit is equal to 30% of expenditures, with no maximum credit for small wind turbines placed in service after December 31, 2008. Eligible small wind property includes wind turbines up to 100 kW in capacity. (In general, the maximum credit is $4,000 for eligible property placed in service after October 3, 2008, and before January 1, 2009. ''The American Recovery and Reinvestment Act of 2009'' removed the $4,000 maximum credit limit for small wind turbines.) * '''Geothermal Systems.'''* The credit is equal to 10% of expenditures, with no maximum credit limit stated. Eligible geothermal energy property includes geothermal heat pumps and equipment used to produce, distribute or use energy derived from a geothermal deposit. For electricity produced by geothermal power, equipment qualifies only up to, but not including, the electric transmission stage. For geothermal heat pumps, this credit applies to eligible property placed in service after October 3, 2008. Note that the credit for geothermal property, with the exception of geothermal heat pumps, has no stated expiration date. * '''Microturbines.''' The credit is equal to 10% of expenditures, with no maximum credit limit stated (explicitly). The credit for microturbines is capped at $200 per kW of capacity. Eligible property includes microturbines up to two megawatts (MW) in capacity that have an electricity-only generation efficiency of 26% or higher. * '''Combined Heat and Power (CHP).'''* The credit is equal to 10% of expenditures, with no maximum limit stated. Eligible CHP property generally includes systems up to 50 MW in capacity that exceed 60% energy efficiency, subject to certain limitations and reductions for large systems. The efficiency requirement does not apply to CHP systems that use biomass for at least 90% of the system's energy source, but the credit may be reduced for less-efficient systems. This credit applies to eligible property placed in service after October 3, 2008. In general, the original use of the equipment must begin with the taxpayer, or the system must be constructed by the taxpayer. The equipment must also meet any performance and quality standards in effect at the time the equipment is acquired. The energy property must be operational in the year in which the credit is first taken. Significantly, ''The American Recovery and Reinvestment Act of 2009'' repealed a previous restriction on the use of the credit for eligible projects also supported by "subsidized energy financing." For projects placed in service after December 31, 2008, this limitation no longer applies. Businesses that receive other incentives are advised to consult with a tax professional regarding how to calculate this federal tax credit. ''* The American Recovery and Reinvestment Act of 2009, which allows PTC-eligible facilities to use the 30% ITC, has implications for some technologies that were already potentially eligible for either incentive in some form. Certain geothermal and open- or closed- loop biomass systems (which may include certain types of biomass CHP projects) now qualify for a 30% tax credit through December 31, 2013, the in-service deadline for these technologies under the PTC. Wind-energy systems of all sizes -- not only systems of 100 kW or less -- also now qualify for the 30% ITC through the wind-energy PTC in-service deadline of December 31, 2012. Applicants should refer to the eligibility definition contained in the PTC to determine if and how their project might qualify for this treatment.''