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Stimulating Energy on the Farm: New and Expanded Incentives for Saving and Producing Energy

June 26, 2009

Source: USDA-NRCS, Lynn BettsWhen heading to the grocery store to go shopping, it feels better to walk out the door with a pocket full of coupons. Chances are those coupons will lead you to pick up a few items that you would not have otherwise purchased—it can’t be helped. But wouldn’t those coupons be even better if the investments they led you to make could keep on saving you money or get your local utility to cut you a check each month?

The American Recovery and Reinvestment Act (ARRA) of 2009 contains several provisions that promote and incent energy efficiency and renewable energy. Pair these opportunities with Farm Bill and other programs, and it becomes increasingly clear that now is the time to invest in saving and producing energy on the farm.

Some of the opportunities listed below are literally as easy as clipping a coupon, while others are a bit more competitive—but all of them hold promise for creating more profitable farms that protest the environment, which can only be a good thing during the current economic storm. When considering your options for energy improvements, a good rule of thumb is to begin by becoming as energy efficient as possible—sealing and insulating your house and other facilities on the farm can reduce heating and cooling bills up to 20%. The best way to get started is to call your local utility and set up an energy audit. Then when you install a renewable energy system, you know that you will be using the electricity you produce as efficiently as possible, accelerating the return on your investment.

American Recovery and Reinvestment Act

Low-Income Weatherization: ARRA provides $5 billion for the DOE Weatherization Program. The Weatherization Assistance Program enables low-income families to permanently reduce their energy bills by making their homes more energy efficient—through energy efficiency measures like insulation, space-heating equipment, energy-efficient windows, water heaters and efficient air conditioners. Get in touch with your state energy office as soon as possible to learn about their specific eligibility guidelines.

Tax Credits: Through the ARRA, tax credits that were previously effective for 2009 have been extended to 2010 as well, and the limit has been raised from 10% to 30%. The tax credits that were for a specific dollar amount have been converted to 30% of the cost, while the maximum credit has been raised from $500 to $1500 for the two years (2009–2010). Some improvements such as ground source heat pumps, solar water heaters and solar PV panels are not subject to the $1,500 maximum. The $200 cap on windows has also been removed. A helpful list of federal tax credits for energy efficiency can be found at http://www.energystar.gov/taxcredits.

Four types of upgrades are covered by these tax credits:
  • Home shell improvements like insulation, windows and sealing
  • Home heating, ventilating and air-conditioning
  • Renewable energy technology like ground source heat pumps, solar water and PV systems, and small wind
  • Hybrid and diesel cars

ARRA also includes a provision to uncap the federal small wind turbine Investment Tax Credit (ITC) originally passed last October. The removal of the cost caps on the small-wind ITC will provide consumers with a true 30% tax credit for the purchase and installation of small wind turbines with rated capacities of 100 kilowatts (kW) or less for home, farm, or business use. The ITC is available for systems installed between October 3, 2008 and December 31, 2016. The value of the credit is now uncapped through ARRA.

Source: Lissa PawlischRenewable Energy: ARRA also contains a number of other provisions potentially benefitting renewable energy production on the farm:

  • The option to receive a cash grant through the US Treasury in lieu of the ITC.
  • An expansion of the Clean Renewable Energy Bond (CREB) program to finance facilities that generate electricity from a number of renewable resources.
  • Expanded research and development funding through DOE’s Energy Efficiency and Renewable Energy program, largely focused on biomass and geothermal.
  • Extension of bonus depreciation for businesses, allowing them to recover the costs of capital expenditures by immediately writing off fifty percent of the cost of depreciable property expenditures in 2009 (equipment, tractors, wind turbines, solar panels, etc).
  • Five-year carryback of net operating losses for small businesses.

Rural Energy for America Program

The Rural Energy for America Program (REAP) is Section 9007 of the 2008 Farm Bill (formerly 9006). There is $60 million in this program nationwide for 2009, up from roughly $17-23 million annually in previous years. Applicants can be either rural small businesses or agricultural producers, and projects can be in the areas of energy efficiency, small wind, biomass, solar, or geothermal. There are grant opportunities (up to 25% of eligible project cost) and guaranteed loan opportunities (up to 50% of project cost). You can apply for a combination of both. Contact your state or local USDA office for REAP details and to apply today.

Visit Recovery.gov, USDA.gov and DSIREusa.org to shop for more “coupons” and incentives.

The Conservation PlannerThis article is from the June 2009 issue of The Conservation Planner, a publication of The Minnesota Project. Click here to download the entire issue and explore past issues >>
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