Renewable Energy Production Tax Credit

Summary

In June 2006, S.B. 888 established a renewable energy production tax credit to encourage the development and expansion of renewable energy facilities in Florida. The credit was allowed to expire in 2010. In April 2012, H.B. 7117 re-established and updated the renewable energy production tax credit. This summary describes the current version of the credit.

This annual corporate tax credit is equal to $0.01 per kilowatt-hour (kWh) of electricity produced and sold by the taxpayer to an unrelated party during a given tax year. For new facilities (placed in service after May 1, 2012) the credit is based on the sale of the facility's entire electrical production. For an expanded facility,* the credit is based on the increases in the facility's electrical production that are achieved after May 1, 2012.

For the purposes of this credit, renewable energy is defined as “electrical, mechanical, or thermal energy produced from a method that uses one or more of the following fuels or energy sources: hydrogen, biomass, solar energy, geothermal energy, wind energy, ocean energy, waste heat, or hydroelectric power.”

The credit may be claimed for electricity produced and sold on or after January 1, 2013, and June 30, 2016. Beginning in 2014 and continuing until 2017, each taxpayer claiming a credit under this section must apply to the Department of Agriculture and Consumer Services each year for an allocation of available credit. If the credit granted is not fully used in one year because of insufficient tax liability, the unused amount may be carried forward for up to 5 years.

The combined total amount of tax credits which may be granted for all taxpayers under this program is limited to $5 million for fiscal year 2012/2013, and $10 million per year for the remaining fiscal years. If the amount of credits applied for each year exceeds the cap established for that year, the Florida Department of Agriculture and Consumer Services will award credits to qualified applicants based on the following priority:

1. New facilities placed in operation post May 1, 2012 (up to $250,000 maximum)
2. Facilities not able to claim credits under Priority 1 and which claim a credit of $50,000 or less
3. Facilities not able to claim credits under Priority 1 or Priority 2

For all Priority levels, credits allocated will be prorated based upon applicants unallocated claims for qualified production and sales.

A taxpayer cannot claim both this production tax credit and Florida’s Renewable Energy Technologies Investment Tax Credit. In June 2008, Florida enacted H.B. 7135 which specified that a taxpayer's use of the credit does not reduce the amount of the Florida alternative minimum tax available to the taxpayer.

Tax credits may be transferable to to an eligible entity after a merger or acquisition. Credits must be used in the same manner and with the same limitations and can only be transferred to a surviving or acquiring entity once.

The Florida Department of Agriculture and Consumer Services is responsible for ensuring that the corporate income tax credit granted does not exceed limitations outlined in H.B. 7117 and is charged with making available on its web site tax credit balances. The Florida Department of Revenue is authorized to audit and investigate tax credit paperwork and claims.

* An "expanded facility" is a Florida renewable energy facility that increases its electrical production and sale by more than 5% above the facility's electrical production and sale during the 2011 calendar year.