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Energy Incentives

Financial Incentives for Energy Efficiency and Conservation

There are several state, federal, and utility/private financial and tax incentives available for Virginia homeowners businesses in the commercial, industrial, and manufacturing sectors.  Click on the appropriate quick link on this web page to learn more about tax credits, deductions, exemptions and utility programs that can help your home or business conserve energy and save money by becoming more energy efficient.

 

Residential Incentives

Personal Tax Credit for Home Improvements Has Been Extended! 
Potential Applicants: Homeowners who placed in service qualified energy saving home improvements between January 1, 2011, and December 31, 2016.

Home improvement tax credits are available for insulation, replacement windows, water heaters, certain high efficiency heating and cooling equipment, and biomass stoves. See chart on the ENERGY STAR website. The maximum total amount that can be claimed for all products placed in service in 2011 for most home improvements is 10% of cost up to $500 EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems that are not subject to this cap, and are in effect through 2016. If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters.   Geothermal heat pumps, small wind turbines, and solar energy system may be eligible for a tax credit of 30% of the cost until December 31, 2016.  Fuel cells may be eligible of a tax credit of 30% of the cost, up to $500 per 0.5 kW of power capacity until December 31, 2016. 
These five incentives remain in place and unchanged from the prior law:

 

 

IRS Forms

Note: The links above go to the IRS web site. IRS often does not publish new versions of forms until the beginning of the following tax year.

 

Property Tax Exemption for Solar Energy Systems


Virginia allows any county, city or town to exempt or partially exempt solar energy equipment or recycling equipment from local property taxes. Residential, commercial or industrial property is eligible. The statute broadly defines solar energy equipment as any that is "designed and used primarily for the purpose of providing for the collection and use of incident solar energy for water heating, space heating or cooling or other application which would otherwise require a conventional source of energy."

Cities and counties currently offering a solar energy equipment and facilities exemption include: Albemarle, Alexandria, Charlottesville, Chesterfield, Hampton, Hanover, Harrisonburg, Henrico, Isle of Wight, King and Queen, Lexington, Loudoun, Lynchburg, Prince William, Pulaski, Roanoke, Spotsylvania, Warren, Winchester and Wise.

Please contact your local building inspection officials for information on how this credit, if offered, is applied in your locality.

 

Voluntary Solar Resource Development Fund


The Voluntary Solar Resource Development Fund, created by the General Assembly in 2011, establishes a revolving loan fund to be administered by the Virginia Department of Mines, Minerals and Energy (DMME). The Fund will be fueled primarily by donations from customers of investor-owned electric utilities. 

To date, the rate of donations to the fund has been much lower than anticipated, and there are insufficient funds to enable DMME to make loans. A final determination on the future of the program has not yet been made. For more information on the history and status of the program, please see the Annual Report on the Solar Development fund DMME submitted to the Governor.

 

Energy Efficient Buildings Tax Exemption

(Code of VA §58.1-3221.2)

Potential Applicants: Business, Industry, and Residents 
This statute allows any county, city, or town to exempt or partially exempt energy efficient buildings from local property taxes. Eligible buildings are those that:

  • exceed the energy efficiency standards prescribed in the Virginia Uniform Statewide Building Code by 30 percent, or
  • meets or exceeds performance standards of the Green Globes Green Building Rating System of the Green Building Initiative, or
  • meets or exceeds performance standards of the Leadership in Energy and Environmental Design (LEED) Green Building Rating System of the U.S. Green Building Council, or
  • meets or exceeds performance standards or guidelines under the EarthCraft House Program, or
  • is an Energy Star qualified home.

Localities offering exemptions: CharlottesvilleRoanokeSpotsylvania   

 

 

Weatherization Assistance Program


Potential Applicants: Low-income homeowners and renters 
The Weatherization Assistance program provides funds to reduce the heating and cooling costs for low-income families and to ensure their health and safety.  The program provides repairs and improvements to home heating and cooling systems as well as providing for the installation of energy-saving measures in the house.
To see if you qualify for this program, check here. For a list of weatherization providers, click here.
For more information about this program, visit the Department of Housing and Community Development website or email Brett Jackson.

 

 

ENERGY STAR and Water Sense Sales Tax Holiday


The sales tax holiday is a recurring annual event, beginning at 12:01 a.m. on the Friday before the second Monday in October of every year and ending at midnight on the Monday immediately following.  The 2013 holiday will take place Friday, October 11, 2013 through Monday, October 14, 2013.
During this period, consumers may purchase certain Energy Star qualified products exempt of the Retail Sales and Use Tax. The exempt items include: any dishwasher, clothes washer, air conditioner, ceiling fan, compact fluorescent light bulb, dehumidifier, programmable thermostat, or refrigerator, the energy efficiency of which has been designated by the United States Environmental Protection Agency and the United States Department of Energy as meeting or exceeding each such agency’s requirements under the Energy Star program. The exemption is also available for WaterSense qualified products containing a WaterSense label. In order to be eligible for the Energy Star or WaterSense sales tax holiday exemptions, products must cost $2,500 or less per item and be purchased for noncommercial home or personal use.
For information regarding this program, visit the Virginia Department of Taxation's website, click here.

 

 

Green Mortgages


Potential Recipients: Small businesses, homeowners refinancing, and soon-to-be homeowners
If your small business is looking for loans to retrofit facilities, purchase energy efficient equipment, utilize energy efficient construction, buy alternative fuel for vehicles, or to implement other efficient ideas, there maybe be help from the U.S. Small Business Administration (SBA). Although the SBA does not make loans, it does guarantee them. SBA loan programs 7(a) and CDC/504 could offer some assistance. For more information on green mortgages visit http://www.mortgageloan.com/environment/ and for information on SBA loan programs visit the SBA's web page on loan programs.

For homeowner green mortgage information please see Energy Efficient Mortgages.

 

 

Commercial Incentives


Corporate Tax Deduction for Commercial Building Efficiency Has Been Extended!
Potential Applicants: Commercial, Government (deduction goes to designer), Construction

A tax deduction of up to $1.80 per square foot is available to owners or designers of new or existing commercial buildings that save at least 50% of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2001. Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. These tax deductions are available for systems placed in service from January 1, 2006 through December 31, 2013.
More information can be found on the ENERGY STAR Tax Deductions for Commercial Buildings page.

 

Industrial Incentives


Energy Efficient Buildings Tax Exemption (Code of VA §58.1-3221.2)
Potential Applicants: Business, Industry, and Residents 

This statute allows any county, city, or town to exempt or partially exempt energy efficient buildings from local property taxes. Eligible buildings are those that:

  • exceed the energy efficiency standards prescribed in the Virginia Uniform Statewide Building Code by 30 percent, or
  • meets or exceeds performance standards of the Green Globes Green Building Rating System of the Green Building Initiative, or
  • meets or exceeds performance standards of the Leadership in Energy and Environmental Design (LEED) Green Building Rating System of the U.S. Green Building Council, or
  • meets or exceeds performance standards or guidelines under the EarthCraft House Program, or
  • is an Energy Star qualified home.

Localities offering exemptions: CharlottesvilleRoanokeSpotsylvania   

 

 

Clean Energy Manufacturing Incentive Grant Program (CMIG)


Clean Energy Manufacturing Incentive Grant Program repeals the Solar Photovoltaic Manufacturing Incentive Grant Program effective July 1, 2013, and the Biofuels Production Incentive Grant Program effective July 1, 2017, to create a program that provides financial incentives to companies that manufacture or assemble equipment, systems, or products used to produce renewable or nuclear energy, or products used for energy conservation, storage, or grid efficiency purposes. To be eligible for a grant, the manufacturer must make a capital investment greater than $50 million and create at least 200 full-time jobs that pay at least the prevailing wage. A wind energy supplier must make a capital investment of greater than $10 million and create at least 30 full-time jobs that pay at least the prevailing wage to be eligible for a grant.

Full guidelines for the Clean Energy Manufacturing Incentive Grant Program can be found  here.