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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.

 

Federal Tax Incentives

Personal Income Tax Credit for Renewable Energy, Geothermal and fuel cells Has Been Extended! 
Potential Applicants: Homeowners who placed in service qualified energy saving home improvements between January 1, 2011, and December 31, 2016.

Income tax credits are available for solar (hot water and photovoltaic), geothermal heat pumps, fuel cells, and small wind energy systems through 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. 
These five incentives remain in place and unchanged from the prior law:

 

IRS Tax Incentive Forms

  • Residential Energy Efficient Property: Form 5695
  • Commercial Solar Incentives: Form 3468 (Investment Credit)

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.

 

Virginia Property Tax Exemption for Solar Equipment


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: CharlottesvilleRoanoke, Virginia Beach

 

Weatherization and Energy Assistance Programs


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 and for a list of weatherization providers, click here.   

For more information about this Program, email Lee Hutchinson at the Virginia Department of Housing and Community Development. 

For eligibility information on the Energy Assistance Program or for assistance on crisis home heating and cooling, please contact your local Department of Social Services.

For more information about the Energy Assistance Program, please visit the Virginia Department of Social Services.

 

ENERGY STAR and Water Sense Sales Tax Holiday


The annual back-to-school sales tax holiday returns in early August. Along with school supplies, clothing and footwear, shoppers can now buy emergency preparedness items and certain energy-efficient products that were previously tax-exempt only during their own respective tax holidays.

Virginia’s existing three tax holidays – back to school in August, hurricane and emergency preparedness in May, and Energy Star and WaterSense in October – were combined into a single tax holiday by the 2015 General Assembly. The new combined sales tax holiday applies only to sales occurring during the three-day period that begins each year on the first Friday before the second Monday in August and ends at midnight 11:59 p.m. on the following Sunday.

During the holiday, shoppers won’t be charged state and local sales tax on a variety of items. The tax-exempt products have various price limits, but there is no restriction on how many exempt items consumers can purchase.

Here’s an explanation of the tax exemptions during the sales tax holiday:

  • Most school/office supplies, such as pens, loose-leaf paper, scissors, binders, backpacks and construction paper, will be tax-exempt as long as each item costs $20 or less.
  • Clothing and footwear priced at $100 or less per article or pair will be tax-exempt.
  • Items that may be needed to prepare for an emergency, priced at $60 or less each, will be exempt from sales tax; examples include batteries, flashlights, bottled water, tarps, duct tape, fire extinguishers, cell-phone chargers, smoke detectors, buckets, rope and first aid kits.
  • Gas-powered chainsaws that cost $350 or less each, and chainsaw accessories that cost $60 or less each, will be exempt.
  • Portable generators will be exempt if they cost $1,000 or less each.
  • Energy Star-labeled dishwashers, washing machines, air conditioners, ceiling fans, light bulbs, dehumidifiers and refrigerators will be exempt if they sell for $2,500 or less each.
  • WaterSense-labeled sink faucets, faucet accessories, aerators, shower heads, toilets and landscape irrigation controllers priced at $2,500 or less each will be sales tax-exempt.

All retailers who sell the exempt products are required to participate in the tax holiday. In addition, retailers may choose to pay the sales tax themselves on any taxable items and pass the savings on to customers.

Online purchases of qualifying products will also be exempt from the sales tax as long as the orders are placed during the Aug. 7-9 exemption period and the sellers have the items available for immediate shipment.

For complete details, visit the Virginia Department of Taxation’s website at www.tax.virginia.gov/salestaxholiday.

 

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.

 

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.