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Funding


Information on funding options for wind systems.

Grants

USDA Rural Energy for America Program (REAP)
  • Grants for Renewable Energy and Efficiency Grants are limited to 25 percent of a proposed project's cost (max. grant is $500k), and a loan guarantee may not exceed $10 million.
  • The combined amount of a grant and loan guarantee may not exceed 75 percent of the cost of the project. 
  • Funding priority is given to grants of $20k or less and to combined grant and loan requests. 
  • Eligibility: 
    • Non-metro farms and small businesses
    • state government entities
    • local governments
    • tribal governments
    • land-grant colleges and universities
    • electric co-ops (with restrictions)
    • public power agencies (with restrictions)

For more information:

Visit the rural development section of the USDA website and click on "energy programs." Or visit the Database of Incentives website.

Contact the USDA office in Minnesota:
Ron Omann 
Renewable Energy Coordinator
Ron.Omann@mn.usda.gov 
phone 651.602.7796

Bonds

Qualified Energy Conservation Bonds (QECBs)

  • Eligibility:
    • Local Government
    • State Government
    • Tribal Government 
  • Low-interest bonds
  • Bondholder (investor) receives federal tax credits in lieu of traditional bond interest 
  • Max term: 15 years
  • Bond volume is allocated to each state based on the state's percentage of the U.S. population as of July 1, 2008. Each state is then required to allocate a portion of its allocation to "large local governments" within the state based on the local government's percentage of the state's population. Large local governments are defined as municipalities and counties with populations of 100,000 or more.
  • Minnesota allocation: $54,159,000 

For more information, visit the Database of Incentives website.  

Bonus Depreciation

Accelerated Depreciation - Federal

Accelerated Depreciation “Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation”

  • Five year depreciation schedule for wind
  • Bonus Depreciation for systems installed in 2012
    • 50 percent in first year, remaining 50 percent according to the standard accelerated depreciation schedule. 

For more information, consult your tax advisor and review the following:

Accelerated Depreciation - State

Accelerated Depreciation “Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation” 

Five year depreciation schedule for wind
State of MN does not fully conform to the federal bonus depreciation system 
MN disallows 80 percent of the federal bonus.

For more information, consult your tax advisor and review the following: 

Exemptions & Credits

Investment Tax Credit (ITC)
  • Federal corporate tax credit
  • Thirty percent of installed cost
  • Wind systems < 100 kW*
  • *Wnd systems of any size are eligible for taxpayers eligible for the PTC.  PTC-eligible taxpayers may take the federal business energy investment tax credit (ITC) instead of taking the PTC for new installations
  • For equipment installed from January 1, 2008 through December 31, 2016.
  • Consult your tax adviser for more information
For more information, visit the Database of Incentives for Renewables and Efficiency website. 

Renewable Electricity Production Tax Credit (PTC)

  • The PTC provides a per-kilowatt-hour tax credit for electricity generated over the first ten years of operation. 
  • The current rate is 2.2¢/kWh. 
  • Construction must be completed and turbine must be in service by December 31, 2012.
  • The tax credit can only be applied to passive income (e.g., rental income or income from businesses in which the taxpayer participates only as an investor) 

For more information, visit the Database of Incentives for Renewables and Efficiency website.

Wind Sales Tax Exemption (Minn. Statute 297A.25)

  • Details on this exemption are available in this section of the Database of Incentives for Renewables and Efficiency website.
  • Exempt from MN Sales Tax: materials used to manufacture, install, construct, repair or replace wind-energy systems (including rental equipment)
  • Buyers complete the Minnesota Department of Revenue form ST3  "Certificate of Exemption" and sellers keep the form in their files for tax reference (search for “ST3”).

Wind Systems Property Tax Exemption 
  • Details on this exemption are available in this section of the Database of Incentives for Renewables and Efficiency website.
  • The following is exempt from Minnesota property tax:
    • all real and personal property of wind-energy system
    • land on which wind system is located remains taxable  

Wind Energy Production Tax

  • In lieu of a property tax on large wind-energy systems, a production tax was implemented in 2002.  
  • Systems > 12 MW taxed at 0.12 cents/kWh; 
  • Systems between 2 MW and 12 MW taxed at 0.036 cents/kWh;  
  • Systems between 250 kW and 2 MW taxed at 0.012 cents/kWh. Wind systems under 250 kW are exempt from the production tax, as are systems with a capacity of 2 MW or less that are owned by political subdivisions. Effective for 2010 and thereafter (Minn. Stat. § 272.029 Subd. 6), the revenue generated by the production tax is distributed to local taxing districts as follows: 80% to counties and 20% to cities and townships. 
  • A provision in a separate statute (Minn. Stat. § 272.028) allows a mutually agreeable alternative to be negotiated between the local government authority and the wind facility owner for the purpose of maintaining "public infrastructure and services." For example, a lower tax might be negotiated by a local government in order to attract wind development. 

Loans


Sustainable Agriculture Loan Program

  • Up to $40,000 per farmer and up to $160,000 on joint projects.
  • 3 percent interest, up to 7 year term.

For more information, visit this section of the Minnesota Department of Agriculture website. 

Agricultural Improvement Loan Program

  • On-farm wind up to 1 MW
  • Interest Rate 3.25 percent (as of Oct. 2012)
  • Up to 10 year term
  • Administration by Minnesota Department of Agriculture through Minnesota Rural Finance Authority (RFA) 
  • RFA participation limited to 45 percent of the principal up to $300,000

For more information, visit the loan improvement section and the agriculture finance section of the Minnesota Department of Agriculture website.

Outside Resources

Database of State Incentives for Renewables and Efficiency (DSIRE)
Organized by incentive type, but more detailed and up to date. 

Current Energy Funding Opportunities
Minnesota Department of Commerce, Division of Energy Resources listing of current solicitations of proposals for energy or environmental grant funding from a wide variety of organizations.