S.F. 511 Section 1. NEW SECTION . 422.11K Wind energy system tax 1 credits. 2 1. Subject to subsection 4 of this section, the taxes 3 imposed under this division, less the credits allowed under 4 section 422.12, shall be reduced by a wind energy system tax 5 credit equal to the sum of the following: 6 a. Fifty percent of the federal residential energy efficient 7 property credit related to small wind energy provided in 8 section 25D(a)(4) of the Internal Revenue Code, not to exceed 9 five thousand dollars. 10 b. Fifty percent of the federal energy credit related to 11 small wind energy provided in section 48(a)(2)(A)(i)(IV) of the 12 Internal Revenue Code, not to exceed twenty thousand dollars. 13 2. Any credit in excess of the tax liability is not 14 refundable but the excess for the tax year may be credited 15 to the tax liability for the following ten years or until 16 depleted, whichever is earlier. The director of revenue shall 17 adopt rules to implement this section. 18 3. a. An individual may claim the tax credit allowed a 19 partnership, limited liability company, S corporation, estate, 20 or trust electing to have the income taxed directly to the 21 individual. The amount claimed by the individual shall be 22 based upon the pro rata share of the individual’s earnings of 23 the partnership, limited liability company, S corporation, 24 estate, or trust. 25 b. A taxpayer who is eligible to claim a tax credit under 26 this section shall not be eligible to claim a wind energy 27 production tax credit under chapter 476B or a renewable energy 28 tax credit under chapter 476C. 29 c. A taxpayer may claim more than one credit under this 30 section, but may claim only one credit per separate and 31 distinct small wind energy system installation. The department 32 shall establish criteria, by rule, for determining what 33 constitutes a separate and distinct installation. 34 d. A taxpayer must submit an application to the department 35 -1- LSB 1698SV (2) 86 rn/sc 1/ 8

S.F. 511 for each separate and distinct small wind energy installation. 1 The application must be approved by the department in order to 2 claim the tax credit. The application must be filed by May 1 3 following the year of the installation of the small wind energy 4 system. 5 4. a. Each tax year the total amount of small wind energy 6 system tax credit claims that shall be paid pursuant to this 7 section shall not exceed the amount appropriated by the general 8 assembly for that purpose. If the total dollar amount of the 9 claims exceeds that amount, each claim shall be paid an amount 10 equal to the amount appropriated divided by the total number of 11 claims, not to exceed the amount of the taxpayer’s claim. 12 b. If an amount of tax credits available for a tax year 13 pursuant to paragraph “a” goes unclaimed, the amount of the 14 unclaimed tax credits shall be made available for a subsequent 15 tax year in which an appropriation under this section is made 16 in addition to, and cumulated with, the amount appropriated for 17 that subsequent tax year. 18 5. On or before January 1, annually, if tax credits have 19 been claimed during the preceding tax year, the department 20 shall submit a written report to the governor and the general 21 assembly regarding the number and value of tax credits claimed 22 under this section, and any other information the department 23 may deem relevant and appropriate. 24 Sec. 2. Section 422.11L, subsection 1, Code 2015, is amended 25 by adding the following new paragraph: 26 NEW PARAGRAPH . c. Notwithstanding paragraphs “a” and “b” 27 of this subsection, for installations occurring on or after 28 January 1, 2016, the applicable percentages of the federal 29 residential energy efficiency property tax credit related to 30 solar energy and the federal energy credit related to solar 31 energy systems shall be fifty percent. 32 Sec. 3. Section 422.11L, subsection 4, paragraph a, Code 33 2015, is amended to read as follows: 34 a. The cumulative value of tax credits claimed annually 35 -2- LSB 1698SV (2) 86 rn/sc 2/ 8

S.F. 511 by applicants pursuant to this section shall not exceed four 1 six million five hundred thousand dollars. Of this amount, 2 at least one million dollars shall be reserved for claims 3 associated with or resulting from residential solar energy 4 system installations. In the event that the total amount 5 of claims submitted for residential solar energy system 6 installations in a tax year is an amount less than one million 7 dollars, the remaining unclaimed reserved amount shall be 8 made available for claims associated with or resulting from 9 nonresidential solar energy system installations received for 10 the tax year. 11 Sec. 4. Section 422.33, subsection 29, paragraph a, Code 12 2015, is amended to read as follows: 13 a. The taxes imposed under this division shall be reduced by 14 a solar energy system tax credit equal to sixty percent of the 15 federal energy credit related to solar energy systems provided 16 in section 48(a)(2)(A)(i)(II) and section 48(a)(2)(A)(i)(III) 17 of the Internal Revenue Code, not to exceed twenty thousand 18 dollars. For installations occurring on or after January 1, 19 2016, the applicable percentage of the federal energy credit 20 related to solar energy systems shall be fifty percent. 21 Sec. 5. Section 422.33, Code 2015, is amended by adding the 22 following new subsection: 23 NEW SUBSECTION . 31. a. The taxes imposed under this 24 division shall be reduced by a wind energy system tax 25 credit equal to fifty percent of the federal energy credit 26 related to small wind energy systems provided in section 27 48(a)(2)(A)(i)(IV) of the Internal Revenue Code, not to exceed 28 twenty thousand dollars. 29 b. The taxpayer may claim the credit pursuant to this 30 subsection according to the same requirements, conditions, and 31 limitations as provided in section 422.11K. 32 Sec. 6. Section 422.60, subsection 12, paragraph a, Code 33 2015, is amended to read as follows: 34 a. The taxes imposed under this division shall be reduced by 35 -3- LSB 1698SV (2) 86 rn/sc 3/ 8

S.F. 511 a solar energy system tax credit equal to sixty percent of the 1 federal energy credit related to solar energy systems provided 2 in section 48(a)(2)(A)(i)(II) and section 48(a)(2)(A)(i)(III) 3 of the Internal Revenue Code, not to exceed twenty thousand 4 dollars. For installations occurring on or after January 1, 5 2016, the applicable percentage of the federal energy credit 6 related to solar energy systems shall be fifty percent. 7 Sec. 7. Section 422.60, Code 2015, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 14. a. The taxes imposed under this 10 division shall be reduced by a wind energy system tax 11 credit equal to fifty percent of the federal energy credit 12 related to small wind energy systems provided in section 13 48(a)(2)(A)(i)(IV) of the Internal Revenue Code, not to exceed 14 twenty thousand dollars. 15 b. The taxpayer may claim the credit pursuant to this 16 subsection according to the same requirements, conditions, and 17 limitations as provided in section 422.11K. 18 Sec. 8. Section 476C.1, subsection 6, paragraph d, Code 19 2015, is amended to read as follows: 20 d. (1) Was initially placed into service on or after July 21 1, 2005, and before January 1, 2017. 22 (2) Notwithstanding subparagraph (1), the placement in 23 service requirements for a facility that has applied for 24 eligibility approval on or after January 1, 2008, but which is 25 not operational as of the effective date of this Act shall be 26 extended to January 1, 2019. 27 Sec. 9. Section 476C.3, subsection 4, paragraph a, Code 28 2015, is amended to read as follows: 29 a. The maximum amount of nameplate generating capacity 30 of all wind energy conversion facilities the board may find 31 eligible under this chapter shall not exceed three hundred 32 sixty-three megawatts of nameplate generating capacity. 33 Beginning January 1, 2016, of the credits revoked pursuant to 34 subsection 6, one megawatt of nameplate generating capacity 35 -4- LSB 1698SV (2) 86 rn/sc 4/ 8

S.F. 511 shall be reserved for wind energy conversion facilities 1 installed within a small wind innovation zone pursuant to 2 section 476.48. 3 Sec. 10. Section 476C.3, subsection 4, paragraph b, Code 4 2015, is amended to read as follows: 5 b. The maximum amount of energy production capacity 6 equivalent of all other facilities the board may find eligible 7 under this chapter shall not exceed a combined output of 8 fifty-three megawatts of nameplate generating capacity and , 9 annually, one hundred sixty-seven billion British thermal units 10 of heat for a commercial purpose. Of the maximum amount of 11 energy production capacity equivalent of all other facilities 12 found eligible under this chapter , no more than ten megawatts 13 of nameplate generating capacity or energy production capacity 14 equivalent shall be allocated to any one facility. Of the 15 maximum amount of energy production capacity equivalent of all 16 other facilities found eligible under this chapter , fifty-five 17 billion British thermal units of heat for a commercial purpose 18 shall be reserved annually for an eligible facility that is 19 a refuse conversion facility for processed, engineered fuel 20 from a multicounty solid waste management planning area. The 21 maximum amount of energy production capacity the board may 22 find eligible for a single refuse conversion facility is , 23 annually, fifty-five billion British thermal units of heat for 24 a commercial purpose. 25 Sec. 11. Section 476C.5, Code 2015, is amended by adding the 26 following new unnumbered paragraph: 27 NEW UNNUMBERED PARAGRAPH . For a renewable energy facility 28 that has applied for eligibility approval on or after January 29 1, 2008, but which is not operational as of the effective date 30 of this Act, renewable energy tax credit certificates shall not 31 be issued for renewable energy purchased or produced by the 32 facility for on-site consumption on or after December 31, 2028. 33 Sec. 12. EFFECTIVE UPON ENACTMENT. This Act, being deemed 34 of immediate importance, takes effect upon enactment. 35 -5- LSB 1698SV (2) 86 rn/sc 5/ 8

S.F. 511 Sec. 13. RETROACTIVE APPLICABILITY. 1 1. The section of this Act amending section 476C.3, 2 subsection 4, paragraph “b”, applies retroactively to January 3 1, 2014, for tax years beginning on or after that date. 4 2. The sections of this Act amending section 422.11L, 5 subsection 4, paragraph “a”, section 422.33, subsection 29, 6 paragraph “a”, and section 422.60, subsection 12, paragraph 7 “a”, apply retroactively to January 1, 2015, for tax years 8 beginning on or after that date. 9 3. The sections of this Act enacting section 422.11K, 10 section 422.33, subsection 31, and section 422.60, subsection 11 14, apply retroactively to January 1, 2015, for tax years 12 beginning on or after that date. 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanation’s substance by the members of the general assembly. 16 This bill modifies existing renewable energy tax credit 17 provisions and enacts new renewable energy tax credit 18 provisions. 19 The bill establishes a wind energy system tax credit against 20 the individual and corporate income tax and the franchise tax. 21 The tax credit is equal to the sum of 50 percent of the federal 22 residential energy efficient property credit related to small 23 wind energy provided in section 25D(a)(4) of the Internal 24 Revenue Code, not to exceed $5,000, and 50 percent of the 25 federal energy credit related to small wind energy provided in 26 section 48(a)(2)(A)(i)(IV) of the Internal Revenue Code, not 27 to exceed $20,000. 28 The bill provides that any credit in excess of the tax 29 liability is not refundable but the excess for the tax year may 30 be credited to the tax liability for the following 10 years or 31 until depleted, whichever is earlier. 32 The bill provides that a taxpayer who is eligible to claim 33 the wind energy system tax credit shall not be eligible to 34 claim a wind energy production tax credit under Code chapter 35 -6- LSB 1698SV (2) 86 rn/sc 6/ 8

S.F. 511 476B or a renewable energy tax credit under Code chapter 476C. 1 A taxpayer may claim more than one wind energy system tax 2 credit but may claim only one credit per separate and distinct 3 small wind energy system installation. The department shall 4 establish criteria by rule for determining what constitutes a 5 separate and distinct installation. 6 The bill requires that a taxpayer must submit an application 7 to the department for each separate and distinct wind energy 8 installation for approval. The application must be filed by 9 May 1 following the year of the installation of the small wind 10 energy system. 11 The bill states that each tax year the total amount of wind 12 energy system tax credit claims that shall be paid shall not 13 exceed the amount appropriated by the general assembly for that 14 purpose. If the total dollar amount of the claims exceeds 15 that amount, each claim shall be paid an amount equal to the 16 amount appropriated divided by the total number of claims, not 17 to exceed the amount of the taxpayer’s claim. If an amount 18 of tax credits available for a tax year goes unclaimed, the 19 amount of the unclaimed tax credits shall be made available for 20 the following tax year in which an appropriation is made in 21 addition to, and cumulated with, the amount appropriated for 22 that following tax year. 23 The bill requires the department, on or before January 1, 24 annually, if tax credits have been claimed during the preceding 25 tax year, to submit a written report to the governor and the 26 general assembly regarding the number and value of tax credits 27 claimed and any other information the department may deem 28 relevant and appropriate. 29 The provisions enacting the wind energy system tax credit 30 are retroactively applicable to January 1, 2015, for tax years 31 beginning on or after that date. 32 The bill modifies provisions applicable to the solar energy 33 system tax credit. The bill provides that for solar energy 34 system installations occurring on or after January 1, 2016, 35 -7- LSB 1698SV (2) 86 rn/sc 7/ 8

S.F. 511 the percentages of the federal residential energy efficiency 1 property credit related to solar energy and the federal energy 2 credit related to solar energy which may be claimed shall be 3 reduced from 60 percent to 50 percent. The bill increases 4 the cumulative value of solar energy system tax credits which 5 may be claimed annually from $4 million to $6 million. These 6 changes are correspondingly made to the corporate and franchise 7 solar energy system tax credit provisions contained in Code 8 sections 422.33 and 422.60. These provisions are retroactively 9 applicable to January 1, 2015, for tax years beginning on or 10 after that date. 11 With regard to renewable energy tax credit provisions 12 contained in Code chapter 476C, the bill extends placement in 13 service requirements for eligible renewable energy facilities 14 that have applied for eligibility approval on or after 15 January 1, 2008, but which are not operational on the bill’s 16 effective date, from January 1, 2017, to January 1, 2019. 17 The bill correspondingly extends the period during which 18 renewable energy tax credit certificates may be issued for such 19 facilities by two years, from December 31, 2026, to December 20 31, 2028. 21 Additionally, the bill modifies references to the maximum 22 amount of British thermal units of heat for a commercial 23 purpose which may be included in energy production capacity 24 equivalent qualifying for a renewable energy tax credit. Such 25 references shall apply on an annual basis. These provisions 26 are retroactively applicable to January 1, 2014, for tax years 27 beginning on or after that date. 28 Finally, the bill reserves one megawatt of nameplate 29 generating capacity for wind energy conversion facilities 30 installed within a small wind innovation zone established 31 pursuant to Code section 476.48. This reserved capacity 32 commences January 1, 2016. 33 The bill takes effect upon enactment. 34 -8- LSB 1698SV (2) 86 rn/sc 8/ 8