Date Requested:February 17, 2009
Time Requested:12:33 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2009R1865 Introduced HB2535
CBD Subject: SOLAR ENERGY TAX CREDIT
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The stated purpose of this bill is to give credit for energy savings when a solar energy system is installed on a residential property.
    
    As written, this bill provides a state personal income tax credit of 30 percent of the cost to purchase and install a solar energy system up to a maximum of $2,000. There would be minimal revenue consequences associated with the passage of this bill. According to the Energy Information Administration’s (EIA) Annual Energy Outlook 2008, the installed cost of a solar water heater was $3,500 and the installed cost of a photovoltaic system (to provide electricity for a residence) was nearly $7,000 in 2007. Due to the overall cost and installation factors involved (e.g., solar resources, climate, local building code requirements, etc.), there would only be a limited number of taxpayers who could potentially take advantage of such a personal income tax credit.
    
    Also, taxpayers will be able to claim a federal energy efficiency tax credit under The American Recovery and Reinvestment Act of 2009, signed into law on February 17, 2009. Under this Act, solar energy systems placed in service before December 31, 2016 may take a 30 percent credit up to $2,000 for the purchase and installation of residential solar electric and water heating systems. After January 1, 2009, the $2,000 cap on residential solar electric systems (i.e., photovoltaic) no longer applies.
    
    There would be no additional administrative costs to the State Tax Department from the passage of this bill.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2009
Increase/Decrease
(use"-")
2010
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    As written, this bill provides a state personal income tax credit of 30 percent of the cost to purchase and install a solar energy system up to a maximum of $2,000. There would be minimal revenue consequences associated with the passage of this bill. According to the Energy Information Administration’s (EIA) Annual Energy Outlook 2008, the installed cost of a solar water heater was $3,500 and the installed cost of a photovoltaic system (to provide electricity for a residence) was nearly $7,000 in 2007. Due to the overall cost and installation factors involved (e.g., solar resources, climate, local building code requirements, etc.), there would only be a limited number of taxpayers who could potentially take advantage of such a personal income tax credit.
    
    Also, taxpayers will be able to claim a federal energy efficiency tax credit under The American Recovery and Reinvestment Act of 2009, signed into law on February 17, 2009. Under this Act, solar energy systems placed in service before December 31, 2016 may take a 30 percent credit up to $2,000 for the purchase and installation of residential solar electric and water heating systems. After January 1, 2009, the $2,000 cap on residential solar electric systems (i.e., photovoltaic) no longer applies.
    
    There would be no additional administrative costs to the State Tax Department from the passage of this bill.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to give credit for energy savings when a solar heating water system is installed on a residential property.
    
    The bill does not contain language limiting the application of the credit to property located in West Virginia. Thus, a West Virginia taxpayer could install a solar energy system on an out-of-state residence and claim the credit against West Virginia’s state personal income tax liability.
    
    Also, the bill requires the solar energy system to derive at least 50 percent of its energy from the sun. However, the bill does not provide a methodology or test to determine the amount of energy savings.