Iowa DNR Energy: Renewable Energy, Financial Incentives, Permitting Requirements and Resources

Methane Gas Conversion Property Tax Exemption - Real and personal property used for methane gas collection and conversion into energy in the state of Iowa and connected with, or in conjunction with, a publicly owned sanitary landfill, is exempt from property tax. If other fuels are burned as well, the exemption is equal to the ratio of methane in the overall fuel mix. See Iowa Code 427.1(29) for details.
Methane Energy Replacement Generation Tax Exemption - All energy generated by methane gas conversion property (including digester gas facilities) is exempt from the replacement generation tax of .06 cents per kWh. See Iowa Code 437A.6 for details.

Renewable Energy Tax Credits

Eligible Facilities: Wind, biogas, biomass, methane gas, solar energy conversion facilities that are located in Iowa and owned (at least 51% interest) by any of the following: resident of Iowa; farm corporation; limited liability company; authorized trust; family farm corporation; family farm limited liability company; family, revocable, or testamentary trust; small business; electric cooperative association; cooperative corporation; or school district.

Sectors: Commercial, Industrial, Residential, Institutional.

Amount: 1.5 cts/kWh or $4.50/MMBtu (commercial heat, methane or biogas) or $1.44/MCF (hydrogen), for a term of up to ten years.

Maximum: 90 MW wind; 10 MW other eligible technologies.

Expiration: Facilities must be operational by 12/31/2010; certificates must be issued by 12/31/2020. This tax credit applies only to those facilities placed into service on or after July 1, 2005, meaning this tax credit is not retroactive.

Legislative Code: SF 390 / Iowa Code 476C

Summary: This legislation enacts a tax credit of 1.5 cents/kWh or $4.50/MMBtu or $1.44/MCF for electricity, commercial heat or gas sold by renewable energy facilities that are initially placed into service between 7/1/2005 and 12/31/2010. The tax credit is only available to the first 90 MW (nameplate) of wind projects and 10 MW (nameplate) of other renewable energy facilities.
A renewable energy facility must first submit an application for eligibility with the Iowa Utilities Board. If the application is approved, the facility must be operational within eighteen months, or the eligibility to recover this tax credit expires. If a facility loses approval, it may reapply if there are still tax credits remaining. Facilities that receive approval and are constructed within the eighteen months then apply for the actual tax credit certificates with the Iowa Utilities Board. Certificates are issued based upon the amount of electricity, hydrogen fuel, methane or other biogas, or heat for commercial purposes from an eligible renewable energy facility generated by an eligible renewable energy facility and sold to the purchaser of the renewable energy.
Either the producer or the purchaser may claim the tax credits, but the arrangement must be documented within the power purchase agreement. The tax credits may be transferred once to any person (the initial decision of ownership between the producer and purchaser does not count as a transfer). The tax credits are renewable each year (based on actual energy sold) for the first ten years of the project's operations.

Limitations: One eligible owner may not own more than 2 facilities eligible for a tax credit. An eligible facility must have at least one owner for each 2.5 MW of nameplate generating capacity. A person who receives a tax credit under Iowa Code 476B is not eligible to also receive a tax credit under Iowa Code 476C. The tax credits may not be used for tax years prior to July 1, 2006.

Iowa Energy Center Alternate Energy Revolving Loan Program (AERLP)
Amount: 50% of the financed loan (Up to $250,000)
Web site: www.energy.iastate.edu
Summary: The AERLP provides funding for those interested in establishing alternative energy facilities in Iowa, including biomass, small wind, large wind, solar, and hydro projects.

Rural Economic Value-Added Mentoring Program (REVAMP)
Amount: Up to $10,000
Website: www.agriculture.state.ia.us/
Summary: REVAMP pays qualified consultants to work with innovative value-added businesses that want to start or expand in Iowa to develop or refine a business plan. Once the plan is completed, the applicant may apply for funding through VAAPFAP.

Value-Added Agricultural Products and Processes Financial Assistance Program
Amount: Combination of forgivable and traditional loans
Web site: www.iowasmart.com/services/entrepreneurial/
Summary: The program offers a combination of forgivable and traditional loans, with the interest rate typically the prime rate. Research and development projects are not eligible for this program.

SOLID WASTE ALTERNATIVES PROGRAM (SWAP)
Amount: First $20,000 is a forgivable loan, the next $150,000 is a zero-percent interest loan, anything more than $170,000 is a 3 percent interest loan. Contact: Valerie Drew
Web site: www.iowadnr.com/waste/financial/financialswap.html
Summary: The Solid Waste Alternatives Program (SWAP) funds the statewide development and expansion of waste reduction and recycling projects. Pre-proposals are accepted year round and reviewed quarterly.

CLEAN WATER STATE REVOLVING FUND PROGRAM
Amount: Varies
Web site: http://www.epa.gov/owm/cwfinance/index.htm
Summary: Previously the Construction Grants Program, this new, more flexible program has a wide variety of options, including funding of agriculture best management practices, and manure management and disposal. It offers low interest loans or other options such as: refinancing, purchasing, guaranteeing local debt, and purchasing bond insurance.

AGSTAR
Amount: Varies
Web site: http://www.epa.gov/outreach/agstar/iondex.htm
Summary: U.S. Environmental Protection Agency program that works with dairy and pork producers to install methane recovery systems. Funding is available through the program.

USDA RURAL BUSINESS COOPERATIVE PROGRAM
Amount: Ranges from $35,000 to $10 million
Web Site: http://www.rurdev.usda.gov/rbs/busp/bpdir.htm
Summary: Helps entities obtain loans for improving the economic and environmental climate in rural communities, including initiatives for pollution abatement and control.

Permitting Requirements

Regulations for livestock confinement facilities vary, depending on size of the facility, animal type and the number of animals housed. If the methane recovery system involves putting electric generation into the local grid, a utility agreement will be necessary with the local utility.

For the Iowa Department of Natural Resource requirements on the design and installation of a methane digester and methane recovery system, contact:

DNR Contact:
Bob Palla, Iowa Department of Natural Resources
Wallace State Office Building, Des Moines, IA 50319
Phone: (515) 281-8868, Bob.Palla@dnr.state.ia.us

Resources

DNR Contact:
Jim Bodensteiner
(515) 281-8416
Jim.Bodensteiner@dnr.state.ia.us