Residential Renewable Energy Tax Credit (Corporate)

NOTE:  The Renewable Energy Tax Credit is not allowable against Personal Income taxes since 2010, however the Corporate portion of the tax credit is still active. While the Corporate tax credit is still included in the statutes, there is no functional way to leverage the tax credit. 

Rhode Island offers a tax credit for photovoltaic systems (on-grid and off-grid), solar hot-water systems, active solar-heating systems, wind-energy systems and geothermal-energy systems installed on residences. The tax credit is equal to 25% of the system cost and applies only to residential installations. The tax credit is currently only available as deductible from Business Corporation tax portion of the business that pays for the system.

Photovoltaic (PV) systems must have a minimum module size of 24 square feet, and must either be connected to the grid or to a battery-storage system. PV systems up to $15,000 are eligible for the full 25% credit, which would amount to $3,750 per system.  A resident or business that pays for a PV system that exceeds $15,000 in cost will receive a credit based on a $15,000 system cost. 

Solar hot-water systems must have a minimum collector area of 34 square feet and must include a storage tank that holds at least 80 gallons. Solar hot-water systems up to $7,000 are eligible for the full 25% credit. (A resident or business that pays for a solar hot-water system that exceeds $7,000 in cost will receive a credit based on a $7,000 system cost.)

Active solar-heating systems must have a minimum collector area of 125 square feet, and must include a system for storing and/or distributing heat to the living area of a house. Active solar-heating systems up to $15,000 are eligible for the full 25% credit. (A resident or business that pays for an active solar-heating system that exceeds $15,000 in cost will receive a credit based on a $15,000 system cost.)

Wind-energy systems must have a rotor diameter of at least 44 inches and a minimum factory-rated output of at least 250 watts (W) at 28 miles per hour. Wind-energy systems up to $15,000 are eligible for the full 25% credit. (A resident or business that pays for a wind-energy system that exceeds $15,000 in cost will receive a credit based on a $15,000 system cost.)

Geothermal systems must have either a minimum coefficient of performance of 3.4, or an efficiency ratio of 16 or greater. All geothermal systems must have a commissioning sign-off by the manufacturer or distributor of the equipment to verify the proper installation and performance of the system. In addition, all geothermal systems must meet the following standards:

• ARI/ASHRAE/ISO-13256-1 for water-to-air geothermal systems
• ARI/ASHRAE/ISO-13256-2 for water-to-water geothermal systems
• ARI/ASHRAE/ISO-13256 GWHP for groundwater heat pumps
• ARI/ASHRAE/ISO-13256 GLHP for closed-loop heat pumps

Geothermal systems up to $7,000 are eligible for the full 25% credit. (A resident or business that pays for a geothermal system that exceeds $7,000 in cost will receive a credit based on a $7,000 system cost.)

The following systems are not eligible for the credit: passive solar space-heating systems, passive solar hot-water systems, sun spaces, solar greenhouses, PV and wind systems on boats or recreational vehicles, solar collectors for pools, existing renewable-energy systems, used renewable-energy equipment, and repairs and replacements of existing renewable-energy systems.

To apply for the tax credit, taxpayers must first obtain a system approval from the Rhode Island Office of Energy Resources (RI OER), which is to be attached to the income tax filing. The RI OER web site provides details on the criteria and application for system approval.