HOUSE OF REPRESENTATIVES

H.B. NO.

2511

TWENTY-EIGHTH LEGISLATURE, 2016

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to energy storage.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1.  The purpose of this Act is to encourage and maximize cost-effective energy storage technologies and systems by establishing a tax credit for energy storage properties.

SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-    Energy storage; income tax credit.  (a)  When the requirements of subsection (c) are met, each individual or corporate taxpayer that files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section against the Hawaii state individual or corporate net income tax.  The tax credit may be claimed as follows:

(1)    For each energy storage property that is used primarily to store and deliver energy to offset part or all of the load on the premises on which the energy storage property is located, and is installed and first placed in service in the State by a taxpayer during the taxable year:

(A)  Thirty per cent of the basis for energy storage property first placed in service after June 30, 2016, and before January 1, 2018;

(B)  Twenty-five per cent of the basis for energy storage property first placed in service after December 31, 2017, and before January 1, 2020;

(C)  Twenty per cent of the basis for energy storage property first placed in service after December 31, 2019, and before January 1, 2022; and

(D)  Fifteen per cent of the basis for energy storage property first placed in service after December 31, 2021;

provided that no energy storage property that receives a tax credit under this paragraph shall later receive a production tax credit under paragraph (2);

(2)  For each energy storage property that is used primarily to store electricity, does not receive a tax credit under paragraph (1), and is first placed in service in the State by a taxpayer during the taxable year:

(A)  On or before December 31, 2018, 8 cents multiplied by the number of kilowatt-hours stored by the energy storage property and delivered and sold to a customer for such electricity during the first ten taxable years that the energy storage property is in service;

(B)  After December 31, 2018, and before January 1, 2023, 6 cents multiplied by the number of kilowatt-hours stored by the energy storage property and delivered and sold to a customer for such electricity during the first ten taxable years that the energy storage property is in service; and

(C)  After December 31, 2022, 4 cents multiplied by the number of kilowatt-hours stored by the energy storage property and delivered and sold to a customer for such electricity during the first ten taxable years that the energy storage property is in service.

     Multiple owners of a single energy storage property shall be entitled to a single tax credit, and the tax credit shall be apportioned between the owners in proportion to their contribution to the cost of the property.

     In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for every eligible energy storage property that is installed and placed in service in the State by the entity.  The cost upon which the tax credit is computed shall be determined at the entity level.  Distribution and share of credit shall be determined pursuant to section 704(b) of the Internal Revenue Code.

     (b)  For taxable years beginning after December 31, 2015, the dollar amount of any utility rebate shall be deducted from the basis of the qualifying energy storage property and its installation before applying the tax credit.

     (c)  The director of taxation shall prepare any forms that may be necessary to claim a tax credit under this section, including forms identifying the property type of each tax credit claimed under this section.  The director may also require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

     (d)  If the tax credit under subsection (a)(1) exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted, unless otherwise elected by the taxpayer pursuant to subsection (e).  All claims for the tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed.  Failure to comply with this subsection shall constitute a waiver of the right to claim the credit.

     (e)  For any energy storage property under subsection (a)(1), a taxpayer may elect to reduce the eligible credit amount by thirty per cent and if this reduced amount exceeds the amount of income tax payment due from the taxpayer, the excess of the credit amount over payments due shall be refunded to the taxpayer; provided that tax credit amounts properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; and no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.

     The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the energy storage property is installed and placed in service.  A separate election may be made for each separate property that generates a credit.  An election once made shall be irrevocable.

     (f)  For any energy storage property under subsection (a)(2), if the tax credit under subsection (a)(2) exceeds the taxpayer's income tax liability, the excess of the credit over liability shall be refunded to the taxpayer; provided that tax credit amounts properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.  No property placed in service pursuant to subsection (a)(2) shall be subject to reduction in refund payments for any subsequent year by any legislative act or executive decision.

     (g)  The tax credit provided for in this section shall be construed in accordance with Treasury Regulations and judicial interpretations of similar provisions in sections 25D, 45, and 48 of the Internal Revenue Code.

     (h)  An association of owners under chapter 421I, 421J, 514A, or 514B may claim the credit allowed under this section in its own name for energy storage property and facilities placed in service and located on common areas.

     (i)  No credit under this section shall be allowed to any federal, state, or local government or any political subdivision, agency, or instrumentality thereof.

     (j)  The department of taxation, in collaboration with the department of business, economic development, and tourism, shall submit a joint annual report to the legislature no later than twenty days prior to the convening of each regular session on the following for the preceding taxable year:

(1)  The number of energy storage properties that have qualified for a tax credit during the calendar year by:

(A)  Property type; and

(B)  Taxpayer type (corporate and individual);

(2)  The total cost of the tax credit to the State during the taxable year by:

(A)  Property type;

(B)  Taxpayer type;

(C)  Tax credit type (investment or production); and

(D)  Refundability type (refundable or nonrefundable); and

(3)  The estimated economic benefit that may be attributable to the tax credit, including:

(A)  Impact on the economy, including:

              (i)  Economic boost;

             (ii)  Net flow of money into or out of the State; and

            (iii)  General excise and income tax revenue generated; and

(B)  Jobs, including:

              (i)  Number of jobs maintained;

             (ii)  Number of jobs created; and

            (iii)  Average pay of such jobs.

     (k)  The department of business, economic development, and tourism shall commence a study no later than July 1, 2018, on the costs incurred and benefits generated by this section, as well as the extent to which the tax credit under this section has helped the State to achieve its energy goals.  In conducting this study, the department of business, economic development, and tourism shall consult with the department of taxation and industry trade groups and may consult with other stakeholders.  The department of business, economic development, and tourism shall submit a report to the legislature no later than December 31, 2019.  The report shall include, at a minimum, the following:

(1)  The information identified in subsection (j);

(2)  The results of its study; and

(3)  Recommendations on whether the tax credit under this section should be wholly or partially continued, eliminated, or revised.

     (l)  As used in this section:

     "Basis" means costs related to the energy storage property under subsection (a), including accessories, energy storage, and installation, but does not include the cost of consumer incentive premiums unrelated to the operation of the property or offered with the sale of the energy storage property and costs for which another credit is claimed under this chapter.  Any cost incurred and paid for the repair, construction, or reconstruction of a structure in conjunction with the installation and placing in service of the energy storage property, shall not constitute a part of the basis for the purposes of this section; provided that costs incurred for the physical support of the energy storage property shall constitute part of the basis for the purposes of this section.

     The basis used under this section shall be consistent with the use of basis in section 25D or section 48 of the Internal Revenue Code; provided that, for the purposes of calculating the credit allowed under this section, the basis of the energy storage property shall not be reduced by the amount of any federal tax credit or other federally subsidized energy financing received by the taxpayer.

     "First placed in service" has the same meaning as in Treasury Regulation section 1.167(a)-11(e)(1).

     "Energy storage property" means equipment that stores and delivers electricity, the construction, reconstruction, or erection of which is completed by the taxpayer, or which is acquired by the taxpayer if the original use of the property commences with the taxpayer."

     SECTION 3.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 4.  New statutory material is underscored.

SECTION 5.  This Act shall take effect on July 1, 2016, and shall apply to taxable years beginning after December 31, 2015.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Energy Storage

 

Description:

Creates an energy storage income tax credit.

 

 

 

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