Federal and state incentives are helping to reduce initial costs of purchasing and installing fuel cells dramatically. In addition, Power Purchase Agreements (PPAs) have become a popular way for fuel cell manufacturers to get their products to consumers across the country.
The Investment Tax Credit (ITC), created under the Energy Policy Act of 2005, helps to offset the cost of a fuel cell by providing tax incentives to residential and commercial customers. In 2008, the Emergency Economic Stabilization Act increased the incentive amount, and extended the credit through 2016. The ITC provides a 30 percent tax credit for qualified fuel cell property or $3,000/kW of the fuel cell nameplate capacity, whichever is less, on equipment installed before December 31, 2016. A credit of 10 percent is also available for combined heat and power (CHP) systems.
The American Recovery and Reinvestment Act of 2009 (ARRA, or Recovery Act) in 2009 expanded these incentives by adding a grant in lieu of tax credit for fuel cell purchasers with insufficient tax liability (only entities that pay taxes are eligible). The ARRA also raised the investment tax credit dollar cap for residential fuel cells in joint occupancy dwellings to $3,334/kW, and increased the cap on the 30 percent hydrogen fueling facility tax credit from $30,000 to $200,000. Additionally, a 30 percent manufacturing tax credit was created for investment in property used for manufacturing fuel cells and other technologies.
To learn more, please visit the U.S. Department of Energy Fuel Cell Technologies Program Incentives web page.
Many states also offer tax credits, grant funding, low-interest loans, or other incentives for fuel cell installations, for development of hydrogen fueling infrastructure, and for fuel cell manufacturing facilities. Some programs have been enabled through legislation, such as California’s Self Generation Incentive Program (SGIP), or are delivered via development agencies and public benefit funds, like the New York State Energy Research and Development Authority (NYSERDA), Massachusetts Green Energy Fund and the Connecticut Clean Energy Finance and Investment Authority (CEFIA).
For more information on the fuel cell incentives available in your state, please see our State Fuel Cell and Hydrogen Database and our annual fuel cell policy wrap-ups: