H 3154 Session 109 (1991-1992)
H 3154 General Bill, By H.H. Keyserling, R.S. Corning, Elliott, Haskins,
M.F. Jaskwhich, K.G. Kempe, I.K. Rudnick and C.Y. Waites
A Bill to provide a state income tax credit for qualified renewable energy
source expenditures, including qualified active solar energy systems, and to
provide for related matters, including a criminal penalty.
12/27/90 House Prefiled
12/27/90 House Referred to Committee on Ways and Means
01/08/91 House Introduced and read first time HJ-83
01/08/91 House Referred to Committee on Ways and Means HJ-83
A BILL
TO PROVIDE A STATE INCOME TAX CREDIT FOR QUALIFIED
RENEWABLE ENERGY SOURCE EXPENDITURES, INCLUDING
QUALIFIED ACTIVE SOLAR ENERGY SYSTEMS, AND TO
PROVIDE FOR RELATED MATTERS, INCLUDING A CRIMINAL
PENALTY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Subject to the conditions prescribed in this act, a
taxpayer as defined in Section 2 is allowed a state income tax credit
equal to twenty-five percent of the purchase price up to a maximum
credit of one thousand dollars of all qualified renewable energy source
expenditures as these expenditures are defined in Section 2, except for
qualified active solar energy systems. Active solar energy systems are
allowed a state income tax credit equal to fifty dollars per million British
thermal units of estimated annual energy produced, but not exceeding
the maximum tax credit of twenty-five percent up to one thousand
dollars of the purchase price.
SECTION 2. For purposes of this act:
( 1) "Taxpayer" means an individual, fiduciary, or
corporation subject to the Income Tax Act of 1926 (Chapter 7, Title 12
of the 1976 Code).
( 2) "Qualified renewable energy source expenditure"
means an expenditure made on or after January 1, 1992, by the taxpayer
for renewable energy source property installed in connection with a
residential or nonresidential building:
(a) which is located in the State;
(b) which is used by the taxpayer, or his tenants in a
landlord/tenant relationship, for residential, commercial, or industrial
purposes.
"Qualified renewable energy source expenditure"
includes, but is not limited to, expenditures for labor costs properly
allocable to the on-site preparation, assembly, or original installation of
renewable energy source property but does not include any expenditure
allocable to a swimming pool used as an energy storage medium or to
another energy storage medium which has a primary function other than
energy storage.
( 3) "Renewable energy source property" means
property:
(a) which, when installed in connection with a building, transmits
or uses as an energy source in the building:
( i) solar energy (active and passive systems), biomass
conversion, the potential energy of falling or flowing water (water
wheel) to produce mechanical or electrical energy, or any other form of
renewable energy specified in regulations promulgated by the Tax
Commission, after consultation with the Joint Legislative Committee on
Energy, for the purpose of heating, cooling, or providing hot water for
use within these buildings:
(ii) energy from the burning of wood in stoves or furnaces
other than fireplaces;
(b) which is installed by or at the instance of the taxpayer;
(c) which can reasonably be expected to be effective or remain in
operation for at least five years;
(d) which meets the performance and quality standards, if any,
which:
( i) have been prescribed by federal or state law or
regulations;
(ii) are in effect at the time of the acquisition of the
property.
( 4) "Active solar energy system" means a mechanical
system which collects solar radiation in the form of thermal energy and
uses a heat transfer fluid to transport the thermal energy to meet load
requirements or to thermal storage where the thermal storage and
collectors are separated in order that losses from the collector, while it
is not operating, do not contribute to loss from storage. Components of
the system include collectors; storage containers and contents, except the
building envelope; pipe; fittings; ductwork insulation; pumps; blowers;
valves; and controls. ( 5) "Annual usable energy
output" means the annual amount of energy provided by the
renewable energy system which can be utilized to offset energy
requirements normally met by purchased energy resources. It must be
measured in millions of British thermal units and must take into account
climatic conditions, system performance characteristics, system load,
and load usage patterns.
( 6) "British thermal unit" (BTU) means the amount
of energy required to raise the temperature of one pound of water one
degree Fahrenheit.
( 7) "Commission" means the South Carolina Tax
Commission.
( 8) "Dual purpose passive solar energy system"
means a passive solar energy system whose collectors or storage
components serve a purpose other than the collection and storage of
solar thermal energy. These purposes include the heating of living space
through greenhousing, as well as the treatment of flooring, roofing, and
windows. Components of the system include collectors; storage
containers and contents, except the building envelope; pipe; fittings;
ductwork insulation; pumps; blowers; valves; and controls.
( 9) "Innovative solar energy system" means a solar
energy system for which no nationally recognized certification program
or testing method exists.
(10) "Installation date" means the date on which the
renewable energy system is put into operation or is capable of operating.
(11) "Load" means the energy requirements of a
building, device, or process.
(12) "Passive solar energy system" means a solar
energy system whose collectors and storage units are integrated into the
building structure so that losses from the collector, while it is not
operating, contribute to loss from storage.
(13) "Photovoltaic" means a solar energy system that
converts radiant solar energy directly into electrical energy.
Components include collectors, batteries, wiring, and controls.
(14) "Single purpose passive solar energy system"
means a passive solar energy system whose components are used for the
sole purpose of collecting, storing, and distributing solar energy.
Examples of single purpose passive solar energy systems include solar
attics, Trombe walls, water walls, and building integrated phase-change
systems except when used in conjunction with a dual purpose passive
solar energy system.
(15) "Solar energy system" means the equipment
which directly converts and then transfers or stores solar energy into
usable forms of thermal or electrical energy. These systems may include
space heating or cooling, crop drying, electricity generation, or hot water
heating.
(16) "Systems addition" means equipment attached to
an existing renewable energy system which increases the annual usable
energy output of the system.
(17) "System designer" means a person who offers for
sale a renewable energy system as a complete package, the components
of which may be produced by different manufacturers.
(18) "System replacement" means the total removal
and replacement of the collectors in a solar energy system; or
replacement of the blade assembly, generator, or alternator in a wind
energy system.
SECTION 3. (A) A person offering to sell a renewable energy
resource system as defined under Section 2 shall, before selling the
system to any person within this State, make application to the Division
of Energy, Agriculture and Natural Resources within the Governor's
Office, on forms to be provided by that division, for certification of
performance of systems to be sold and installed within this State.
(B) The certification of performance issued by the Division of
Energy, Agriculture and Natural Resources, and the allowable tax credit
for active solar energy systems, must be based upon design calculations
similar to the f-Chart solar design method or other documentation as
specified by Tax Commission regulations and must include the
maximum practical yearly amount of energy produced based upon
millions of British thermal units as certified by the Solar Rating and
Certification Corporation or the Florida Solar Energy Center. The
certification of performance must include the maximum amount of tax
credit permitted for the active solar system based upon millions of
BTU's produced on a yearly basis. Further, the certification of
performance must include a Cost/Performance Ratio (CPR) of the
system along with the required payback time based upon the reported,
installed price of the system. The required payback time must be based
upon a life-cycle cost analysis showing the number of years before the
investment will pay for itself in saved energy costs.
(C) Upon certification by the Division of Energy, Agriculture and
Natural Resources, a person offering to sell a renewable energy resource
system shall, before selling the system to any person, give the person a
copy of the certification of performance, a copy of which must be
included with that person's claim for the tax credit filed with the Tax
Commission. Upon certification by the division, a copy of the
certification of performance must be supplied to the Tax Commission by
the division for inclusion in the commission's records.
(D) The Division of Energy, Agriculture and Natural Resources
shall inspect each year a representative number of selected renewable
energy resource systems which have been certified and installed for
purposes of claiming the income tax credit to insure compliance with the
standards established under this act.
(E) Each year by October first the Tax Commission shall provide
the Joint Legislative Committee on Energy, the House Ways and Means
Committee, and the Senate Finance Committee a report containing
information on the number and types of different qualifying renewable
energy source systems claiming the tax credit during the preceding
calendar year along with the total dollar amount of credits claimed for
each type system, with the dollar tax credit amounts carried over to the
next five succeeding taxable years as allowed under this act.
SECTION 4. Installation contractors shall provide the customers
purchasing solar systems a minimum one-year transferable parts and
labor warranty on the entire solar system, its installation, and operation.
This warranty does not become effective before the day the system is
completed and operational and accepted in writing by the purchaser.
SECTION 5. (A) The Tax Commission shall establish procedures, by
the promulgation of regulations in accordance with Article 1, Chapter
23, Title 1 of the 1976 Code, for the administration of the provisions of
this act.
(B) The regulations promulgated by the Tax Commission must
establish performance standards and qualifications for renewable energy
resource systems installed within this State for which a tax credit is
claimed. The performance standards must be established to:
(1) produce the maximum practical amount of energy;
(2) conform, where feasible, with national performance
standards promulgated or recognized by the federal government, the
Florida Solar Energy Center, or the Tennessee Valley Authority (TVA)
for renewable energy resource systems.
(C) The solar systems collectors must have been tested and
approved by an independent test facility according to procedures in
ASHRAE 93-77 and must comply with the "Test Methods and
Minimum Standards for Solar Collectors" as published by the
Interstate Solar Coordination Council (ISCC Document 80-1). In
addition, the solar systems collectors must be tested or evaluated to
withstand wind loads of fifty-five psf at a minimum.
(D) The cost performance ratio (CPR) of the installed system must
not exceed 4.9 based upon a percentage of twenty-five percent (twenty-five percent state tax credit). The CPR must be determined by the
following formula:
"Seventy-five percent times the manufacturer's (contractor's)
suggested installed price equals cents per kwh divided by twenty
years times the manufacturer's estimated kwh saved per year."
(In general, the lower the CPR, the more cost-effective the solar
system will be.)
(E) All solar systems, components, and installations must conform
to applicable state and local codes and nationally recognized standards.
The installation contractors must be licensed general contractors within
South Carolina and shall have received training and certification on the
installation of the systems from the manufacturers of the systems they
install.
SECTION 6. A taxpayer may claim as an income tax credit all qualified
renewable energy source expenditures made during a taxable year to the
amount authorized in Section 1. If the amount of the tax credit exceeds
the taxpayer's tax liability for that taxable year, the amount which
exceeds the tax liability may be carried over for credit against income
taxes in the next five succeeding taxable years until the total amount of
the tax credit has been taken.
SECTION 7. A person who intentionally files fraudulent information
with the Division of Energy, Agriculture and Natural Resources for
purposes of obtaining the certification of performance of a renewable
energy resource system as meeting the requirements of this act or the
regulations promulgated by the Tax Commission under this act is guilty
of a misdemeanor and, upon conviction, must be punished by a fine of
not less than five hundred dollars but not more than one thousand five
hundred dollars or by imprisonment of not less than sixty days but not
more than one hundred eighty days, or both fine and imprisonment.
SECTION 8. This act takes effect upon approval by the Governor and
is effective for tax years beginning after December 31, 1991.
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