Oregon and South Dakota Approve Renewable Energy Tax Incentives

March 19, 2008

Oregon and South Dakota are the latest states to encourage renewable energy development in their state through tax incentives. Oregon Governor Ted Kulongoski approved a bill on March 11 that allows tax credits of up to $40 million for manufacturers of renewable energy equipment. The bill is clearly aimed at drawing economically beneficial facilities to the state, as it includes measures to reduce the tax credit if the credit is unlikely to draw a new or expanded business to the state, if the new facility is unlikely to provide a significant number of new jobs, or if the facility or the company building it appear unlikely to succeed. See the governor's announcement of the bill signing (PDF 25 KB) and the full text of the bill, House Bill 3619 (PDF 49 KB). Download Adobe Reader.

While the Oregon act intends to encourage new manufacturing facilities within the state, the new South Dakota act provides tax incentives for wind energy facilities and the transmission lines that serve them. House Bill 1320, approved by Governor Mike Rounds on March 14, waives all state and local property taxes for wind energy facilities with a capacity of at least 5 megawatts. Instead, the owners of the facilities have to pay a tax of $3 per kilowatt of capacity plus 2% of the gross receipts of the wind facility. The wind facility developers can also earn rebates for up to half the cost of underground distribution lines, substations, and transmission lines built to support the wind power facility. The rebates can equal 90% of the taxes paid for the first 5 years and 50% of the taxes paid for the following 5 years. The remaining tax proceeds will be divided among the state and the county and local governments where the wind facility is located. See the governor's announcement of the bill signing and the full text of the bill, House Bill 1320.