2023 Arizona Revised Statutes › Title 43 - Taxation of Income › § 43-1083.02 - Renewable energy production tax credit; definitions

43-1083.02.
Renewable energy production tax credit;  definitions
A. A credit is allowed against the taxes imposed by this title for the production of electricity using renewable energy resources.
B. The taxpayer is eligible for the credit:
1. If the taxpayer holds title to a qualified energy generator that first produces electricity from and after December 31,  2010 and before January 1,  2021.
2. For ten consecutive calendar years beginning with the calendar year in which the qualified energy generator begins producing electricity that is transmitted through a transmission facility to a grid connection with a public or private electric transmission or distribution utility system. That same date applies with respect to that generator until the expiration of the ten-year period regardless of whether the generator is sold to another taxpayer or goes out of production before the expiration of the ten-year period.
C. The credit authorized by this section is based on the electricity that is generated by a qualified energy generator during a calendar year. For a taxpayer that files on a fiscal year basis,  the credit shall be claimed on the return for the taxable year in which the calendar year ends.
D. Subject to subsection G of this section,  the amount of the credit is:
1. One cent per kilowatt-hour of the first two hundred thousand megawatt-hours of electricity produced by a qualified energy generator in the calendar year using a wind or biomass derived qualified energy resource.
2. The following amounts for electricity produced by a qualified energy generator using a solar light derived or solar heat derived qualified energy resource:
(a) Four cents per kilowatt-hour in the first calendar year in which the qualified energy generator produces electricity.
(b) Four cents per kilowatt-hour in the second calendar year in which the qualified energy generator produces electricity.
(c) Three and one-half cents per kilowatt-hour in the third calendar year in which the qualified energy generator produces electricity.
(d) Three and one-half cents per kilowatt-hour in the fourth calendar year in which the qualified energy generator produces electricity.
(e) Three cents per kilowatt-hour in the fifth calendar year in which the qualified energy generator produces electricity.
(f) Three cents per kilowatt-hour in the sixth calendar year in which the qualified energy generator produces electricity.
(g) Two cents per kilowatt-hour in the seventh calendar year in which the qualified energy generator produces electricity.
(h) Two cents per kilowatt-hour in the eighth calendar year in which the qualified energy generator produces electricity.
(i) One and one-half cents per kilowatt-hour in the ninth calendar year in which the qualified energy generator produces electricity.
(j) One cent per kilowatt-hour in the tenth calendar year in which the qualified energy generator produces electricity.
E. To qualify for the purposes of this section,  an energy generator may be located within one mile of an existing qualified energy generator only if the owner of the energy generator or the owner's corporate affiliates are not the owner of or the corporate affiliate of the owner of the existing qualified energy generator.
F. To be eligible for the credit under this section,  the taxpayer must apply to the department,  on a form prescribed by the department,  for certification of the credit. The department shall only accept applications beginning January 2 through January 31 of the year following the calendar year for which the credit is being requested. The application shall include:
1. The name,  address and social security number or federal employer identification number of the applicant.
2. The location of the taxpayer's facility that produces electricity using renewable energy resources for which the credit is claimed.
3. The amount of the credit that is claimed.
4. The date the qualified energy generator began producing commercially marketable amounts of electricity.
5. Any additional information that the department requires.
G. The department shall review each application under subsection F of this section and certify to the taxpayer the amount of the credit that is authorized. The amount of the credit for any calendar year shall not exceed two million dollars per facility that produces electricity using renewable energy resources. Credits are allowed under this section and section 43-1164.03 on a first come,  first served basis. The department shall not authorize tax credits under this section and section 43-1164.03 that exceed in the aggregate a total of twenty million dollars for any calendar year. The first time that a taxpayer submits a qualified application for a qualified energy generator under subsection F of this section,  the department shall add the taxpayer's name to a credit authorization list that is maintained in the order in which qualified applications are first received by the department on behalf of the qualified energy generator. A taxpayer's position on the credit authorization list shall be determined in the first year the taxpayer submits an application under subsection F of this section for the qualified energy generator. The taxpayer's position on the credit authorization list for a particular qualified energy generator shall remain unchanged for the ten years that are specified in subsection B,  paragraph 2 of this section or until a year in which the taxpayer fails to submit a timely application under subsection F of this section or otherwise fails to comply with this section. If a taxpayer is removed from the credit authorization list for a qualified energy generator,  the taxpayer may establish a new position on the credit authorization list in a subsequent year by filing a timely application for a qualified energy generator that qualifies for the credit. If an application is received that,  if authorized,  would require the department to exceed the twenty million dollar limit,  the department shall grant the applicant only the remaining credit amount that would not exceed the twenty million dollar limit. After the department authorizes twenty million dollars in tax credits,  the department shall deny any subsequent applications that are received for that calendar year. The department shall not authorize any additional tax credits that exceed the twenty million dollar limit even if the amounts that have been certified to any taxpayer were not claimed or a taxpayer otherwise fails to meet the requirements to claim the additional credit.
H. Co-owners of a qualified energy generator,  including partners in a partnership,  members of a limited liability company and shareholders of an S corporation as defined in section 1361 of the internal revenue code,  may each claim the pro rata share of the credit allowed under this section based on ownership interest. The total of the credits allowed all such owners of the qualified energy generator may not exceed the amount that would have been allowed for a sole owner of the generator.
I. If the allowable tax credit for a taxpayer exceeds the taxes otherwise due under this title on the claimant's income,  or if there are no taxes due under this title,  the amount of the claim not used to offset taxes under this title may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' income tax liability.
J. The department shall adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purposes of this section.
K. For the purposes of this section:
1. " Biomass"  means organic material that is available on a renewable or recurring basis,  including:
(a) Forest-related materials,  including mill residues,  logging residues,  forest thinnings,  slash,  brush,  low-commercial value materials or undesirable species,  salt cedar and other phreatophyte or woody vegetation removed from river basins or watersheds and woody material harvested for the purpose of forest fire fuel reduction or forest health and watershed improvement.
(b) Agricultural-related materials,  including orchard trees,  vineyard,  grain or crop residues,  including straws and stover,  aquatic plants and agricultural processed coproducts and waste products,  including fats,  oils,  greases,  whey and lactose.
(c) Animal waste,  including manure and slaughterhouse and other processing waste.
(d) Solid woody waste materials,  including landscape or right-of-way tree trimmings,  rangeland maintenance residues,  waste pallets,  crates and manufacturing,  construction and demolition wood wastes,  excluding pressure-treated,  chemically-treated or painted wood wastes and wood contaminated with plastic.
(e) Crops and trees planted for the purpose of being used to produce energy.
(f) Landfill gas,  wastewater treatment gas and biosolids,  including organic waste byproducts generated during the wastewater treatment process.
2. " Qualified energy generator"  means a facility that has at least five megawatts generating capacity,  that is located on land in this state owned or leased by the taxpayer,  that produces electricity using a qualified energy resource and that sells that electricity to an unrelated entity,  unless the electricity is sold to a public service corporation.
3. " Qualified energy resource"  means a resource that generates electricity through the use of only the following energy sources:
(a) Solar light.
(b) Solar heat.
(c) Wind.
(d) Biomass.