Energy Division

A Division of the Kansas Corporation Commission, funded through the federal State Energy Program (SEP).

Other Programs and Incentives

Listed below are other state and federal incentives and programs that are available to Kansas homeowners/individuals and businesses to encourage investments in energy efficiency and alternative energy.

Incentives for Homeowners/Individuals

U.S. Department of Agriculture Rural Development's Direct Housing Loans

Contact: USDA Rural Development, Kansas Office, 785-271-2700.
This program provides low interest loans to rural homeowners for critical home improvements, which can include energy efficiency improvements such as weatherization, insulation, and new heating systems. Financing is usually limited to loans with 1% interest rates. Note: The “guaranteed” part of this program provides reduced interest rates for financing of new homes built to an approved energy-efficiency standard.

Federal Tax Credits for Consumer Energy Efficiency

Contact: Call 1-800-829-1040 or contact your local Internal Revenue Service office.
For 2012, tax credits are available for geothermal heat pumps, small wind turbines, solar energy systems (solar water heaters and photovoltaic systems), and fuel cells in existing homes and new construction. See Energy Star website for more details.

Alternative-Fuel Tax Credit

Contact: Kansas Department of Revenue [tac@kdor.state.ks.us], 785-368-8222.
Individuals purchasing qualified alternative-fueled vehicles after January 1, 1996, are eligible for state income tax credits, the amount of which differs depending on the weight of the vehicle and whether the vehicle was purchased before January 1, 2005. For vehicles purchased before July 1, 2007, a wide variety of alternative-fueled vehicles are eligible, but for vehicles purchased on or after July 1, 2007, only vehicles that run on biomass-derived fuels are eligible.

Incentives for Businesses

Commercial Buildings Tax Incentives

Contact: 1-800-829-4933 or contact your local Internal Revenue Service office
Businesses that reduce energy consumption associated with heating and cooling commercial buildings are eligible for a federal income tax deduction of up to $1.80 per square foot, provided the energy usage is 50% less than a building that meets ASHRAE Standard 90.1-2001. A partial tax deduction can be taken for measures improving building envelope, lighting, or heating and cooling systems. This deduction is available until December 31, 2013.

Federal Tax Credits for Energy Efficiency in New Residential Construction

Call 1-800-829-1040 or contact your local Internal Revenue Service Office.
For 2012, tax credits are available for geothermal heat pumps, small wind turbines, solar energy systems (solar water heaters and photovoltaic systems), and fuel cells in existing homes and new construction.See Energy Star website for more details.

Rural Energy for America Program Grant (REAP Grants)

Contact: USDA Rural Development, Kansas Office, 785-271-2736
This program, administered by USDA Rural Development, provides grants for small businesses in rural areas to perform energy audits, make energy efficiency improvements, and install renewable energy systems. These funds are awarded on a competitive basis, based on financial need and technical feasibility.

Rural Energy for America Program Guaranteed Loan Program (REAP Loans)

Contact: USDA Rural Development’s Kansas Office, 785-271-2736
This program, administered by USDA Rural Development, provides loan guarantees for rural small businesses for financing renewable energy and energy efficiency projects. USDA Rural Development guarantees up to 85% of a loan from qualified local lender, which may result in lower interest rates or allow businesses to receive financing when they otherwise might not qualify.

Facility Conservation and Improvement Program (FCIP)

Contact: Terry Steuber [], Kansas Energy Division, 785-271-3170
This state program enables public agencies (state, municipalities, counties, and schools) to use energy-savings performance contracting to access financing for energy efficiency and conservation projects and streamlines procurement. Tax-exempt financing with a low interest rate makes projects more economical and reduces the pay-back period. Click here for more information on FCIP.

Idle Reduction Equipment Excise Tax Exemption

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that invest in qualified on-board idle-reduction devices and systems in heavy-duty trucks are exempt from the federal excise tax imposed on the retail sale of heavy-duty trucks and trailers. This tax exemption only applies to equipment sold after October 3, 2008.

Economic Revitalization and Reinvestment Act - Wind and Solar Bond Financing

Contact: Randi Tveitaraas Jack [], Kansas Department of Commerce, 785-296-7868.
This program allows for up to $5 million in bond financing per project for eligible wind and solar energy manufacturers. The bonds are paid off from the payroll withholding tax of the new jobs. To qualify, a project must create at least 200 new jobs within five years, pay at least a $32,500 average salary and generate a minimum capital investment of $30 million.

Advanced Technology Vehicle Manufacturing Loan Program

Contact: The U.S. Department of Energy, 1-800-342-5363
The Advanced Technology Vehicle Manufacturing Loan Program (ATVM), administered by the Department of Energy, provides loans to manufacturers of automobiles and automobile parts to help cover the costs of re-equipping, expanding, and establishing manufacturing facilities that manufacture advanced technology vehicles.

Alternative-Fuel Tax Credit

Contact: Kansas Department of Revenue, 785-368-8222
Businesses that purchase qualified alternative-fueled vehicles after January 1, 1996, are eligible for state income tax credits, the amount of which depends on vehicle weight and whether the vehicle was purchased before January 1, 2005. For vehicles purchased before July 1, 2007, a wide variety of alternative-fueled vehicles are eligible, but for vehicles purchased on or after July 1, 2007, only vehicles that run on biomass-derived fuels are eligible.

Business Energy Investment Tax Credit (ITC)

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
This tax credit was expanded significantly by the Energy Improvement and Extension Act of 2008, and further expanded by the American Recovery and Reinvestment Act of 2009. In general, credits are available for eligible systems—including small wind turbines, solar, fuel cells, geothermal, microturbines, and combined heat and power (CHP)—placed in service on or before December 31, 2016. The amount of the credit is 30% of the system cost for solar, fuel cells, and small wind, and 10% of the system cost for geothermal, microturbines, and CHP. This tax credit cannot be claimed in combination with the Production Tax Credit (PTC).

Renewable Electricity Production Tax Credit (PTC)

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
Businesses that produce electricity derived from wind, biomass, geothermal, landfill gas, municipal solid waste, marine and hydrokinetic, and qualified hydroelectric sources are eligible to receive a per-kWh Production Tax Credit (PTC). The amount of the credit is adjusted for inflation annually. In 2009, the credits are 2.1¢ per kWh for wind, closed-loop biomass, and geothermal-derived electricity, and 1.0¢ for all other covered electrical production. The PTC for wind is scheduled to expire on December 31, 2012, and the other PTC’s are scheduled to expire on December 31, 2013. This tax credit can not be claimed in combination with the Investment Tax Credit (ITC).

Federal Tax Credits for Business Energy Efficiency - 2012

Call 1-800-829-1040 or contact your local Internal Revenue Service Office.
For 2012, tax credits are available for geothermal heat pumps, small wind turbines, solar energy systems (solar water heaters and photovoltaic systems), and fuel cells in existing homes and new construction. See Energy Star website for more details.

Rural Energy for America Program Rural Energy for America Program Grants/Renewable Energy Systems/Energy Efficiency Improvement Program (REAP/RES/EEI)

Contact: USDA Rural Development, Kansas Office, 785-271-2736
This program, administered by USDA Rural Development, provides grants to agricultural producers and rural small businesses to perform energy audits, make energy efficiency improvements, and install renewable energy systems. These funds are awarded on a competitive basis, and are limited to a maximum of 25% of eligible project costs.

Rural Energy for America Program Guaranteed Loan Program (REAP Loans)

Contact: USDA Rural Development, Kansas Office, 785-271-2736
This program, administered by USDA Rural Development, provides loan guarantees to rural small businesses for financing renewable energy and energy efficiency projects. USDA Rural Development guarantees up to 85% of a loan from qualified local lender, which may result in lower interest rates or allow businesses to receive financing when they otherwise might not qualify. Loans guaranteed by this program must be for no more than 50% of qualified project costs.

Renewable Energy Property Tax Exemption

Contact: Kansas Department of Revenue, Property Valuation Division, 785-296-2365, or contact your local county appraiser
Property used by businesses to generate electricity from renewable sources in Kansas—large-scale and small-scale projects—are exempt from state property taxes, beginning January 1, 1999. Property used for the transportation and treatment of landfill gas are also exempt from state property taxes beginning January 1, 2002.

Cellulosic Biofuel Producer Tax Credit

Contact: U.S. Internal Revenue Service (IRS), Excise Tax Branch, 202-622-3130, or contact your local IRS office
Businesses that produce cellulosic biofuels from January 1, 2009, to December 31, 2012, may be eligible to receive a per-gallon Production Tax Credit (PTC) of $1.01 per gallon produced. For more information, see IRS Publication 510 and IRS Forms 637 and 6478, which are available via the IRS web site.

Allowances for Cellulosic Biofuels Property

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
For cellulosic biofuel facilities placed in service before January 1, 2013, the taxpayer can immediately write off 50% of the cost of the facility. Previously, this tax credit was limited to cellulosic ethanol, but it has been expanded to include all cellulosic biofuels.

Bioenergy Program for Advanced Biofuels

Contact: USDA Rural Development, Business Programs, Energy Branch, 202-720-1400
This federal program, authorized by Section 9005 of the 2008 Farm Bill, provides funding to eligible agricultural producers to support and ensure an expanding production of advanced biofuels.

Biorefinery Assistance Program

Contact: USDA Rural Development, Business Programs, Energy Branch, 202-720-1400
This federal program, operated by the Department of Agriculture (USDA), provides private loan guarantees for the development, construction, and retrofitting of commercial-scale biorefineries, as well as grants to help pay for the development and construction costs of demonstration-scale biorefineries. Funds provided by this program are awarded on a competitive basis.

Repowering Assistance

Contact: USDA Rural Development, Business Programs, Energy Branch, 202-720-1400
This federal program, authorized by Section 9004 of the 2008 Farm Bill, provides funding for existing biorefineries (including ethanol and biodiesel plants) to use renewable biomass to replace fossil fuels used to produce heat or power.

Biomass Crop Assistance Program

Contact: Kansas State USDA Farm Service Agency (FSA) office, 785-539-3531, or your local FSA county office.
This federal program, operated by the USDA Farm Service Agency, provides financial support to establish, produce, and transport crops for the purpose of conversion to bioenergy. Click here for PDF summary.

Ethyl Alcohol Production Incentive

Contact: Kansas Department of Revenue, 785-296-5327
Businesses that produce at least 5 million gallons of ethyl alcohol annually are eligible to receive a $0.075 payment for each gallon sold. This state incentive expires July 1, 2011.

Biodiesel Fuel Producer Incentive

Contact: Kansas Department of Revenue, 785-296-5327
Producers of biodiesel fuels are eligible to receive a $0.30 payment per gallon sold. This state program expires July 1, 2016.

Alternative-Fuel Fueling Station Tax Credit

Contact: Kansas Department of Revenue, 785-296-3070
Qualified alternative-fuel fueling stations placed in service on or after January 1, 2005, are eligible for a state income tax credit. This tax credit is equal to 40% of the cost of the fueling station; for qualified fueling stations installed before January 1, 2009, the maximum amount that can be claimed through this tax credit is $160,000; for those installed after January 1, 2009, this amount is reduced to $100,000.

Storage and Blending Equipment Tax Credit

Contact: Tricia Kensinger-Rice [], Kansas Department of Commerce, 785-296-6080
Businesses that install any equipment used to store or blend biofuels with petroleum-based fuels from December 31, 2006, to January 1, 2012, are eligible for a state income tax credit. This tax credit is equal to 10% of the taxpayer’s qualified investment for the first $10 million invested, and 5% of qualified investments thereafter.

Certified Development Company Economic Development Loan Program

Contact: U.S. Small Business Administration, , 1-800-827-5722, for a listing of private-sector lenders in your area.
Also know as SBA 504 loans, these loans are administered by private-sector nonprofit organizations to allow small business owners to buy, build, or renovate commercial real estate. These loans can be used to purchase energy efficient machinery and equipment, or to conduct other energy efficiency renovations. Interest rates and terms of such loans are subject to market conditions.

U.S. Department of Energy Guaranteed Loan Program

Contact: U.S. Department of Energy, Loan Guarantee Program Office, 202-586-8336
This program provides loan guarantees to eligible commercial projects that utilize advanced renewable energy technologies. These loans are awarded on a competitive basis. Under the American Recovery and Reinvestment Act of 2009, $6 billion of loan guarantees will target renewable-energy power generation and transmission projects.

Business and Industry Guaranteed Loan (B&I) Program

Contact: USDA Rural Development, Kansas Office, 785-271-2736
For businesses looking to invest in programs that create jobs and stimulate rural economics, the Rural Development division of the Department of Agriculture (USDA) will guarantee up to 80% of a loan made by a commercial lender. This program is limited to investments that create jobs in rural areas and cities with populations under 50,000.

Intermediary Relending Program (IRP)

Contact: USDA Rural Development, Kansas Office, 785-271-2736
USDA Rural Development, through intermediaries, provides loans for businesses that are developing business facilities or community development projects. These funds are only available for use in rural areas, including cities with a population of less than 25,000.

Rural Business Enterprise Grant (RBEG) Program

Contact: USDA Rural Development, Kansas Office, 785-271-2736
USDA Rural Development—through public entities, nonprofit corporations, and federally recognized Indian tribal groups—provides financing to facilitate development of small and emerging private businesses. These funds are only available for use outside of cities with more than 50,000 people.

Waste Heat Utilization System Tax Credit

Contact: Kansas Department of Revenue, 785-296-3070
Systems designed to capture waste heat generated in the process of generating electricity and to use this heat to generate additional electricity or to produce renewable fuels are exempt from state property taxes for 10 years following the installation of such equipment. In addition, after December 31, 2006, businesses may amortize the cost of the waste heat system for deductions on their state income tax.

High Performance Incentive Program (HPIP)

Contact: Ed Bryan [], Kansas Department of Commerce, 785-296-7174
Companies that pay above-average wages and meet investment requirements for developing the skills of their workers are eligible to receive an investment tax credit equal to 10% of eligible investments that exceed $50,000. This investment tax credit cannot be taken in conjunction with the investment tax credit offer through the Enterprise Zone Incentives program.

Investment Tax Credits for Microturbines and Fuel Cells

Contact: 1-800-829-4933 or your local Internal Revenue Service office.
For microturbines, the credit is equal to 10 percent of expenditures, with no maximum credit limit stated (explicitly). The credit for microturbines is capped at $200 per kW of capacity. Eligible property includes microturbines up to two megawatts (MW) that have an electricity-only generation efficiency of 26 percent or higher. For fuel cells, the credit is equal to 30 percent of expenditures, with no maximum credit. However, the credit for fuel cells is capped at $1,500 per 0.5 kilowatt (kW) of capacity. Eligible property includes fuel cells with a minimum capacity of 0.5 kW that have an electricity-only generation efficiency of 30 percent or higher. (The credit for property placed in service before October 4, 2008, is capped at $500 per 0.5 kW.)

Combined Heat and Power Investment Tax Credit

Contact: U.S. Internal Revenue Service (IRS), 1-800-829-4933, or local IRS office
The credit is equal to 10% of expenditures, with no maximum limit stated. Eligible CHP property generally includes systems up to 50 MW in capacity that exceed 60% energy efficiency, subject to certain limitations and reductions for large systems. The efficiency requirement does not apply to CHP systems that use biomass for at least 90% of the system's energy source, but the credit may be reduced for less-efficient systems. This credit applies to eligible property placed in service after October 3, 2008.

Carbon Dioxide Capture/Sequestration Tax Deduction

Contact: Kansas Department of Revenue, 785-296-3070
Businesses are allowed to deduct from state income taxes the amortized costs of machinery and equipment used to capture and sequester carbon dioxide. The amortization deduction is equal to 55% of the costs of such machinery and equipment for the first taxable year, and 5% in subsequent years.