Renewable Energy Technology Incentives in Kentucky | The Renewable Energy Hub USA

Renewable Energy Technology Incentives in Kentucky


Like many states, Kentucky has depended on fossil fuels far too much in the past, particularly coal, but it has made some progress towards a cleaner energy mix in recent times. A range of state and federal tax incentives have improved matters but there is still some considerable way to go. By 2014 Kentucky still had over 90% of its electricity needs met by coal alone, something that needs to be addressed in the near future.

A meagre 0.5 MW of solar capacity was installed in 2014, two thirds of which was residential. The combined total has risen to 8.5 MW in recent times, enough to power around 800 homes. The biggest solar farm is Bowling Green Farm which has a 2 MW capacity though some of Kentucky’s more illustrious businesses, including General Motors, have gone solar in the last few years. The industry is still small in the state, however, despite recent incentives, and there are fewer than 50 solar companies employing under 1,000 people.

While Kentucky has the capacity to develop a strong solar PV industry, low wind speeds in the region mean that erecting wind turbines is not a good idea. Despite this, there have been attempts to build some wind farms although these projects have all met with strong local objections and failure. The state does have a number of hydroelectric dams but they only provide a small proportion of the energy mix. Biomass could be an option and there have been attempts to build energy producing plants in recent years and there are plans to create a strong biomass industry.

Solar PV Incentives in Kentucky

A number of renewable technology incentives have been introduced to help Kentuckians install solar PV at a lower cost. There is, of course, the Federal Tax Rebate which helps residential and commercial projects. Much of the incentivizing is aimed at commercial concerns, however. For businesses installing a system over 50 kW there are incentives that reduce tax liability through the Incentives for Energy Independence scheme and there is also help via the Renewable Energy Tax Credit that knocks about 30% off the cost of a commercial project.

Solar PV Case Study in Kentucky

While there are more incentives for installing solar PV for commercial premises, there is still a decent return on investment to be made for residential properties. You cannot get solar through leasing as in some other states and the only option is to cash purchase, either through savings or through a loan. The cost of 5 kW array would be $21,250 which is reduce by the 30% Federal Tax Rebate and with savings on electricity bills you should expect to have your costs covered by year 17, a little later than in many other states. Even with this delay, you should expect to profit by over $10,000 for the 25-year average lifetime of an array.

Solar Thermal Incentives in Kentucky

Solar thermal in Kentucky gets the same incentives as solar PV but is not a highly popular way for providing hot water and heating in a home. There are issues concerning the concentrated heat of the sun in this region that makes it less viable. Most households, if they are turning to an alternative energy in Kentucky are opting for solar PV, as it’s seen as the cheaper alternative.

Small Hydro Incentives in Kentucky

There are a few hydroelectric plants in Kentucky but they provide only a small part of the total energy mix for the state. Micro hydropower benefits from the Federal Tax Rebate but much of the incentives again are aimed at business concerns.

Geothermal Incentives in Kentucky

There are numerous incentives for installations such as ground source heat pumps including the Inter-County Energy Efficiency Program that can provide between $500 and $1000 to offset initial costs. Many of the utility companies also supply their own schemes such as the Clark Energy Residential Energy Efficiency Rebate Program aimed at private homes.

Biomass Incentives in Kentucky

Biomass could be big in the future in Kentucky but the industry has got off to a fairly muted start. There are schemes such as the Incentives for Energy Independence that promote bigger projects for energy production. These projects have often been set back following objections at governmental level but there is a will to make this more a part of the state’s energy mix in the future.

Wind Power Incentives in Kentucky

Incentives for wind power in Kentucky are restricted to those provided by the Federal Government and there is no big push to build turbines in the countryside any time in the future. Many counties have actually passed legislation making it difficult to raise turbines and the low wind in the state will continue to be a determining factor.

With such a small part of its energy mix coming from renewables, Kentucky still has a long way to go before it can wean itself off a dependence on coal. While incentives do exist, there needs to be a major change in public and state perception before any more advances are made. In the meantime, solar PV remains a good bet for a long term investment and lower electricity bills.

You can find out about Kentucky’s renewable technology incentives on the DSIRE website.

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