Representative Douglas V. Sagers proposes the following substitute bill:


1     
TAX CREDIT AMENDMENTS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Douglas V. Sagers

5     
Senate Sponsor: Ralph Okerlund

6     

7     LONG TITLE
8     General Description:
9          This bill creates tax credit provisions related to hydrogen.
10     Highlighted Provisions:
11          This bill:
12          ▸     creates a nonrefundable gross receipts tax credit for certain commercial energy
13     systems that use hydrogen electrolysis systems;
14          ▸     provides a process for obtaining a written certification to claim the gross receipts
15     tax credit;
16          ▸     provides rulemaking authority to the Office of Energy Development and the State
17     Tax Commission to administer the written certification process to claim the gross
18     receipts tax credit;
19          ▸     creates nonrefundable corporate and individual income tax credits for certain
20     commercial energy systems that use hydrogen electrolysis energy systems;
21          ▸     provides a process for a lessee or assignee assigned a renewable energy systems
22     income tax credit to obtain a written certification;
23          ▸     defines "infrastructure" to include hydrogen fuel production or distribution projects
24     for purposes of qualifying for a high cost infrastructure development tax credit; and
25          ▸     makes technical and conforming changes.
26     Money Appropriated in this Bill:
27          None
28     Other Special Clauses:
29          This bill provides retrospective operation.
30          This bill provides a special effective date.
31     Utah Code Sections Affected:
32     AMENDS:
33          59-7-614, as last amended by Laws of Utah 2019, Chapter 247
34          59-10-1014, as last amended by Laws of Utah 2019, Chapter 247
35          63M-4-602, as last amended by Laws of Utah 2019, Chapter 501
36     ENACTS:
37          59-8-301, Utah Code Annotated 1953
38     

39     Be it enacted by the Legislature of the state of Utah:
40          Section 1. Section 59-7-614 is amended to read:
41          59-7-614. Renewable energy systems tax credits -- Definitions -- Certification --
42     Rulemaking authority.
43          (1) As used in this section:
44          (a) (i) "Active solar system" means a system of equipment that is capable of:
45          (A) collecting and converting incident solar radiation into thermal, mechanical, or
46     electrical energy; and
47          (B) transferring a form of energy described in Subsection (1)(a)(i)(A) by a separate
48     apparatus to storage or to the point of use.
49          (ii) "Active solar system" includes water heating, space heating or cooling, and
50     electrical or mechanical energy generation.
51          (b) "Biomass system" means a system of apparatus and equipment for use in:
52          (i) converting material into biomass energy, as defined in Section 59-12-102; and
53          (ii) transporting the biomass energy by separate apparatus to the point of use or storage.
54          (c) "Commercial energy system" means a system that is:
55          (i) (A) an active solar system;
56          (B) a biomass system;
57          (C) a direct use geothermal system;
58          (D) a geothermal electricity system;
59          (E) a geothermal heat pump system;
60          (F) a hydroenergy system;
61          (G) a hydrogen electrolysis system;
62          [(G)] (H) a passive solar system; or
63          [(H)] (I) a wind system;
64          (ii) located in the state; and
65          (iii) used:
66          (A) to supply energy to a commercial unit; or
67          (B) as a commercial enterprise.
68          (d) "Commercial enterprise" means an entity, the purpose of which is to produce
69     electrical, mechanical, or thermal energy for sale from a commercial energy system.
70          (e) (i) "Commercial unit" means a building or structure that an entity uses to transact
71     business.
72          (ii) Notwithstanding Subsection (1)(e)(i):
73          (A) with respect to an active solar system used for agricultural water pumping or a
74     wind system, each individual energy generating device is considered to be a commercial unit;
75     or
76          (B) if an energy system is the building or structure that an entity uses to transact
77     business, a commercial unit is the complete energy system itself.
78          (f) "Direct use geothermal system" means a system of apparatus and equipment that
79     enables the direct use of geothermal energy to meet energy needs, including heating a building,
80     an industrial process, and aquaculture.
81          (g) "Geothermal electricity" means energy that is:
82          (i) contained in heat that continuously flows outward from the earth; and
83          (ii) used as a sole source of energy to produce electricity.
84          (h) "Geothermal energy" means energy generated by heat that is contained in the earth.
85          (i) "Geothermal heat pump system" means a system of apparatus and equipment that:
86          (i) enables the use of thermal properties contained in the earth at temperatures well
87     below 100 degrees Fahrenheit; and
88          (ii) helps meet heating and cooling needs of a structure.
89          (j) "Hydroenergy system" means a system of apparatus and equipment that is capable
90     of:
91          (i) intercepting and converting kinetic water energy into electrical or mechanical
92     energy; and
93          (ii) transferring this form of energy by separate apparatus to the point of use or storage.
94          (k) "Hydrogen electrolysis system" means a system of apparatus and equipment that:
95          (i) is separate or in conjunction with a renewable energy source; and
96          (ii) uses electricity from a renewable energy source to create hydrogen gas from water.
97          [(k)] (l) "Office" means the Office of Energy Development created in Section
98     63M-4-401.
99          [(l)] (m) (i) "Passive solar system" means a direct thermal system that utilizes the
100     structure of a building and its operable components to provide for collection, storage, and
101     distribution of heating or cooling during the appropriate times of the year by utilizing the
102     climate resources available at the site.
103          (ii) "Passive solar system" includes those portions and components of a building that
104     are expressly designed and required for the collection, storage, and distribution of solar energy.
105          [(m)] (n) "Photovoltaic system" means an active solar system that generates electricity
106     from sunlight.
107          [(n)] (o) (i) "Principal recovery portion" means the portion of a lease payment that
108     constitutes the cost a person incurs in acquiring a commercial energy system.
109          (ii) "Principal recovery portion" does not include:
110          (A) an interest charge; or
111          (B) a maintenance expense.
112          (p) "Renewable energy source" means the same as that term is defined in Section
113     54-17-601.
114          [(o)] (q) "Residential energy system" means the following used to supply energy to or
115     for a residential unit:
116          (i) an active solar system;
117          (ii) a biomass system;
118          (iii) a direct use geothermal system;
119          (iv) a geothermal heat pump system;
120          (v) a hydroenergy system;
121          (vi) a passive solar system; or
122          (vii) a wind system.
123          [(p)] (r) (i) "Residential unit" means a house, condominium, apartment, or similar
124     dwelling unit that:
125          (A) is located in the state; and
126          (B) serves as a dwelling for a person, group of persons, or a family.
127          (ii) "Residential unit" does not include property subject to a fee under:
128          (A) Section 59-2-405;
129          (B) Section 59-2-405.1;
130          (C) Section 59-2-405.2;
131          (D) Section 59-2-405.3; or
132          (E) Section 72-10-110.5.
133          [(q)] (s) "Wind system" means a system of apparatus and equipment that is capable of:
134          (i) intercepting and converting wind energy into mechanical or electrical energy; and
135          (ii) transferring these forms of energy by a separate apparatus to the point of use, sale,
136     or storage.
137          (2) A taxpayer may claim an energy system tax credit as provided in this section
138     against a tax due under this chapter for a taxable year.
139          (3) (a) Subject to the other provisions of this Subsection (3), a taxpayer may claim a
140     nonrefundable tax credit under this Subsection (3) with respect to a residential unit the taxpayer
141     owns or uses if:
142          (i) the taxpayer:
143          (A) purchases and completes a residential energy system to supply all or part of the
144     energy required for the residential unit; or
145          (B) participates in the financing of a residential energy system to supply all or part of
146     the energy required for the residential unit;
147          (ii) the residential energy system is completed and placed in service on or after January
148     1, 2007; and
149          (iii) the taxpayer obtains a written certification from the office in accordance with
150     Subsection [(7)] (8).
151          (b) (i) Subject to Subsections (3)(b)(ii) through (iv) and, as applicable, Subsection
152     (3)(c) or (d), the tax credit is equal to 25% of the reasonable costs of each residential energy
153     system installed with respect to each residential unit the taxpayer owns or uses.
154          (ii) A tax credit under this Subsection (3) may include installation costs.
155          (iii) A taxpayer may claim a tax credit under this Subsection (3) for the taxable year in
156     which the residential energy system is completed and placed in service.
157          (iv) If the amount of a tax credit under this Subsection (3) exceeds a taxpayer's tax
158     liability under this chapter for a taxable year, the taxpayer may carry forward the amount of the
159     tax credit exceeding the liability [may be carried forward] for a period that does not exceed the
160     next four taxable years.
161          (c) The total amount of tax credit a taxpayer may claim under this Subsection (3) for a
162     residential energy system, other than a photovoltaic system, may not exceed $2,000 per
163     residential unit.
164          (d) The total amount of tax credit a taxpayer may claim under this Subsection (3) for a
165     photovoltaic system may not exceed:
166          (i) for a system installed on or after January 1, 2018, but on or before December 31,
167     2020, $1,600;
168          (ii) for a system installed on or after January 1, 2021, but on or before December 31,
169     2021, $1,200;
170          (iii) for a system installed on or after January 1, 2022, but on or before December 31,
171     2022, $800;
172          (iv) for a system installed on or after January 1, 2023, but on or before December 31,
173     2023, $400; and
174          (v) for a system installed on or after January 1, 2024, $0.
175          (e) If a taxpayer sells a residential unit to another person before the taxpayer claims the
176     tax credit under this Subsection (3):
177          (i) the taxpayer may assign the tax credit to the other person; and
178          (ii) (A) if the other person files a return under this chapter, the other person may claim
179     the tax credit under this section as if the other person had met the requirements of this section
180     to claim the tax credit; or
181          (B) if the other person files a return under Chapter 10, Individual Income Tax Act, the
182     other person may claim the tax credit under Section 59-10-1014 as if the other person had met
183     the requirements of Section 59-10-1014 to claim the tax credit.
184          (4) (a) Subject to the other provisions of this Subsection (4), a taxpayer may claim a
185     refundable tax credit under this Subsection (4) with respect to a commercial energy system if:
186          (i) the commercial energy system does not use:
187          (A) wind, geothermal electricity, solar, or biomass equipment capable of producing a
188     total of 660 or more kilowatts of electricity; or
189          (B) solar equipment capable of producing 2,000 or more kilowatts of electricity;
190          (ii) the taxpayer purchases or participates in the financing of the commercial energy
191     system;
192          (iii) (A) the commercial energy system supplies all or part of the energy required by
193     commercial units owned or used by the taxpayer; or
194          (B) the taxpayer sells all or part of the energy produced by the commercial energy
195     system as a commercial enterprise;
196          (iv) the commercial energy system is completed and placed in service on or after
197     January 1, 2007; and
198          (v) the taxpayer obtains a written certification from the office in accordance with
199     Subsection [(7)] (8).
200          (b) (i) Subject to Subsections (4)(b)(ii) through [(v)] (iv), the tax credit is equal to 10%
201     of the reasonable costs of the commercial energy system.
202          (ii) A tax credit under this Subsection (4) may include installation costs.
203          (iii) A taxpayer may claim a tax credit under this Subsection (4) for the taxable year in
204     which the commercial energy system is completed and placed in service.
205          [(iv) A tax credit under this Subsection (4) may not be carried forward or carried back.]
206          [(v)] (iv) The total amount of tax credit a taxpayer may claim under this Subsection (4)
207     may not exceed $50,000 per commercial unit.
208          (c) (i) Subject to Subsections (4)(c)(ii) and (iii), a taxpayer that is a lessee of a
209     commercial energy system installed on a commercial unit may claim a tax credit under this
210     Subsection (4) if the taxpayer [confirms that the lessor irrevocably elects not to claim the tax
211     credit] obtains a written certification from the office in accordance with Subsection (8).
212          (ii) A taxpayer described in Subsection (4)(c)(i) may claim as a tax credit under this
213     Subsection (4) only the principal recovery portion of the lease payments.
214          (iii) A taxpayer described in Subsection (4)(c)(i) may claim a tax credit under this
215     Subsection (4) for a period that does not exceed seven taxable years after the [date] day on
216     which the lease begins, as stated in the lease agreement.
217          (5) (a) Subject to the other provisions of this Subsection (5), a taxpayer may claim a
218     refundable tax credit under this Subsection (5) with respect to a commercial energy system if:
219          (i) the commercial energy system uses wind, geothermal electricity, or biomass
220     equipment capable of producing a total of 660 or more kilowatts of electricity;
221          (ii) (A) the commercial energy system supplies all or part of the energy required by
222     commercial units owned or used by the taxpayer; or
223          (B) the taxpayer sells all or part of the energy produced by the commercial energy
224     system as a commercial enterprise;
225          (iii) the commercial energy system is completed and placed in service on or after
226     January 1, 2007; and
227          (iv) the taxpayer obtains a written certification from the office in accordance with
228     Subsection [(7)] (8).
229          (b) (i) Subject to [Subsections] Subsection (5)(b)(ii) [and (iii)], a tax credit under this
230     Subsection (5) is equal to the product of:
231          (A) 0.35 cents; and
232          (B) the kilowatt hours of electricity produced and used or sold during the taxable year.
233          (ii) A tax credit under this Subsection (5) may be claimed for production occurring
234     during a period of 48 months beginning with the month in which the commercial energy
235     system is placed in commercial service.
236          [(iii) A tax credit under this Subsection (5) may not be carried forward or carried back.]
237          (c) A taxpayer that is a lessee of a commercial energy system installed on a commercial
238     unit may claim a tax credit under this Subsection (5) if the taxpayer [confirms that the lessor
239     irrevocably elects not to claim the tax credit] obtains a written certification from the office in
240     accordance with Subsection (8).
241          (6) (a) Subject to the other provisions of this Subsection (6), a taxpayer may claim a
242     refundable tax credit as provided in this Subsection (6) if:
243          (i) the taxpayer owns a commercial energy system that uses solar equipment capable of
244     producing a total of 660 or more kilowatts of electricity;
245          (ii) (A) the commercial energy system supplies all or part of the energy required by
246     commercial units owned or used by the taxpayer; or
247          (B) the taxpayer sells all or part of the energy produced by the commercial energy
248     system as a commercial enterprise;
249          (iii) the taxpayer does not claim a tax credit under Subsection (4);
250          (iv) the commercial energy system is completed and placed in service on or after
251     January 1, 2015; and
252          (v) the taxpayer obtains a written certification from the office in accordance with
253     Subsection [(7)] (8).
254          (b) (i) Subject to [Subsections] Subsection (6)(b)(ii) [and (iii)], a tax credit under this
255     Subsection (6) is equal to the product of:
256          (A) 0.35 cents; and
257          (B) the kilowatt hours of electricity produced and used or sold during the taxable year.
258          (ii) A tax credit under this Subsection (6) may be claimed for production occurring
259     during a period of 48 months beginning with the month in which the commercial energy
260     system is placed in commercial service.
261          [(iii) A tax credit under this Subsection (6) may not be carried forward or carried back.]
262          (c) A taxpayer that is a lessee of a commercial energy system installed on a commercial
263     unit may claim a tax credit under this Subsection (6) if the taxpayer [confirms that the lessor
264     irrevocably elects not to claim the tax credit] obtains a written certification from the office in
265     accordance with Subsection (8).
266          (7) (a) A taxpayer may claim a nonrefundable tax credit as provided in this Subsection
267     (7) if:
268          (i) the taxpayer owns a commercial energy system that uses a hydrogen electrolysis
269     system having a rated capacity of two megawatts or greater;
270          (ii) (A) the commercial energy system supplies all or part of the energy required by
271     commercial units owned or used by the taxpayer; or
272          (B) the taxpayer sells all or part of the energy produced by the commercial energy
273     system as a commercial enterprise;
274          (iii) the taxpayer does not claim a credit under Subsection (4);
275          (iv) the commercial energy system is completed and placed in service on or after
276     January 1, 2015; and
277          (v) the taxpayer obtains a written certification from the office in accordance with
278     Subsection (8).
279          (b) (i) Subject to Subsection (7)(b)(ii), a tax credit under this Subsection (7) is equal to
280     the product of:
281          (A) 12 cents; and
282          (B) the kilograms of hydrogen produced and stored, used, or sold during the taxable
283     year.
284          (ii) A taxpayer may claim a tax credit for production occurring during a period of 48
285     months beginning with the month in which the commercial energy system is placed in
286     commercial service.
287          (c) If the amount of a tax credit under this Subsection (7) exceeds a taxpayer's tax
288     liability under this chapter for a taxable year, the taxpayer may carry forward the amount of the
289     tax credit exceeding the liability for a period that does not exceed the next four taxable years.
290          (d) Subject to Subsections (7)(d)(ii) and (iii), a taxpayer that is a lessee of a
291     commercial energy system installed on a commercial unit may claim a tax credit under this
292     Subsection (7) if the taxpayer obtains a written certification from the office in accordance with
293     Subsection (8).
294          (ii) A taxpayer described in Subsection (7)(d)(i) may claim as a tax credit under this
295     Subsection (7) only the principal recovery portion of the lease payments.
296          (iii) A taxpayer described in Subsection (7)(d)(i) may claim a tax credit under this
297     Subsection (7) for a period that does not exceed seven taxable years after the day on which the
298     lease begins, as stated in the lease agreement.
299          [(7)] (8) (a) Before a taxpayer, including a lessee under Subsections (4) through (7),
300     may claim a tax credit under this section, the taxpayer shall obtain a written certification from
301     the office.
302          (b) The office shall issue a taxpayer that is not a lessee a written certification if the
303     office determines that:
304          (i) the taxpayer meets the requirements of this section to receive a tax credit; and
305          (ii) the residential energy system or commercial energy system with respect to which
306     the taxpayer seeks to claim a tax credit:
307          (A) has been completely installed;
308          (B) is a viable system for saving or producing energy from renewable resources; and
309          (C) is safe, reliable, efficient, and technically feasible to ensure that the residential
310     energy system or commercial energy system uses the state's renewable and nonrenewable
311     energy resources in an appropriate and economic manner.
312          (c) The office shall issue a taxpayer that is a lessee under Subsections (4) through (7) a
313     written certification if the office receives:
314          (i) a copy of the lessor's written certification or other proof, in a form established by the
315     office, that the lessor qualified for a tax credit under Subsection (4), (5), (6), or (7); and
316          (ii) proof that the lessor irrevocably elects not to claim the tax credit for which the
317     lessor qualified.
318          [(c)] (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
319     Act, the office may make rules:
320          (i) for determining whether a residential energy system or commercial energy system
321     meets the requirements of Subsection [(7)] (8)(b)(ii); and
322          (ii) for purposes of a tax credit under Subsection (3) or (4), establishing the reasonable
323     costs of a residential energy system or a commercial energy system, as an amount per unit of
324     energy production.
325          [(d)] (e) A taxpayer, including a lessee under Subsections (4) through (7), that obtains a
326     written certification from the office shall retain the written certification for the same time
327     period a person is required to keep books and records under Section 59-1-1406.
328          [(e)] (f) The office shall submit to the commission an electronic list that includes:
329          (i) the name and identifying information of each taxpayer or lessee to which the office
330     issues a written certification; and
331          (ii) for each taxpayer and lessee:
332          (A) the amount of the tax credit listed on the written certification; and
333          (B) the date the renewable energy system was installed.
334          [(8)] (9) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
335     Act, the commission may make rules to address the certification of a tax credit under this
336     section.
337          [(9)] (10) A tax credit under this section is in addition to any tax credits provided under
338     the laws or rules and regulations of the United States.
339          Section 2. Section 59-8-301 is enacted to read:
340     
Part 3. Nonrefundable Tax Credits.

341          59-8-301. Nonrefundable renewable energy system tax credit.
342          (1) As used in this section:
343          (a) "Commercial energy system" means the same as that term is defined in Section
344     59-7-614.
345          (b) "Commercial enterprise" means the same as that term is defined in Section
346     59-7-614.
347          (c) "Commercial unit" means the same as that term is defined in Section 59-7-614.
348          (d) "Hydrogen electrolysis system" means the same as that term is defined in Section
349     59-7-614.
350          (e) "Office" means the Office of Energy Development created in Section 63M-4-401.
351          (2) (a) A taxpayer may claim a nonrefundable tax credit against a tax due under this
352     chapter if:
353          (i) the taxpayer owns a commercial energy system that uses a hydrogen electrolysis
354     system having a rated capacity of two megawatts or higher;
355          (ii) (A) the commercial energy system supplies all or part of the energy required by
356     commercial units owned or used by the taxpayer; or
357          (B) the taxpayer sells all or part of the energy produced by the commercial energy
358     system as a commercial enterprise;
359          (iii) the commercial energy system is completed and placed in service on or after
360     January 1, 2015; and
361          (iv) the taxpayer obtains a written certification from the office in accordance with
362     Subsection (3).
363          (b) (i) Subject to Subsection (2)(b)(ii), a tax credit under this Subsection (2) is equal to
364     the product of:
365          (A) 12 cents; and
366          (B) the kilograms of hydrogen produced and stored, used, or sold during the taxable
367     year.
368          (ii) A taxpayer may claim a tax credit for production occurring during a period of 48
369     months beginning with the month in which the commercial energy system is placed in
370     commercial service.
371          (c) If the amount of a tax credit under this section exceeds a taxpayer's tax liability
372     under this chapter for a taxable year, the taxpayer may carry forward the amount of the tax
373     credit exceeding the liability for a period that does not exceed the next four taxable years.
374          (d) Subject to Subsections (2)(d)(ii) and (iii), a taxpayer that is a lessee of a
375     commercial energy system installed on a commercial unit may claim a tax credit under this
376     section if the taxpayer obtains a written certification from the office in accordance with
377     Subsection (3).
378          (ii) A taxpayer described in Subsection (2)(d)(i) may claim as a tax credit under this
379     Subsection (2) only the principal recovery portion of the lease payments.
380          (iii) A taxpayer described in Subsection (2)(d)(i) may claim a tax credit under this
381     Subsection (2) for a period that does not exceed seven taxable years after the day on which the
382     lease begins, as stated in the lease agreement.
383          (3) (a) Before a taxpayer, including a lessee, may claim a tax credit under this section,
384     the taxpayer shall obtain a written certification from the office.
385          (b) The office shall issue a taxpayer that is not a lessee a written certification if the
386     office determines that:
387          (i) the taxpayer meets the requirements of this section to receive a tax credit; and
388          (ii) the commercial energy system with respect to which the taxpayer seeks to claim a
389     tax credit:
390          (A) has been completely installed;
391          (B) is a viable system for saving or producing energy from renewable resources; and
392          (C) is safe, reliable, efficient, and technically feasible to ensure that the commercial
393     energy system uses the state's renewable and nonrenewable energy resources in an appropriate
394     and economic manner.
395          (c) The office shall issue a taxpayer that is a lessee a written certification if the office
396     receives:
397          (i) a copy of the lessor's written certification or other proof, in a form established by the
398     office, that the lessor qualified for a tax credit under this section; and
399          (ii) proof that the lessor irrevocably elects not to claim the tax credit for which the
400     lessor qualified.
401          (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
402     office may make rules for determining whether a commercial energy system meets the
403     requirements of Subsection (3)(b)(ii).
404          (e) A taxpayer, including a lessee, that obtains a written certification from the office
405     shall retain the written certification for the same time period a person is required to keep books
406     and records under Section 59-1-1406.
407          (4) The office shall submit to the commission an electronic list that includes:
408          (a) the name and identifying information of each taxpayer or lessee to which the office
409     issues a written certification; and
410          (b) for each taxpayer and lessee:
411          (i) the amount of the tax credit listed on the written certification; and
412          (ii) the date the renewable energy system was installed.
413          Section 3. Section 59-10-1014 is amended to read:
414          59-10-1014. Nonrefundable renewable energy systems tax credits -- Definitions --
415     Certification -- Rulemaking authority.
416          (1) As used in this section:
417          (a) (i) "Active solar system" means a system of equipment that is capable of:
418          (A) collecting and converting incident solar radiation into thermal, mechanical, or
419     electrical energy; and
420          (B) transferring a form of energy described in Subsection (1)(a)(i)(A) by a separate
421     apparatus to storage or to the point of use.
422          (ii) "Active solar system" includes water heating, space heating or cooling, and
423     electrical or mechanical energy generation.
424          (b) "Biomass system" means a system of apparatus and equipment for use in:
425          (i) converting material into biomass energy, as defined in Section 59-12-102; and
426          (ii) transporting the biomass energy by separate apparatus to the point of use or storage.
427          (c) "Commercial energy system" means the same as that term is defined in Section
428     59-7-614.
429          (d) "Commercial enterprise" means the same as that term is defined in Section
430     59-7-614.
431          (e) "Commercial unit" means the same as that term is defined in Section 59-7-614.
432          [(c)] (f) "Direct use geothermal system" means a system of apparatus and equipment
433     that enables the direct use of geothermal energy to meet energy needs, including heating a
434     building, an industrial process, and aquaculture.
435          [(d)] (g) "Geothermal electricity" means energy that is:
436          (i) contained in heat that continuously flows outward from the earth; and
437          (ii) used as a sole source of energy to produce electricity.
438          [(e)] (h) "Geothermal energy" means energy generated by heat that is contained in the
439     earth.
440          [(f)] (i) "Geothermal heat pump system" means a system of apparatus and equipment
441     that:
442          (i) enables the use of thermal properties contained in the earth at temperatures well
443     below 100 degrees Fahrenheit; and
444          (ii) helps meet heating and cooling needs of a structure.
445          [(g)] (j) "Hydroenergy system" means a system of apparatus and equipment that is
446     capable of:
447          (i) intercepting and converting kinetic water energy into electrical or mechanical
448     energy; and
449          (ii) transferring this form of energy by separate apparatus to the point of use or storage.
450          (k) "Hydrogen electrolysis system" means the same as that term is defined in Section
451     59-7-614.
452          [(h)] (l) "Office" means the Office of Energy Development created in Section
453     63M-4-401.
454          [(i)] (m) (i) "Passive solar system" means a direct thermal system that utilizes the
455     structure of a building and its operable components to provide for collection, storage, and
456     distribution of heating or cooling during the appropriate times of the year by utilizing the
457     climate resources available at the site.
458          (ii) "Passive solar system" includes those portions and components of a building that
459     are expressly designed and required for the collection, storage, and distribution of solar energy.
460          [(j)] (n) "Photovoltaic system" means an active solar system that generates electricity
461     from sunlight.
462          [(k)] (o) (i) "Principal recovery portion" means the portion of a lease payment that
463     constitutes the cost a person incurs in acquiring a residential energy system.
464          (ii) "Principal recovery portion" does not include:
465          (A) an interest charge; or
466          (B) a maintenance expense.
467          [(l)] (p) "Residential energy system" means the following used to supply energy to or
468     for a residential unit:
469          (i) an active solar system;
470          (ii) a biomass system;
471          (iii) a direct use geothermal system;
472          (iv) a geothermal heat pump system;
473          (v) a hydroenergy system;
474          (vi) a passive solar system; or
475          (vii) a wind system.
476          [(m)] (q) (i) "Residential unit" means a house, condominium, apartment, or similar
477     dwelling unit that:
478          (A) is located in the state; and
479          (B) serves as a dwelling for a person, group of persons, or a family.
480          (ii) "Residential unit" does not include property subject to a fee under:
481          (A) Section 59-2-405;
482          (B) Section 59-2-405.1;
483          (C) Section 59-2-405.2;
484          (D) Section 59-2-405.3; or
485          (E) Section 72-10-110.5.
486          [(n)] (r) "Wind system" means a system of apparatus and equipment that is capable of:
487          (i) intercepting and converting wind energy into mechanical or electrical energy; and
488          (ii) transferring these forms of energy by a separate apparatus to the point of use or
489     storage.
490          (2) A claimant, estate, or trust may claim an energy system tax credit as provided in
491     this section against a tax due under this chapter for a taxable year.
492          (3) (a) [For a taxable year beginning on or after January 1, 2007, a] A claimant, estate,
493     or trust may claim a nonrefundable tax credit under this [section] Subsection (3) with respect to
494     a residential unit the claimant, estate, or trust owns or uses if:
495          [(a)] (i) the claimant, estate, or trust:
496          [(i)] (A) purchases and completes a residential energy system to supply all or part of
497     the energy required for the residential unit; or
498          [(ii)] (B) participates in the financing of a residential energy system to supply all or
499     part of the energy required for the residential unit;
500          [(b)] (ii) the residential energy system is installed on or after January 1, 2007; and
501          [(c)] (iii) the claimant, estate, or trust obtains a written certification from the office in
502     accordance with Subsection (5).
503          [(4) (a)] (b) For a residential energy system, other than a photovoltaic system, the tax
504     credit described in this section is equal to the lesser of:
505          (i) 25% of the reasonable costs, including installation costs, of each residential energy
506     system installed with respect to each residential unit the claimant, estate, or trust owns or uses;
507     and
508          (ii) $2,000.
509          [(b) Subject to Subsection (5)(d), for] (c) For a residential energy system that is a
510     photovoltaic system, the tax credit described in this section is equal to the lesser of:
511          (i) 25% of the reasonable costs, including installation costs, of each system installed
512     with respect to each residential unit the claimant, estate, or trust owns or uses; or
513          (ii) (A) for a system installed on or after January 1, 2007, but on or before December
514     31, 2017, $2,000;
515          (B) for a system installed on or after January 1, 2018, but on or before December 31,
516     2020, $1,600;
517          (C) for a system installed on or after January 1, 2021, but on or before December 31,
518     2021, $1,200;
519          (D) for a system installed on or after January 1, 2022, but on or before December 31,
520     2022, $800;
521          (E) for a system installed on or after January 1, 2023, but on or before December 31,
522     2023, $400; and
523          (F) for a system installed on or after January 1, 2024, $0.
524          [(c)] (d) (i) The office shall determine the amount of the tax credit that a claimant,
525     estate, or trust may claim and list that amount on the written certification that the office issues
526     under Subsection (5).
527          (ii) The claimant, estate, or trust may claim the tax credit in the amount listed on the
528     written certification that the office issues under Subsection (5).
529          [(d)] (e) A claimant, estate, or trust may claim a tax credit under this Subsection (3) for
530     the taxable year in which the residential energy system is installed.
531          [(e)] (f) If the amount of a tax credit listed on the written certification exceeds a
532     claimant's, estate's, or trust's tax liability under this chapter for a taxable year, the claimant,
533     estate, or trust may carry forward the amount of the tax credit exceeding the liability for a
534     period that does not exceed the next four taxable years.
535          [(f)] (g) A claimant, estate, or trust may claim a tax credit with respect to additional
536     residential energy systems or parts of residential energy systems for a subsequent taxable year
537     if the total amount of tax credit the claimant, estate, or trust claims does not exceed $2,000 per
538     residential unit.
539          [(g)] (h) (i) Subject to Subsections (4)[(g)](h)(ii) and (iii), a claimant, estate, or trust
540     that leases a residential energy system installed on a residential unit may claim a tax credit
541     under this Subsection (3) if the claimant, estate, or trust [confirms that the lessor irrevocably
542     elects not to claim the tax credit] obtains a written certification from the office in accordance
543     with Subsection (5).
544          (ii) A claimant, estate, or trust described in Subsection (4)[(g)](h)(i) [that leases a
545     residential energy system] may claim as a tax credit under this Subsection (3) only the principal
546     recovery portion of the lease payments.
547          (iii) A claimant, estate, or trust described in Subsection (4)[(g)](h)(i) [that leases a
548     residential energy system] may claim a tax credit under this Subsection (3) for a period that
549     does not exceed seven taxable years after the [date] day on which the lease begins, as stated in
550     the lease agreement.
551          [(h)] (i) If a claimant, estate, or trust sells a residential unit to another person before the
552     claimant, estate, or trust claims the tax credit under this Subsection (3):
553          (i) the claimant, estate, or trust may assign the tax credit to the other person; and
554          (ii) (A) if the other person files a return under Chapter 7, Corporate Franchise and
555     Income Taxes, the other person may claim the tax credit as if the other person had met the
556     requirements of Section 59-7-614 to claim the tax credit; or
557          (B) if the other person files a return under this chapter, the other person may claim the
558     tax credit under this section as if the other person had met the requirements of this section to
559     claim the tax credit.
560          (4) (a) A claimant, estate, or trust may claim a nonrefundable tax credit as provided in
561     this Subsection (4) if:
562          (i) the claimant, estate, or trust owns a commercial energy system that uses a hydrogen
563     electrolysis system having a rated capacity of two megawatts or greater;
564          (ii) (A) the commercial energy system supplies all or part of the energy required by
565     commercial units owned or used by the claimant, estate, or trust; or
566          (B) the claimant, estate, or trust sells all or part of the energy produced by the
567     commercial energy system as a commercial enterprise;
568          (iii) the claimant, estate, or trust does not claim a credit under Subsection
569     59-10-1106(3);
570          (iv) the commercial energy system is completed and placed in service on or after
571     January 1, 2015; and
572          (v) the claimant, estate, or trust obtains a written certification from the office in
573     accordance with Subsection (5).
574          (b) (i) Subject to Subsection (4)(b)(ii), a tax credit under this Subsection (4) is equal to
575     the product of:
576          (A) 12 cents; and
577          (B) the kilograms of hydrogen produced and stored, used, or sold during the taxable
578     year.
579          (ii) A claimant, estate, or trust may claim a tax credit for production occurring during a
580     period of 48 months beginning with the month in which the commercial energy system is
581     placed in commercial service.
582          (c) If the amount of a tax credit under this Subsection (4) exceeds a claimant's, estate's,
583     or trust's tax liability under this chapter for a taxable year, the claimant, estate, or trust may
584     carry forward the amount of the tax credit exceeding the liability for a period that does not
585     exceed the next four taxable years.
586          (d) (i) Subject to Subsections (4)(d)(ii) and (iii), a claimant, estate, or trust that is a
587     lessee of a commercial energy system installed on a commercial unit may claim a tax credit
588     under this Subsection (4) if the claimant, estate, or trust obtains a written certification from the
589     office in accordance with Subsection (5).
590          (ii) A claimant, estate or trust described in Subsection (4)(d)(i) may claim as a tax
591     credit under this Subsection (4) only the principal recovery portion of the lease payments.
592          (iii) A claimant estate or trust described in Subsection (4)(d)(i) may claim a tax credit
593     under this Subsection (4) for a period that does not exceed seven taxable years after the day on
594     which the lease begins, as stated in the lease agreement.
595          (5) (a) Before a claimant, estate, or trust, including a lessee or assignee, may claim a
596     tax credit under this section, the claimant, estate, or trust shall obtain a written certification
597     from the office.
598          (b) The office shall issue a claimant, estate, or trust a written certification that is not a
599     lessee or an assignee if the office determines that:
600          (i) the claimant, estate, or trust meets the requirements of this section to receive a tax
601     credit; and
602          (ii) the office determines that the residential energy system with respect to which the
603     claimant, estate, or trust seeks to claim a tax credit:
604          (A) has been completely installed;
605          (B) is a viable system for saving or producing energy from renewable resources; and
606          (C) is safe, reliable, efficient, and technically feasible to ensure that the residential
607     energy system uses the state's renewable and nonrenewable energy resources in an appropriate
608     and economic manner.
609          (c) The office shall issue a claimant, estate, or trust that is a lessee or an assignee a
610     written certification if the office receives:
611          (i) a copy of the lessor's or assignor's written certification or other proof, in a form
612     established by the office, that the lessor or assignor qualified for a tax credit under this section;
613     and
614          (ii) proof that the lessor or assignor irrevocably elects not to claim the tax credit for
615     which the lessor or assignor qualified.
616          [(c)] (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
617     Act, the office may make rules:
618          (i) for determining whether a residential energy system meets the requirements of
619     Subsection (5)(b)(ii); and
620          (ii) for purposes of determining the amount of a tax credit that a claimant, estate, or
621     trust may receive under Subsection (4), establishing the reasonable costs of a residential energy
622     system, as an amount per unit of energy production.
623          [(d)] (e) A claimant, estate, or trust, including a lessee or assignee, that obtains a
624     written certification from the office shall retain the written certification for the same time
625     period a person is required to keep books and records under Section 59-1-1406.
626          [(e)] (f) The office shall submit to the commission an electronic list that includes:
627          (i) the name and identifying information of each claimant, estate, [or] trust, lessee, or
628     assignee to which the office issues a written certification; and
629          (ii) for each claimant, estate, [or] trust, lessee, or assignee:
630          (A) the amount of the tax credit listed on the written certification; and
631          (B) the date the renewable energy system was installed.
632          (6) A tax credit under this section is in addition to any tax credits provided under the
633     laws or rules and regulations of the United States.
634          (7) A purchaser of one or more solar units that claims a tax credit under Section
635     59-10-1024 for the purchase of the one or more solar units may not claim a tax credit under this
636     section for that purchase.
637          Section 4. Section 63M-4-602 is amended to read:
638          63M-4-602. Definitions.
639          As used in this part:
640          (1) "Applicant" means a person that conducts business in the state and that applies for a
641     tax credit under this part.
642          (2) "Fuel standard compliance project" means a project designed to retrofit a fuel
643     refinery in order to make the refinery capable of producing fuel that complies with the United
644     States Environmental Protection Agency's Tier 3 gasoline sulfur standard described in 40
645     C.F.R. Sec. 79.54.
646          (3) "High cost infrastructure project" means a project:
647          (a) (i) that expands or creates new industrial, mining, manufacturing, or agriculture
648     activity in the state, not including a retail business;
649          (ii) that involves new investment of at least $50,000,000 in an existing industrial,
650     mining, manufacturing, or agriculture entity, by the entity; or
651          (iii) for the construction of a plant or other facility, including a fueling station, for the
652     storage, production, or distribution of hydrogen fuel used for transportation, electricity
653     generation, or industrial use;
654          (b) that requires or is directly facilitated by infrastructure construction; and
655          (c) for which the cost of infrastructure construction to the entity creating the project is
656     greater than:
657          (i) 10% of the total cost of the project; or
658          (ii) $10,000,000.
659          (4) "Infrastructure" means:
660          (a) an energy delivery project as defined in Section 63H-2-102;
661          (b) a railroad as defined in Section 54-2-1;
662          (c) a fuel standard compliance project;
663          (d) a road improvement project;
664          (e) a water self-supply project;
665          (f) a water removal system project;
666          (g) a solution-mined subsurface salt cavern; [or]
667          (h) a project that is designed to:
668          (i) increase the capacity for water delivery to a water user in the state; or
669          (ii) increase the capability of an existing water delivery system or related facility to
670     deliver water to a water user in the state[.]; or
671          (i) a hydrogen fuel production or distribution project.
672          (5) (a) "Infrastructure cost-burdened entity" means an applicant that enters into an
673     agreement with the office that qualifies the applicant to receive a tax credit as provided in this
674     part.
675          (b) "Infrastructure cost-burdened entity" includes a pass-through entity taxpayer, as
676     defined in Section 59-10-1402, of a person described in Subsection (5)(a).
677          (6) "Infrastructure-related revenue" means an amount of tax revenue, for an entity
678     creating a high cost infrastructure project, in a taxable year, that is directly attributable to a high
679     cost infrastructure project, under:
680          (a) Title 59, Chapter 7, Corporate Franchise and Income Taxes;
681          (b) Title 59, Chapter 10, Individual Income Tax Act; and
682          (c) Title 59, Chapter 12, Sales and Use Tax Act.
683          (7) "Office" means the Office of Energy Development created in Section 63M-4-401.
684          (8) "Tax credit" means a tax credit under Section 59-7-619 or 59-10-1034.
685          (9) "Tax credit certificate" means a certificate issued by the office to an infrastructure
686     cost-burdened entity that:
687          (a) lists the name of the infrastructure cost-burdened entity;
688          (b) lists the infrastructure cost-burdened entity's taxpayer identification number;
689          (c) lists, for a taxable year, the amount of the tax credit authorized for the infrastructure
690     cost-burdened entity under this part; and
691          (d) includes other information as determined by the office.
692          Section 5. Retrospective operation.
693          The changes to Sections 59-7-614, 59-10-1014, and 63M-4-602 have retrospective
694     operation for a taxable year beginning on or after January 1, 2020.
695          Section 6. Effective date.
696          (1) Except as provided in Subsection (2), this bill takes effect on May 12, 2020.
697          (2) The changes to Section 59-8-301 take effect for a taxable year beginning on or after
698     July 1, 2020.