Net metering & feed-in tariffs: Understanding the tax implications of distributed generation policies

Policies designed to support customer-sited distributed generation (DG) are evolving. For years, net energy metering (NEM), or “net metering”, has been used widely across the country, but many states are now studying or transitioning to successor NEM policies. As new tariffs or standard contracts are developed, it is essential that policymakers consider the potential tax implications of each option because this may affect the ability of the NEM successor policy to continue to drive successful deployment of customer-sited solar photovoltaic (PV) systems.

For this reason, the Clean Coalition conducted an analysis to compare the tax impacts on a residential customer-generator under a feed-in tariff (FIT) program as opposed to net metering. The Internal Revenue Service (IRS) has not ruled that energy sold to a utility under a FIT is taxable gross income. However, in this analysis, the Clean Coalition analyzed the implications for the customer-generator if the IRS were to determine that the revenue from energy sales under a FIT constitute taxable gross income. [PDF]

This entry was posted in . Bookmark the permalink.