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Taxes and

incentives for
KPMG International
Taxes and Incentives for Renewable Energy is
designed to help energy companies, investors
and other entities stay current with government
policies and programs that support renewable
energy from wind, solar, biomass, geothermal
and hydropower. Compiled by KPMGs Global
Energy & Natural Resources tax practice, the
2015 edition provides updates on renewable
energy promotion policies for 31 countries.
Italso includes information on adoption trends
for renewables, the growing prominence
of emerging markets, new solar and wind
initiatives, and key investments in renewable
energy around the world.

Lars Behrendt
Tax Partner,
KPMG in Germany

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Introduction 2
2015 industry trends 4
Global investment in renewable energy production 6
Renewable energy promotion policies by country 10
Argentina 12
Australia 13
Austria 15
Belgium 16
Brazil 17
Canada 19
China 22
Costa Rica 25
France 27
Germany 30
Greece 34
India 38
Ireland 40
Italy 42
Japan 44
Mexico 45
The Netherlands 47
New Zealand 48
Norway 49
Peru 51
Philippines 52
Poland 56
Romania 59
South Africa 61
South Korea 63
Spain 65
Sweden 67
Turkey 68
United Kingdom 69
United States 73
Uruguay 75
Top Five Countries 2014 77
Appendix A: REN21 2014 Renewable Global Status Report 78

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Growth in taxes and incentives for renewable energy
Start 2004 2013 2014
Countries with policy targets 48 144 164
States/provinces/countries with feed-in policies 34 106 108
States/provinces/countries with RPs/quota policies 11 99 99
Countries with tendering/public competitive bidding n/a 55 60
Countries with heat obligation/mandate n/a 19 21
States/provinces/countries with biofuels mandates 10 63 64

Source: REN 21 Renewables 2015 Global Status Report

The past year has seen a number generation accounted for an avoidance Equally important are economic factors.
of remarkable milestones and of 1.3 gigatonnes of emissions in 2014.3 Over 7.6 million people worldwide
developments related to renewable The effect of carbon emissions on global now work directly or indirectly in the
energy: climate will be the main focus for the renewables sector.5 Renewables
2015 United Nations Climate Change are seen as a sound investment
Global investments in renewable Conference (COP21) in Paris during and a way to mitigate economic risk
energy increased 17percent, the first November and December. As with by increasing energy diversity and
increase since 2011.1 previous conferences, the overarching reducing dependence on fossil fuels.
Renewable energy accounted goal is to reduce greenhouse gas Renewables are also becoming more
for 48percent of new generating emissions through binding agreements attractive due to advances in technology
capacity installed globally. among all the nations in the world. and decreased costs. Solar photovoltaic
(PV) panels have dropped in price by
Renewable energy provided Renewables also support energy access
80percent since 2008, with further
9.1percent of global electricity and affordability. Currently, 15percent
declines expected in the future.6
generation.2 of the worlds population over a
billion people mostly in emerging In line with these industry drivers,
Developing economies almost Asia and Africa has no access to policy support continues to encourage
matched developed economies in electricity.4 In many emerging countries, significant investment and low costs
renewable energy investments. energy sources such as wind and solar through economies of scale.7 The
Solar in China and Japan and offshore can support decentralized, mini-grid number of countries with renewable
wind in Europe received record and off-grid solutions such as small energy targets and policies increased
financing. wind turbines for powering remote again in 2014, and several jurisdictions
telecommunications and solar-powered made their existing targets more
The continued growth in renewables irrigation kits. In developed countries ambitious including a rising number
has been driven by several factors. First like Australia, Europe, Japan, and North with 100percent renewable energy
of all, we see a continued awareness America, we see significant growth in or electricity targets. As of early 2015,
worldwide that renewable energy plays prosumers residential customers at least 164 countries had renewable
a key role in helping to mitigate the rise who produce their own electric power energy targets, and an estimated
in greenhouse gas emissions. According through solar panels. 145 countries had renewable energy
to recent estimates, renewable energy support policies in place.8

1. Global statistics from REN 21 Renewables 2015 Global Status Report; IEA 5. Ibid.
World Energy Outlook 2015 Special Report; Global Trends in Renewable Energy 6. Solar energy to be cheapest power source in 10 years, International Business
Investments 2015 (UNEP, Bloomberg New Energy Finance); Bloomberg New Times, February 24, 2015
Energy Outlook 2015 7. Op. cit., REN21
2. Excluding hydroelectric generation 8. Ibid.
3. Global Trends in Renewable Energy Investments 2015
4. Ibid.

2 | Taxes and incentives for renewable energy

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Power generation is the focus of most accompanied by other policy tools biofuel and electric vehicles into public
renewable energy policies. Feed-in such as solar-specific renewable heat transportation fleets.
tariffs (FITs) and Renewable Portfolio mandates. Transport-related policies
In addition, the private sector is
Standards (RPS) policies remain the currently focus on the biofuel sector and
rethinking its attitude about renewables.
most commonly used mechanisms. on road transport, although other modes
For example, Google has announced
Policymakers particularly in Europe of transportation also are attracting
agreements to fund over US$2 billion
continue the recent trend of amending attention.
in renewable energy projects, and the
existing policies rather than adopting
Cities continue to lead the way for company has set for itself a goal of
new mechanisms. RPS policies are
renewables by setting and achieving powering operations with 100percent
most popular at the state and provincial
ambitious targets that, in turn, have renewable energy.10
levels. Tendering schemes, net metering
influenced national policies. By early
or net billing policies, green banks With growing energy demand,
2015, several countries had achieved
and green bonds represent other a strong commitment to reduce
100percent of their renewable energy
options that are gaining support from carbon emissions, further advances
or electricity targets, with the vast
policymakers. Counter to these policies, in technology, greater incentives for
majority of targets enacted at the city/
however are new charges or fees on investment, and continued policy
local level.9 Many municipalities have
renewable energy power that have been support, renewable energy will play an
achieved their targets by mandating
introduced in an increasing number of increasingly important role in the global
energy-saving methods through building
countries. energy mix for the 21st century.
codes and local distribution systems.
For renewable heating or cooling, Local and national policymakers have (For additional information about these
financial incentives remain the most also supported the integration of policies, see appendix A/page 78).
widely used form of policy support,

9. Ibid.

Taxes and incentives for renewable energy | 3

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2015 industry trends
Over the long term, the prospects for Again, China was the leader with to expand, energy consumption will be
renewable energy remain positive, US$38 billion in investments, marked by greater peak demand periods
marked by steady growth across all representing almost two-thirds of driven by home appliances, cooling and
sectors. Between now and 2040, wind financing in developing countries. heating systems and transportation.
research and analysis suggest that:11 These investments were driven by However, renewables such as solar
national policies as well as anticipated and wind are variable energy sources,
Overall energy demand will rise by
reductions in FITs. Germany, the UK dependent on whether the sun shines
over 30percent.
and the Netherlands invested over and the wind blows. To incorporate these
Renewables will grow to account for US$5 billion in wind power, much of renewables into their traditional energy
56percent of power capacity. it for offshore installations. Seven mix, utilities will need to continue their
projects costing US$1 billion or more development of battery storage systems,
Developing countries will build three
reached final investment decision smart metering, demand-response
times the renewable capacity as
stage during 2014. The largest project solutions, and other innovations that
developed countries.
was the US$3.8 billion financing by increase energy efficiency while helping
Penetration of renewables will double 12 banks, three export credit agencies, to match fluctuating supply and demand.
to 46percent of electricity output. the European Investment Bank and a
The following key sectors represent a
Danish pension fund for the 600 MW
Costs for wind will decrease by number of recent industry trends:
Gemini installation off the coast of the
32percent and solar by 48percent.
Netherlands.14 Globally, US$18.6 billion Solar PV: Although hydropower is still
Solar will account for over a third of worth of offshore wind projects were the main source of renewable energy,
global capacity additions. financed in 2014, representing an rapidly falling costs have made solar PV
increase of 148percent over 2013. the largest market for new investment.
These long-term trends are clearly
Europe accounted for US$16.2 billion of In fact, unsubsidized solar PV-generated
reflected in the top headlines for the
the world offshore wind investment, with electricity has now become cost-
industry in 2014. Renewables reached
China the remaining US$2.4 billion. competitive with fossil fuels in a growing
almost 11 gigawatts (GW) of installations.
number of locations around the world.
Developing countries almost surpassed Challenges for renewables include policy
The recovery that began in 2013 for solar
developed countries in total investments uncertainty, a trend toward auctions and
PV continued in 2014, with an estimated
for renewables, increasing their share away from FITs and green certificates
40 GW installed for a total global capacity
of investment activity to 49percent a in developed countries, retroactive
of about 177 GW.15 China, Japan, and the
new record.12 China alone attracted over changes in subsidies, and the need to
US accounted for the vast majority of
US$83 billion, representing almost a third expand electricity distribution systems
new capacity. However, significant new
of global investment and an increase of and integrate renewable-based systems
capacity was planned or added in Latin
33percent for that country over 2013.13 with existing power grids. In addition, the
America, several African countries, and
rapid drop in crude oil prices in 2015 and
The largest single initiatives for markets in the Middle East such as Saudi
the continued low prices for natural gas
renewable energy in 2014 involved Arabia. In January 2014, Dubai Electricity
in North America may have an impact on
solar panel projects in China and Japan. & Water Authority awarded a contract to
adoption rates for renewables, although no
Almost US$75 billion was invested by build a 200 MW, US$330 million PV plant
significant changes have been seen so far
the two Asian countries. China dedicated to a group led by Saudi Arabias ACWA
in policymaking or investments. In fact, the
almost US$40 billion to large, utility-scale Power International.16 Most EU markets
continued growth of renewables during a
installations of more than 1 megawatt declined for the third consecutive year,
period of historically low prices for oil and
(MW). Japan invested almost US$35 but the region particularly Germany
gas can be explained in part by the success
billion in smaller solar projects of less continued to lead the world in terms of
of policies that decouple the renewable
than 1 MW, supported in part by FITs to total solar PV capacity and contribution to
market from the fossil fuel market.
stimulate the installation of solar, wind, the electricity supply.
and other forms of renewable energy. The development of more sophisticated
Concentrating Solar Thermal Power
power storage and delivery systems
Wind turbine power generation (CSP): The sector maintained strong
will become increasingly important for
represented the other major growth with total capacity increasing
renewables and require high investments.
development area for renewables. 27percent to 4.4 GW.17 Most capacity is
As the global middle class continues

11. Op. cit., Bloomberg New Energy Outlook 2015; World Energy Outlook Special 15. REN21, Technology Roadmap: Solar Photovoltaic Energy, International Energy
Report, REN 21 Agency
12. Op. cit., REN21 16. Op. cit., Global Trends in Renewable Energy Investments 2015
13. Op. cit., Global Trends in Renewable Energy Investments 2015 17. REN21
14. Ibid.

4 | Taxes and incentives for renewable energy

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delivered through parabolic trough plants, factories and other large complexes. market for the seventh consecutive year,
but 2014 saw a greater diversification In general, solar thermal technologies led by China, and overtook Europe in total
of technologies such as linear Fresnel declined in 2014, especially in Europe capacity. The US was the leading country
and tower plants that produce energy as and China. Cumulative capacity of water for wind power generation. After years of
heat through the use of long and narrow collectors reached an estimated 406 GW- operating in the red, most turbine makers
segments of mirror that pivot to reflect thermal (GWth) by the end of 2014 (with pulled back into the black with all the
sunlight onto a fixed absorber tube. air collectors adding another 2 GWth), top 10 companies breaking installation
Only the United States and India added providing approximately 341 terawatt- records.
CSP facilities to their grids in 2014, but thermal (TWth) of heat annually.18
Hydro: Most hydro-electric projects
South Africa and Morocco continued Despite overcapacity and weakening
of more than 50 MW have been in
construction and planning for CSP. Spain demand in 2014, China again accounted
operation for decades and represent a
remained the global leader in existing for about 80percent of the world market
different stage in renewable technology.
capacity, although European markets for solar water collectors. Domestic sales
However, mention should be made
remain stagnant. However, costs are expanded in much of Asia, parts of Africa,
of several recent achievements in
declining for CSP, particularly in the global and Latin America.
this sector. These are led by the final
sunbelt, and a variety of technologies are
Wind Power: Wind is still the cheapest commissioning of the giant 13.9 GW
under development that can support CSP,
option for new power generation, and Xiluodu Dam in Yunnan and Sichuan
such as thermal energy storage (TES)
global wind power added a record 51 GW provinces, China.20 In addition, Andritz,
in 2014 the most of any renewable an Austrian company, has been awarded
Solar Thermal Heating and Cooling: technology for a total of 370 GW.19 a contract to supply electromechanical
Solar thermal heating technologies An estimated 1.7 GW of grid-connected equipment for the 2.1 GW Lauca
capture the heat of the sun and transfer capacity was added offshore for a world hydropower plant in Angola.21 Other
it to air or water to heat buildings. Solar total exceeding 8.5 GW. Wind energy financings include US$904 million for the
chillers use thermal energy to produce is the least-cost option for new power ICE Reventazon hydro-electric project
cold air or water through absorption generating capacity in an increasing in Costa Rica and US$747 million for the
cooling technology. The technology is number of locations, and new markets Nam Ngiep 1 project in Laos.22
used primarily for large domestic water continued to emerge in Africa, Asia, and
heating systems in hotels, schools, Latin America. Asia remained the largest

Annual Capacity additions, 2015-40 (GW)

2012 Projected global installed capacity to 2040, by technology (GW) 2040

21% 14%
5% 36%
65% 14%
6% 200
26% 4%
2015 2020 2025 2030 2035 2040
5,584GW 14,214GW

Fossil Fuels Nuclear Solar Wind Other renewables Flexible capacity

Source: Bloomberg New Energy Finance

18. Ibid.
19. Ibid.
20. Op. cit., Global Trends in Renewable Energy Investments 2015
21. Ibid.
22. Ibid.

Taxes and incentives for renewable energy | 5

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Global investment in
renewable energy production
Global New Investment in Renewable Power and Fuels,
Developed and Developing Countries, 20042014

Billion USD
World Total
300 279 270
billion USD
World Total 256
250 Developed Countries
Developing Countries 232

200 182














2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Does notREN21 Renewables
include 2014inGlobal
investment Status Report,
hydropower> 50 MW 2015.

Global new investment in renewable energy by sector, 2014 compared to 2013, US$ billions

Solar 150 25%

Wind 99 11%

Blomass & w-t-e 8 -10%

Biofuels 5 -8%

Small hydro 5 -17%

Geothermal 3 23%

Marine 0.4 110%

New investment volume adjusts for re-invested equity. Total values include estimates for undisclosed deals.

Source: UNEP, Bloomberg New Energy Finance.

6 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
By the end of 2014, the renewable Equity raising by renewable energy growing consensus about the relative
energy industry had achieved a significant companies on public markets rose risk of renewables when it committed to
turnaround in investment activity. For 54percent in 2014 to US$15.1 billion.27 retaining its renewables, distribution and
the first time in 3 years, global new The increase was driven by the recovery transmission businesses, while putting
investment was on the upswing, in sector share prices between mid-2012 its conventional generation arm into a
increasing by 17percent over 2013 and and March 2014, and by the popularity separate company.29
reaching a total of US$270 billion for with investors of US yieldcos and
(For additional information, see appendix
2014.23 Renewables outpaced fossil fuels European quoted project funds. These
B/page 79)
for the fifth year running in terms of net investments in operating-stage wind,
investment in power capacity additions. solar and other renewable energy China:
Investment in developing economies projects raised US$5 billion from stock
was up 36percent, almost reaching market investors in 2014. Out of every three dollars spent in global
the investment total for developed renewables investment during 2014,
The year 2014 also saw the creation of almost one dollar went to China, making
economies, which saw an increase of only
two new South-South development it the worlds leader in investments and
banks: the US$100 billion New new installations for renewable power.30
Although China, the US, Japan, the UK Development Bank created by the Investments totaled about US$80
and Germany remained the leaders in BRIC countries Brazil, Russia, billion, with 90percent of that amount
investments for renewables, activity India and China along with the assigned to asset financing for utility-
continued to spread to new markets Asian Infrastructure Investment scale projects.31
throughout 2014. Brazil (US$7.6 billion), Bank created by 23 Asian countries.
India (US$7.4 billion) and South Africa The expansion of new investment Wind predominated large-scale
(US$5.5 billion) were all in the top 10 of vehicles for renewables such as development, attracting US$37.9 billion,
investing countries.24 Chile, Indonesia, green bonds, yield companies, and an increase of 30percent over 2013.
Kenya, Mexico, South Africa, and Turkey crowdfundinghave attracted new Not surprisingly, the country set a new
each invested more than US$ 1 billion in classes of capital providers and are global record for wind installations
renewable energy.25 Uruguay, Panama, helping to reduce the cost of capital for 21 GW as development accelerated
the Philippines and Myanmar invested financing renewable energy projects. to beat anticipated reductions in the
between US$500 million to US$1 billion. For example, more than a quarter of new FIT. Major transactions included the
investment in renewable energy for 2014 200 MW Longyuan Rudong intertidal
Backed by lowering costs and policy offshore wind farm (US$990 million)
went to small-scale projects, particularly
support, solar and wind continued to and the 400 MW Huadian Qingyang
solar PV.
dominate the industry. In 2014, these Huanxian Maojing onshore wind farm
two sectors accounted for 92percent of Between 2010 and 2014, investment (US$560 million).
overall global investment in renewable levels in renewables remained relatively
power and fuels, while biomass steady with annual totals between China also built a record volume of solar
and waste-to-energy made up only US$230 billion and US$280 billion. capacity last year, supported by US$29.7
3percent of investments.26 In terms of Although the total for 2014 was on billion in investments, a 20percent
total capacity including utility-scale and the high side of this range, there is increase over last year. As with wind, the
small projects, solar led the industry no assurance that current trends will majority of investments involved utility-
with US$136.3 billion in investments, necessarily continue. Nevertheless, scale plants. Major projects included
up 25percent over 2013. Wind was renewables are being increasingly the 530 MW Longyangxia PV plant
the largest sector in terms of utility- perceived as a stable, relatively low-risk (US$848 million) being developed by
scale asset finance, attracting US$ 92 investment by institutional funds. This is Huanghe Hydropower Development and
billion, an increase of 10percent over evident partly in the rising commitment the 300 MW Minqin Hongshagang PV
last year. Large-scale solar farms grew by institutions to renewable power plant (US$420 million) owned by China
15percent, reaching US$ 62.8 billion. projects, and partly in their backing for Singyes Solar Technologies. Small-scale
The next largest sector was biomass green bonds, which reached a record PV investment rose from US$1.2 billion
and waste-to-power, with US$7.4 billion, US$39 billion of issuance in 2014.28 in 2013 to US$7.6 billion, an increase of
down 10percent from last year. The German utility EON reflected the over 633percent. In September, the

23. Op. cit., Bloomberg New Energy Finance, REN 21. Figure excludes large 27. Ibid.
hydroelectric projects using traditional technology 28. Op. cit., Global Trends in Renewable Energy Investments 2015, REN21
24. Ibid. 29. Ibid.
25. Ibid. 30. Ibid
26. Op. cit., Global Trends in Renewable Energy Investments 2015 31. Ibid.
Taxes and incentives for renewable energy | 7

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government released a new policy on California-based Pattern Energy Group 82 percent (US$28.1 billion) spent on
solar generation systems connected to raised US$586 million in a secondary- small-scale solar projects, a US$6 billion
the distribution grid, encouraging further share placement. In California and some increase over 2013. The FIT has been
development. other states, subsidies were perceived such a success that some 70 GW of
as no longer necessary, shifting the solar applications were approved by
more on page 22.
solar policy debate to retail rates and net November 2014, prompting half of the
United States metering. Investment in US small-scale countrys vertically integrated utilities to
solar capacity grew by 66percent last year announce restrictions in Q4 2014 on grid
Among developed economies, the US to US$12.9 billion, with the residential access. In December, the government
retained its leadership in renewable market welcoming new financing proposed changes to the rules on FIT
energy investments, which increased methods and other innovations. applications, grid connection approval
7percent to US$36.3 billion. In terms and curtailment.
of financing types, venture capital Overall investments for wind declined by
and private equity in solar rose from half to US$6.9 billion, driven mainly by The 2014 Strategic Energy Plan also
US$373 million in 2013 to US$1.3 billion uncertainty over whether the Production includes provisions to shorten the time
in 2014. The biggest deal was a US$250 Tax Credit would be extended. At the required to conduct environmental
million private investment in Sunnova same time, public market investment impact assessments for wind farms;
for expanding residential solar sales. in wind more than doubled last year to deregulate the process of setting up
Overall, US public market activity in US$893 million. Like solar, much of this small hydropower plants; and exempt
solar increased by 76percent to reach financing was driven by yieldcos. solar power stations from regulations
US$5.9 billion. under the Factory Location Act, which
more on page 73
otherwise imposes a three-month
Three of the top four deals in solar were
based on yieldcos publicly-owned
Japan: requirement prior to construction.

companies formed to own power plants Japan followed close behind the US The events of Fukushima in 2011
and pass most cash flow to investors in renewable energy investment. The continue to influence the course of
as dividends. The largest yieldco was 2014 Strategic Energy Plan includes renewable energy policies for Japan.
Abengoa Yield, which raised US$829 a generous FIT that encouraged Responding to fears regarding the
million through an IPO on Nasdaq. In May, US$34.3 billion in investments, with safety of nuclear power after the

8 | Taxes and incentives for renewable energy

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events of Fukushima, the countrys Dudgeon plant (US$2.6 billion) and the Germany:
nuclear reactors were taken offline 389 MW West of Duddon Sands wind
between 2011 and 2012, oil and natural farm (US$2.1 billion). The UKs largest After the UK, the leading European
gas imports were increased, and the transaction in onshore wind was also investor in offshore wind projects was
government provided new incentives for the countrys largest renewable energy Germany, with financing for this sector
renewable energy. However the decision public-market investment US$200 increasing 4 percent to US$11.4 billion in
to take nuclear reactors offline has now million for the Greencoat UK Wind fund 2014. Although Germany was number
been reversed by the 2014 Strategic through a secondary share placement. one in European solar investments in
Energy Plan and the Nuclear Regulation The UK was also one of the few countries 2013, the country saw investments
Authority of Japan is reviewing 18 to attract any marine energy investment, in this sector drop by half in 2014.
reactors for restart. These developments at US$123 million. Slightly over two- Only 2 GW was installed below the
will most likely affect the governments thirds of this amount funded the first governments target range of 2.4 to 2.6
perspective on policymaking for phase of the 86 MW MeyGen Inner GW. The decrease in FIT rates and the
renewable energy in the future.32 Sound tidal stream project, projected to self-consumption charge introduced in
be the worlds largest tidalarray. August led to a one-third reduction in
more on page 44 investment in small-scale PV to US$3
In the first round of the UKs auction billion well below the US$25 billion
United Kingdom program for its new Contracts for level reached in 2010.
The UK was Europes largest single Difference to support renewables,
winning bids came in at tariffs estimated In contrast, wind attracted more than
investor in renewable energy for 2014,
to be some 10 percent below the all- 2.5 times as much investment (US$8.2
although its contribution of US$13.9
in remuneration available under the billion), of which 61 percent was spent on
billion represented only a 1 percent
outgoing Renewables Obligation (RO) three offshore projects. The two biggest
increase over last year.33 Wind attracted
incentive. The results, announced in late deals were for the 350 MW Wikinger and
US$8 billion, compared with US$2.7
February 2015, also showed offshore 277 MW Borkum Riffgrund wind farms,
billion for solar. Offshore projects
wind bids winning through at 14 to 18 both of which cost US$1.7 billion.
accounted for 86 percent of investments
for wind. The biggest final investment percent below what would have been more on page 30
decisions were for the 402 MW available under the RO.

32. Op. cit., Global Trends in Renewable Energy Investments 2015, REN21
33. Ibid.
Taxes and incentives for renewable energy | 9

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Renewable energy promotion
policies by country
The following chart is a summary of the support schemes available for the countries highlighted in this publication.
Additional details regarding the investment and operating support schemes for each country can be found in the
following pages.



Energy production payment

Reductions in sales, energy,
Renewable energy targets

Public investment, loans,

Investment or production
Heat obligation/mandate

Capital subsidy, grant, or

CO2, VAT, or other taxes

Feed-in tariff/premium

Electric utility quota

Biofuels obligation/
obligation / RPS

Tradable REC
Net metering

tax credits

or grants

Australia *
Canada R*
France R R
Germany R
Greece R
Italy R R
Japan R R
The Netherlands
New Zealand
Poland R R
South Korea
Spain R
United Kingdom
United States1 R* R* R* R* R
Argentina R
Brazil R
China R R
Costa Rica R
Romania R
South Africa R R R
Turkey R

existing national (could also include state/provincial), existing state/provincial (but no national), new (* indicates state/provincial),
R revised (* indicates state/provincial), x removed/expired
1 State-level targets in the United States include RPS policies.

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Market Issues KPMGs ENR Tax Services & Due to the impact of these incentives
Solutions Engaging the Green and taxes on your investment decisions,
To help clients address key challenges KPMG firms can factor them into
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provide services backed by a global your regulatory and sustainability to production or sale/purchase of green
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Resources practice has specialists in We can provide tax characteristics
the field of renewable energy, based KPMGs Global ENR Tax network
of carbon credits, resolve Clean
in key business locations around the includes professionals who specialize in
Development Mechanism issues, and
world, acting as a single network. In these tax practice areas:
define implications of Certified Emission
each location, KPMG professionals Reduction forward contracts from both Financial Services Tax
can offer practical, in-depth, renewable trading and transfer pricing standpoints.
energy experience. They can also draw Global Indirect Tax
on the KPMG global network of Energy We can also help you navigate the
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& Natural Resources practitioners to
provide clients with immediate access Government and municipal grant International Corporate Tax
to the latest industry knowledge, skills, programs or tax incentives related to
the production and sale and purchase of Mergers & Acquisitions.
resources and technical developments.
alternative energy and green products. Investing in the sector
With regular calls and effective These include FITs, tax holidays,
communications tools, we can share accelerated depreciation, carbon tax/ KPMG member firms invest significant
observations and insights, debate pricing, trading schemes, energy taxes, time and resources in deepening our
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management agendas. This global and hydropower sources, as well as with strategic and insightful services
network also produces regular surveys increased energy efficiencies, smart- that are tailored to their specific needs
and commentary on key issues affecting grid technologies, and carbon capture and based on an understanding of their
the sector, business trends, changes in and storage technologies. challenges.
regulations and the commercial, risk and
financial challenges of doing business.

Taxes and incentives for renewable energy | 11

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes Quota obligation
Investments and other subsidies The aim is to reach a contribution of
Support is available for renewable sources of renewable energy equal
energy sources including biofuels, solar, to 8 percent of the total national
wind, hydro and geothermal, among consumption of electric energy within
others. a term of 10 years, starting in 2006, the
effective date of the regime.
At the local tax level:
Quota obligations also include the
anticipated value added tax (VAT) use of fossil fuel mixed with at least
refunds for the new depreciable 10 percent of biofuels, including
property (except for automobiles) biodiesel and bioethanol.
included in the project
Additional information
accelerated income tax depreciation.
(Filing two claims for the same project The following authorizations are
is not allowed.) required for the construction of
renewable energy plants:
The property used for the project
will not be a part of the minimum, authorization to use the land
presumed, income tax taxable base. In
environmental impact study
addition, biofuel producers will not be
subject to the hydric infrastructure tax, approval by the Energy Secretariat
the tax on liquid fuels and the gas oil tax
bidding offer submitted through
for the amount of fuel that is marketed
the Program of Electric Generation
in the national territory.
through Renewable Energies
At the provincial level: (Programa Generacin Renovable or
real estate tax exemption
stamp tax exemption Bill:
turnover tax exemption/deferral In March 2014, a bill was brought before
the Argentine Senate to make the
tax stability. application of Law 26190 more flexible
The type of benefit depends on the and to achieve an 8percent share in the
geographic area in which the renewable satisfaction of the national demand of
energy plant operates, so the plants electric energy within a 10-year term
specific location must be supplied for a (expiring in 2016). In addition, the bill
proper tax classification. sets a new goal for 2025, which consists
in increasing the aforementioned share
Operating subsidies to 20percent. As of mid-year 2015, the
Argentine Senate has approved this
Subsidies at the national level:
bill, and we assume that the House
wind: Argentine peso (ARS)0.015/ of Representatives half sanction will
kWh follow.
solar: ARS0.9/kWh Apart from the benefits provided by
hydro for less than 30 MW installed prior regulations, the bill introduces
capacity: ARS0.015/kWh a provision for the collection of a tax
bonus to be allocated to the payment of
other: ARS0.015/kWh. Several national taxes.
provinces have different incentive
feed-in tariffs according to the kind of
energy they want to promote.

12 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes by renewable energy technologies R&D portfolio.4 This initiative has had
to a point where they are better two funding rounds to date which
Renewable Energy Target (RET) able to compete with traditional have focused on solar excellence and
Australias RET is designed to ensure fossil-fuel technologies. Funding is industry collaboration respectively.
that 20 percent of Australias electricity available under two categories:
comes from renewable sources by Accelerated Step Change
2020. The RET continues to act as Projects Offers funding for Initiative (ASCI)
the principle driver of new renewable renewable energy and enabling ASCI supports exceptional,
energy investment across Australia technologies and products as they breakthrough projects that are not
and will achieve a target of 33,000 move through the technology otherwise eligible under existing
GWh of renewable electricity by 2020. innovation chain. The application ARENA programs. Expressions
The renewable energy sector has process is undertaken in two of interest from Australian and
received increased certainty this year phases, with funding allocations international companies and research
with the Australian Parliament passing expected to fall within the range institutions will be accepted until 2018.
renewed legislation committing to of AUD2 million to 30 million. Eligible projects must require an ARENA
the target after a review process.1 Measures Offers funding for contribution of AUD5 million or more,
No further reviews of the scheme initiatives that involve a renewable with the overall project cost expected
are to occur until it ends in 2020. energy industry capacity building to be more than AUD20 million.

In addition to the RET there are also activity, skills development activity Projects that are at the research
a number of policies, programs or a preparatory activity for an and development (R&D) phase of a
and incentives, with key initiatives ARENA Project. The application renewable energy technology or include
specifically related to renewable process is undertaken in one a technology that has yet to be proven at
energy which are described below. phase and is expected to fund up the pilot scale are not eligible. Projects
to AUD3 million, with a maximum can, however, include R&D components
Australian Renewable funding pool of AUD10 million. where they assist in the demonstration,
Energy Agency (ARENA) commercialisation or deployment of
Supporting High value Australian
ARENA is an independent agency a renewable energy technology.
Renewable Energy Knowledge
established by the Australian
(SHARE) initiative is in addition to these Clean Energy Finance
Government on 1 July 2012 and
two categories and seeks to build on the Corporation (CEFC)
operates under the ARENA Act 2011.
store of publicly-available knowledge The CEFC was established by the
It has two key objectives: to improve
about renewable energy technologies Australian Government under the Clean
the competitiveness of renewable
and approaches that are best suited Energy Finance Corporation Act 2012
energy technologies, and to increase
to Australia. The SHARE imitative can and is a commercially oriented financier
the supply of renewable energy in
support the direct commissioning which aims to make a positive return on
Australia. It has approximately AUD2.5
research, studies or knowledge its investment. The CEFC co-finances
billion in funding for renewable energy
products that meet knowledge gaps and invests, both directly and indirectly,
projects and research and development
within the industry or help overcome in clean energy projects using a range
activities.2 To date, it has committed
barriers to its growth in priority areas of financial instruments but does not
AUD1.1 billion to 230 projects
including understanding renewable issue grants. After its first 2 years in
across a range of technologies.3
energy potential, grid integration operation the CEFC has committed
Listed below are ARENAs and international engagement. over AUD1 billion in investments
current initiatives. across 70 projects with a total value
Research and Development
Emerging Renewables Program (ERP) Program (RDP) of AUD3 billion.5 The CEFC focuses
The ERP is focused on supporting The RDP is focused on supporting on technologies and projects that are
renewable energy technology at the R&D activities that will contribute in the later stage of development and
development, demonstration and to increasing the commercial those that can produce a positive rate
supported commercial stages of the deployment of renewable energy. of return and an ability to repay capital.
innovation chain. Ultimately the aim is Up to AUD300 million in grants has
to lower the cost of energy produced been allocated to develop ARENAs

1. 4.
2. programme/
3. 5.
Taxes and incentives for renewable energy | 13

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Renewable Energy Venture Smaller companies (those with an generation. The Australian Capital
Capital Fund aggregated turnover less than AUD20 Territory (ACT) previously ran a Large
The Southern Cross Renewable Energy million) can access a refundable 45 Scale FIT Scheme which provided
Fund is a 13-year, AUD200 million percent R&D tax offset, provided the ACT government with power
venture capital fund, operated by they are not controlled by income tax to grant FIT entitlements up to
Southern Cross Venture Partners. The exempt entities; and 210 MW of generation capacity.
fund was initially established under the Larger companies (those with an Quota obligation
Australian governments AUD100 million aggregated turnover of AUD20 million
Renewable Energy Venture Capital 20 percent reduction by 2020.
of more) can access a non-refundable
Fund (REVC) with the Governments 40 percent R&D tax offset.
contribution matched by an additional
Additional information
AUD100 million contributed by Only the first AUD100 million of R&D The Victorian State Government has
Softbank China Venture Capital. expenditure per income year receives recently made renewable energy a
R&D tax offsets above the corporate priority focus sector of its economy
R&D Tax Incentive tax rate, and unused non-refundable and is establishing a AUD20 million
The R&D Tax Incentive scheme is a offset amounts may be able to be New Energy Jobs Fund that will focus
broad-based program accessible to all carried forward to future income years. on driving investment into renewable
industry sectors. In many instances, energy projects and technologies.
activities conducted as a part of Operating subsidies
renewable energy development may Feed-in Tariff
be eligible for the R&D tax incentive.
There are no national-based FITs.
Currently the program offers two tiers
However, a number of state-based
of incentive based on the turnover
initiatives exist for small-scale
of the company in question:

14 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes In open space:

Investments and other subsidies 5 kWp to 350 kWp: ct10.00/kWh.

Small solar plants Geothermal:
Less than 5 kWp investment subsidies ct7.36/kWh.
are granted for the plants, sufficient for
them to achieve a 6 percent capital yield. Sewage gas

For plants between 5 kWp and 200 ct5.88/kWh.

kWp, an investment subsidy is granted Landfill gas
of 30 percent, not to exceed euros
Compact biomass (such as forest
Waste liquor plants
woodchips or straw)
Maximum 30 percent of the investment
ct8.81/kWh to ct13.86/kWh,
(not including real estate costs)
depending on the production capacity
up to 100 MW: EUR300/kW (declining tariff).
100 MW to 400 MW: EUR180/kW Waste with high biogenic contingent
more than 400 MW: EUR120/kW. same as for compact biomass, minus
25 percent.
Small hydro plants
Liquid biomass
maximum 30 percent of the
investment for 500 kW capacity: up to ct5.68/kWh; surplus of ct2/kWh for
EUR1500/kW production in an efficient power-heat
maximum 20 percent of the
investment for 2 MW capacity: up to Biogas from agrarian production
EUR1000/kW ct12.80/kWh to ct19.31/kWh,
maximum 10 percent of the depending on the production capacity
investment for 10 MW capacity: up to (declining tariff).
EUR400/kW Additional information
Between these set percentages, Legal
the maximum is calculated via linear
The feed-in tariffs are regulated by the
law for the promotion of electricity
Medium hydro plants (<10 MW) production from renewable energy
maximum 10 percent of the resources (kostromgesetz 2012).
investment The concrete feed-in tariffs have to be
determined each year by a decree from
maximum EUR400/kW and maximum the Ministry of Economics.
EUR6 million per plant.
Duration of the feed-in tariffs
Operating subsidies 15 years for liquid and concrete
Feed-in tariff biomass or biogas; 13 years for all other
renewable technologies.
Wind energy:
cents (ct)9.36/kWh. Administrative procedures
Applications have to be filed with
the Renewable Energy handling
On buildings: Center (kostromabwickklungstelle,
5 kWp to 200 kWp: ct11.50/kWh. http://

201 kWp to 350 kWp: ct12.50/kWh.

Taxes and incentives for renewable energy | 15

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes of carried forward increased investment energy certificates and/or combined
deduction if this amount is higher than heat and power (CHP) certificates.
Investment and other subsidies EUR2.48 million (per financial year
Corporate income tax incentives The certificate can be considered
as a transferable intangible asset,
An increased investment deduction is Formalities demonstrating that the energy plant as
available for investments made by a mentioned realized a certain amount of
Belgian company into newly acquired The Royal Decree implementing the
Belgian Income Tax Code contains energy savings. The competent Regional
or built tangible fixed assets or into new Authorities grants these certificates on
intangible fixed assets, provided that a list of eligible investments. Some
examples are wind turbines, solar a monthly basis to the owners of such
these assets are being used in Belgium energy plants as a reward for the energy
for the purpose of a professional activity. panels, combined heat and power
plants, biomass and waste handling, savings they achieved.
The increased investment deduction
will also be provided with respect to processing installations or heat recovery Belgian electricity suppliers have to
investments made in energy saving devices. make sure that a minimum amount of
assets, that is, fixed assets used for A certificate issued by the competent the electricity they provide to the end
a more rational approach to energy Regional Authority confirming that the consumers can be considered as green
consumption, for the improvement of assets are enlisted should be requested or renewable energy. To demonstrate
industrial processes from an energy- within three months following the last that they have reached this minimum
based point of view, and especially for day of the taxable period in which the amount of renewable energy, the
the recovery of energy in the industry. assets are acquired or established. electricity suppliers need to submit a
To verify the authenticity of the sufficient number of certificates to the
Applicable rules and rates Regional Authority. Electricity suppliers
investment made, it is necessary
A percentage of the acquisition or that the application to the competent who do not produce renewable energy
investment value of energy saving Regional Authority is accompanied themselves (and have not been granted
assets that have been newly acquired with supporting documents and other certificates) or suppliers that do not
or established during the taxable period items for determining the accuracy provide enough renewable energy
will be tax deductible. This comes in of the amount and the value of the themselves are able to buy these
addition to the accounting depreciations investments. certificates on the market.
that are also tax deductible.
Regional Support Schemes Producers of renewable energy can sell
The increased investment deduction the certificates they have received to an
should therefore be applied as a one- In Belgium, renewable energy is a
electricity supplier who needs to reach
off deduction and equals 13.5 percent regional matter; only offshore wind
the minimum amount of renewable
(indexed yearly percentage power and hydro power are governed by
energy. Moreover, to ensure the sale
investments 2015) of the acquisition national (federal) regulations. Depending
of certificates at a minimum value, the
value or investment value. on the competent Regional Authority,
distribution network operator, as part
applications can be made for specific
Tax deduction of its duty as a public service, will also
support schemes.
purchase certificates at a minimum
The increased investment deduction will Financial support to encourage Belgian guaranteed value, upon request of an
be applied on the profits of the taxable companies to invest in state-of-the-art, energy producer.
period in which the assets have been ecological technologies can be obtained
newly acquired or established (that is, As a result, producers of renewable
via an open online system and will be
when they became depreciable). When energy can use the certificates that
granted by the competent Regional
the deduction cannot be fully set off were granted to them by the competent
against the profits of the taxable period, Regional Authority to:
the proportion of the deduction that has Provided that certain conditions have
been met, these regionally granted meet the minimum renewable energy
not been used can be carried forward
subsidies are tax-free for corporate requirements (in case the producer is
without any time limit and can be set off
income tax purposes. also an electricity supplier)
against the profits of the subsequent
taxable periods. The application of the Federal System of Certificates sell the certificates on the market at
carried-forward increased investment market price
deduction is however limited to a In Belgium, electricity from renewable
sources is promoted mainly through sell the certificates to the distribution
certain amount per taxable period, being
a quota system based on the trade of network operator at a certain
EUR620,000 for investments made in
certificates in other words, green minimum guaranteed value.
2014, or 25 percent of the total amount

16 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes a 1.5 percent PIS rate and a 6.9 The State Value-Added Tax on Sales
percent COFINS rate levied on and Services (Imposto Sobre a
Investments and other subsidies
gross revenue of ethanol sales Circulao de Mercadorias e Servios
Taxes over revenue and imports (PIS or ICMS) can possibly be exempted
and COFINS) a fixed value of PIS and COFINS
for some products used for biodiesel
by cubic meter of commercialized
A special tax regime is applicable in or ethanol production. In addition,
ethanol BRL8.57 and BRL39.43,
Brazil for producers and importers the ICMS calculation basis may be
respectively, up to 31 August 2013.
of biodiesel, which includes two reduced for interstate operations
programs: the Social Integration The Brazilian government edited Decree related to ethanol and biodiesel
Program (Programa de Integrao 7.997/13, which sets forth that, from production and distribution. This
Social or PIS) and the Contribution to 1 September 2013 until 31 December reduction depends on individual state
the Social Security Fund (Contribuio 2016, the fixed value of PIS and COFINS law.
para o Financiamento da Seguridade by cubic meter of commercialized
In the same way, operations involving
Social or COFINS). The PIS and ethanol shall be increased to BRL21.43
equipment used in the generation of
COFINS taxes due are definitive, and BRL98.57, respectively.
wind and solar energy can possibly be
meaning that the resale of biodiesel Despite this, the Brazilian government ICMS tax exempt until 31 December
by wholesalers, distributors and approved Federal Law n. 12.859/2013 2021.
retailers is not subject to PIS and that grants to the producers and
COFINS. Under this tax regime, the Contribution for Intervention in the
importers a presumed credit in the
producers and importers can opt for: Economic Domain (CIDE)
same values, which leads to a practical
a 6.15 percent PIS rate and a effect of zero rate of PIS and COFINS. Ethanol sales are not subject to
28.32 percent COFINS rate levied Also, the taxpayers may opt for this new Contribution for Intervention in the
on gross revenues derived from fixed value and the presumed credit in Economic Domain (Contribuio de
biodiesel sales; or advance (from 8 May 2013). Interveno no Domnio Econmico
or CIDE).
a fixed value of PIS and COFINS For distributors of ethanol, the following
by cubic meter of commercialized options are available, depending on the Operating subsidies
biodiesel Brazilian real (BRL)26.41 option of the producer or importer: Brazil currently has no feed-in tariff
and BRL121.59, respectively. policy.
a 3.75 percent PIS rate and a 17.25
Producers opting for the fixed value percent COFINS rate levied on Additional information
can obtain certain reductions and gross revenue of ethanol sales
Brazil is considered the worlds seventh
exemptions of the amounts due, a zero rate for the fixed PIS and largest investor in renewable energy.
depending on the supplier of raw COFINS. Nationwide, 79.3 percent of the Internal
material or input applicable to the
Ethanol sales carried out by retailers Energy Supply (Oferta Interna de
production (for example, acquisition
and sales negotiated through the Energia or OIE) is renewable, whereas
from castor bean producers or from
Future & Commodities Exchange the worlds average is 20.3 percent.
family farmers). Moreover, the entity
that sells biodiesel that is subject to (Bolsa de Mercadorias e Futuros or Furthermore, the National Bank for
the non-cumulative regime of PIS and BM&F) are not subject to PIS and Economic and Social Development
COFINS is entitled to a 45 percent COFINS, as long as the commodities (Banco Nacional do Desenvolvimento
presumed credit based on the income contracts do not stipulate physical Econmico Social or BNDES) provides
from the sale in the domestic market or delivery as part of contracts that are a variety of financial programs
the export of biodiesel. financially settled. to stimulate the production of
Federal and state VAT (IPI and ICMS) renewable energy. The development
Sugarcane sales are exempt from
of the renewable energies in Brazil
PIS and COFINS, provided that the Biodiesel and ethanol sales are not
is increasing, and almost half of the
tax payer is under the non-cumulative subject to the Industrialized Products
energy consumed in Brazil is now
regime. tax (Imposto Sobre Produtos
generated by renewable sources.
There is a special tax regime for Industrializados or IPI).
The actual scenario is very
producers, importers and distributors Equipment used in the renewable
advantageous for renewable energy.
of ethanol. The producers and energy generation process is
The government expectations are that
importers may opt for: generally exempted from the IPI.
renewable energy may be responsible

Taxes and incentives for renewable energy | 17

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
for 18 GW out of a total increase of 63 Additional benefits not yet in force of renewable energy. At this point in
GW in the total installed capacity of the time, these benefits have not yet been
segment over the next 10 years. Several other incentives being discussed implemented.
in the Brazilian scenario are also worth
According to the Ministry of Mines mentioning: In 2013, the government created a
and Energy, Brazil is especially well program of incentives to the ethanol
situated for becoming a major producer The Brazilian Commission of sector. This program involves several
of biodiesel. The country contains a vast Infrastructure Services (CI) approved benefits to this market that will be
amount of arable land, much of which PLS311/09, a federal project law that implemented soon:
has the right soil and climate for growing establishes the Special Regime of
Taxation to encourage the development creation of a line of credit of BRL6
a variety of oilseeds.
and generation of electric power from billion for the production and storage
The growth of biodiesel as an alternative alternative sources (Regime Especial of sugarcane and ethanol with reduced
energy source in Brazil is supported by de Tributao para o Incentivo ao interests
Federal Laws 11.097/05 and 13.033/14, Desenvolvimento e Produo de
increasing of the percentage of
which mandate a minimum of 5 percent Fontes Alternativas de Energia or
ethanol to be mixed with gasoline
of biodiesel to be mixed with diesel and REINFA). This project foresees several
from 20 percent to 25 percent
the monitoring of this mixture in the tax benefits such as exemptions of PIS
marketplace. The Laws also support the and COFINS, import taxes and IPI for reduction of chemical input costs,
funding of R&D for biodiesel and other companies operating under the regime. It by diminishing the chemical industry
energy sources, as well as all phases of is important to emphasize that this is not costs with the increasing of its PIS and
production, including the acquisition of a law in force, yet. At the present time, it COFINS credits.
equipment and technology. is still awaiting internal procedures in the
Finally, other general benefits that
In a related matter, Brazil is one of the Federal Senate.
are not specific to renewables may
most promising countries for wind After COP-15, Brazil formalized its apply, such as the Special Incentives
energy. The first wind energy auction commitment to reduce carbon emissions Program for Infrastructure Development
was held at the end of 2009, in which and increased its goal by 2.8 percent. (Regime Especial de Incentivos para o
the government bought 1,805 MW of Under the National Policy on Climate Desenvolvimento da Infra-Estrutura or
wind energy at a price of BRL148.39/ Change (law 12.187/09), Brazil has REIDI), SUDAM/SUDENE incentives,
MWh. Encouraged by the success of this pledged to reduce carbon emissions and technology innovation. Each one
auction, the government continues to 38.9 percent by 2020. According to has its requirements for application and,
hold auctions on an annual basis. this law, Brazil could grant several in some cases, depends on government
tax benefits to encourage the use approval.

18 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes equipment generating electricity CRCE is fully deductible in any year, can
from geothermal energy be carried-forward indefinitely or can
Federal investments and other be transferred to investors through the
subsidies equipment generating electricity
flow-through share rules.
The Government of Canada has from eligible waste fuel.
committed that by 2020 Canadas total Scientific Research & Experimental
o thermal energy
greenhouse gas emissions be reduced Development (SR&ED) Program
by 17 percent from 2005 levels and active solar equipment The SR&ED Program is a federal tax
90 percent of Canadas electricity be district energy equipment that incentive program administered by
generated from sources that do not distributes thermal energy from the Canada Revenue Agency that
produce greenhouse gas pollution. cogeneration encourages Canadian businesses of all
Here is a summary of incentives and sizes, and in all sectors, to conduct R&D
grants that the federal government has heat recovery equipment used in in Canada. Companies, including those
invested in support of these goals. electricity generation and industrial carrying on business in clean energy
processes generation, may be entitled to claim an
Income tax incentives Investment Tax Credit (ITC) if they incur
ground source heat pump
Accelerated Capital Cost Allowance eligible R&D expenditure. The tax credit
(ACCA) is based on money already committed
Advantageous ACCA rates are available equipment generating heat and spent by the company. The program
for certain types of assets used for for industrial processes or is the single largest source of federal
clean energy generation and energy greenhouses, using an eligible government support for industrial R&D,
conservation: waste fuel. returning as much as a 35 percent
o fuels from waste federal cash refund.
Class 43.1 (30 percent declining
balance basis) for certain clean energy equipment that recovers landfill gas Sustainable Development Technology
generation and energy conservation or digester gas Canada (SDTC)
equipment. SDTC plays a significant role in
equipment used to produce biogas bridging the gap between research
Class 43.2 (50 percent declining through anaerobic digestion and commercialization of clean
balance basis) for certain equipment
equipment used to convert technologies. It does this by
described in Class 43.1 that is
biomass into bio-oil fast tracking clean technologies
acquired on or after 23 February
through their development and
2005 and before 2020 that is used equipment used to remove non- demonstration phases, in preparation
for clean energy generation, energy combustibles and containments for commercialization. SDTC is an arms
conservation and higher efficiency from gas. length foundation that was created
Canadian Renewable and by the Federal government to invest
Recent federal budgets that support, Conservation Expense (CRCE) 1.09 billion Canadian dollars (CAD) in
along with other equipment, the innovative technologies and projects
To promote the development and
following components: that deliver economic, environmental,
conservation of sources of renewable
energy, many start-up expenditures on and health benefits to Canadians.
o electricity
renewable projects can be grouped in a Backed by CAD915 million in funds,
high-efficiency cogeneration
CRCE pool. CRCE can include intangible SDTC supports projects that address
expenses such as feasibility studies, climate change, air quality, clean water
small hydroelectric facilities negotiation, regulatory, site approval and clean soil. The CAD500 million
costs, site prep and testing, etc. CRCE NextGen Biofuels Fund supports the
wind turbines
can also include test wind turbines that establishment of first-of-kind, large
fuel cells are part of a wind farm, on projects demonstration-scale facilities for
where 50 percent or more tangible the production of next-generation
wave and tidal power equipment
costs are reasonably expected to be renewable fuels.
Photovoltaic (PV) equipment included in Class 43.1 or 43.2 ACCA.

Taxes and incentives for renewable energy | 19

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
SDTC acts as the primary catalyst in the 2013 budget, the Government of recoverable reserves and increased
building a sustainable development Alberta cancelled future rounds of the royalties. Successful applicants in the
technology infrastructure in Canada. Bioenergy Producer Credit Program. program are provided with royalty
TheSDTC portfolio is currently However, the government will still be adjustments up to a maximum of 30
comprised of 285 clean technology honoring payments to existing grant percent of approved project costs. The
projects, for a total value of CAD2.9 agreements. The program is valid for industry must provide the remaining
billion, of which over CAD2.0 billion is bioenergy production from 1 April 2011 70 percent or more of total project
leveraged primarily from the private- to 31 March 2016. costs. The total industry/government
sector. In February 2015, SDTC commitment to important new
Carbon Capture and Storage (CCS)
announced a call for applications, which technologies, assuming full subscription
Fund Alberta
was open until 15 April 2015. of the program, will be CAD1.15 billion.
The Alberta government has committed
ecoENERGY CAD1.3 billion to advance CCS Innovative Clean Energy Fund (ICE)
The ecoENERGY program targets technology. Approved projects can British Columbia
several areas including biofuels, energy receive a maximum of 75 percent of The Innovative Clean Energy Fund
efficiency and renewable energy. the total incremental cost to capture, encourages the development
transport and store CO2. A maximum of new sources of clean energy
ecoENERGY for biofuels: The
of 40 percent of the approved funding and technologies and supports
ecoENERGY for Biofuels initiative
will be distributed during the design precommercial energy technology or
has a budget of CAD1.5 billion over
and construction stage based on commercial technologies not currently
9years to boost Canadas production
achieved milestones, and an additional used in British Columbia. Since 2008,
of biofuels. The program runs from
20 percent of the approved funding will there are 62 projects with a total
1 April 2008 to 31 March 2017, and
be granted upon commercial operation. amount of CAD77 million that have been
recipients will be entitled to receive
The remaining 40 percent of the funding approved throughout British Columbia.
incentives for up to 7 consecutive
will be provided as CO2 is captured
years. SR&ED tax credit All provinces
and stored over a maximum period of
ecoENERGY for Renewable Power: 10years. Various provinces provide refundable
The ecoENERGY for Renewable and/or non-refundable investment
The government of Alberta has awarded tax credits (ITC) worth between
Power initiative has a budget of
funding for two projects from its CAD1.3 10 percent and 15 percent of annual
approximately CAD1.4 billion
billion CCS fund: eligible expenditures (depending on the
over 14years to encourage using
renewable energy sources to create Alberta Carbon Trunk Line (CAD495 particular province) for all corporations
electricity. The program runs from 1 million) that do business through a permanent
April 2007 to 31 March 2021. There establishment situated in that province.
Shell Quest (CAD745 million). Eligible expenditures are generally those
are no new agreements signed
after 31 March 2011; however, many Innovative Energy Technologies that qualify for federal ITC purposes
projects with existing contribution Programs (IETP) Alberta and are generally capped at a maximum
agreements will still receive annual credit.
The Innovative Energy Technologies
payments up until 31 March 2021. Program (IETP) supports the Provincial Operating subsidies
Provincial investments and other Energy Strategy (PES), which identifies
the need for innovation, research and There are no feed-in tariffs or quota
subsidies obligations at the federal level, but they
technology development. Announced
Bioenergy Producer Credit Program are implemented in some provinces.
in 2004, the IETP supports innovative
technology development in the Quota obligation Alberta
To expand Albertas bioenergy sector, production of Albertas oil, oil sands, and
the Bioenergy Producer Credit Program The province of Alberta has required
gas resources. It also supports finding facilities that emit more than 100,000
was established to provide production commercial technical solutions to the
subsidies for a variety of bioenergy tonnes of greenhouse gas emissions a
gas-over-bitumen issue to allow the year to reduce their emissions intensity
products, including renewable fuels, efficient and orderly production of both
electricity, and heat using waste by 12 percent. The regulation took
resources. Over time, program costs effect as of 1 July 2007. Emitters have
such as manure and wood chips. In will be recovered through additional

20 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
four choices for compliance with this
emissions reduction target:

make improvements to their

purchase offset credits from other
sectors that have voluntarily reduced
their emissions
pay CAD15 a tonne into the Climate
Change and Emissions Management
Fund, an arms length organization
independent from the government
that invests the funds into initiatives
and projects that support emission
reduction technologies
purchase Emissions Performance
Credits from facilities that have
reduced their emissions intensity
below the mandatory 12 percent
Feed-in tariff Ontario
The Ontario feed-in tariff program is
North Americas first comprehensive
guaranteed pricing structure for
renewable electricity production, and it
provides a way to contract for renewable
energy generation. It includes
standardized program rules, prices
and contracts for anyone interested
in developing a qualifying renewable
energy project. Prices are designed
to cover project costs and allow for
a reasonable return on investment
over the contract term, and they are
subject to review periodically. Qualifying
renewable technologies include biogas,
renewable biomass, landfill gas, PV,
water power and wind power.

Taxes and incentives for renewable energy | 21

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes opinions to the central NDRC for VAT
further review. (According to the 50 percent refund of VAT is paid on
Investments and other subsidies
Old Measures, all CDM project the sale of wind power.
Corporate Income Tax (CIT) companies applied directly to the
central NDRC for approval.) 50 percent refund of VAT is paid on
A reduced CIT rate of 15 percent
the sale of self-produced PV power
is granted to qualified advanced The New Measure also changes the from 1 October 2013 to 31 December
and new technology enterprises. sharing percentage in the proceeds 2015.
Applicable fields include solar energy, from the transfer of emission
wind energy, biomaterial energy, and reductions units between the 100 percent refund of VAT is paid on
geothermal energy. government and companies involved the sale of biodiesel oil generated by
in N2O and PFC projects. the utilization of abandoned-animal fat
The Clean Development Mechanism
and vegetable oil.
(CDM) Fund is exempted from CIT on A 3-year exemption from the CIT is
the following income: followed by a 50 percent reduction for The portion of VAT paid in excess of
another 3 years of the standard CIT 8percent shall be refunded on the
the portion of Carbon Emissions
rate for income derived from qualified sale of self-produced electricity by
Reductions (CERs) proceeds that
environmental protection and energy hydroelectric power stations with 1
are shared by the government
or water conservation projects. This million KW installed capacity from
donations from international reduction starts from the year in 1 January 2013 to 31 December
financial organizations which the first revenue is generated. 2015, while the portion of VAT paid
Applicable fields include biomaterial in excess of 12percent shall be
interest income derived from
energy, synergistic development refunded on the sale of self-produced
capital deposit or national bonds
and utilization of methane, and electricity by hydroelectric power
donations from domestic and technological innovation in energy stations with 1 million KW installed
foreign entities or individuals. conservation and emission. capacity from 1 January 2016 to 31
December 2017.
Enterprises operating CDM projects A 10 percent credit of the amount
are allowed to deduct before CIT the invested in the qualified equipment VAT paid on the sale of goods
CER proceeds that are shared by the is applied against the CIT, payable for produced from recycled materials or
government. the current year, with any unutilized waste residuals is refundable.
A 3-year exemption of the CIT is investment credit eligible to be VAT is exempt on the sale of self
followed by a 50 percent reduction carried forward for 5 tax years. This produced goods including recycled
for another 3 years of the standard applies only if such equipment is water, qualified powdered rubber
CIT rate for income derived from qualified as special equipment related made out of obsolete tires, re-
specified CDM projects. These to environmental protection, energy, trodden tires and certain construction
projects include hydrofluorocarbons or water conservation and production materials made from 30 percent or
(HFC), perfluorocarbons (PFC), and safety. more of waste residuals.
nitrous oxide (N2O) projects, starting Only 90 percent of the revenue VAT is exempt for sewage treatment,
from the year in which the revenue derived from the transaction is taken garbage disposal and sludge
from the transfer of greenhouse into account for CIT computation treatment services.
gas emission reductions is first purposes. This applies only if such
received. According to the new revenue is derived from the use of In November 2011, the government
Administrative Measures Governing specific resources associated with authority expanded the scope of sales
the Operation of CDM Projects in the synergistic utilization of resources of self-produced goods/products by
2011, any project companies, except as raw materials in the production of using the prescribed recycled materials,
for the 41 state-owned enterprises goods. waste residuals and agricultural
listed, shall apply for approval with the residuals that are eligible for VAT refund
National Development and Reform A 150 percent deduction is given for at rates ranging from 50 to 100 percent
Commission (NDRC) at the provincial qualified R&D expenses incurred for of the VAT payable. The rates may vary
level first. Then the commission CIT computation purposes. depending on the nature of recycled
would submit preliminary review materials or residuals utilized.

22 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
As of 1 April 2013, the taxpayer is further A qualified ESCO taking part in an areas and the electricity generated by
required to meet the local/national EPC project will be provisionally different types of renewable energy
pollutant emission requirements in exempt from the VAT on the transfer companies.
order to receive the VAT incentive for to the energy user of goods related to
Financial funds/allowance
self-produced goods/ products from the project.
recycled materials. Special funds are made available to
When, at the end of the term of facilitate the development of renewable
Vehicle and Vessel Tax the energy management contract energy relating to the following
As of 1 January 2012, qualified energy (EMC), the ESCO transfers to activities:
efficient vehicles and vessels enjoy the energy user the assets that
have materialized in the course scientific and technical research,
a 50 percent Vehicle and Vessel Tax
of executing the EPC project, the standardization processes and model
deduction. Qualified new energy (mainly
ESCO can do so as if these assets engineering projects
electric) vehicles and vessels may be
exempted from Vehicle and Vessel had been fully depreciated or renewable energy projects in rural
Taxes. amortized for CIT purposes. In the and pastoral areas
same way, when the energy user
Vehicle Purchase Tax receives the project assets from construction of stand-alone electricity
From 1 September 2014 to 31 the ESCO, the energy user can do generation system in remote areas
December 2017, new energy vehicles so as if these assets had been so and islands
purchased will be exempted from depreciated or amortized. renewable energy resource surveys,
Vehicle Purchase Tax. evaluation and construction of
When the ESCO transfers the project
Feed-in tariff incentives available assets to the energy user at the end information systems
to energy performance contracting of the term of the EMC, the ESCO localization of manufacturing facilities
(EPC) projects will not have to recognize any revenue used in the renewable energy sector.
Qualified energy service companies to take into account the contributions
the energy user has made to the price The special funds may also be deployed
(ESCOs) taking part in an EPC project
of the assets. as compensation for the higher costs
will be eligible for a tax exemption in
charged by renewable energy plants
the first 3 years and a tax reduction An energy user in an EPC project can and indirectly borne by the grid for
by half (an effective rate of 12.5 deduct reasonable expenses actually the purchase of electricity from these
percent) over the following 3 years, incurred in accordance with the EMC plants. Applicants may apply for such
starting from the tax year in which the as, and when, they are incurred for funds with the local finance bureaus and
revenue from the project first arises. CIT purposes. There is no need to the government agencies in charge of
Where an EPC project lasts less than differentiate between service fees renewable energy projects.
6 years, the ESCO shall be entitled and asset prices in claiming such a
to the incentives based on the actual deduction. Financial subsidies for energy
project period. conservation technologies
Operating subsidies improvement
An enterprise that invests in special
equipment for energy conservation Feed-in tariff During the States 12th Five-Year Plan
will obtain a credit against its tax period, the central government will
With the revised Renewable Energy
payable that equals 10 percent of continue to arrange special subsidies
Law that came into effect in April 2010,
the investment amount in the year in to support the projects to improve the
the State Bureau of Energy and other
which the investment is made. Where energy conservation technologies.
departments of the State Council
there is not sufficient tax payable will promulgate guidelines on the full The financial subsidies for energy
to absorb the credit in the year, the purchase of electricity generated by conservation will support the following
excess credit may be carried forward new energies. According to the revised activities:
up to 5 tax years. law, the price of on-grid electricity
innovation for energy conservation
A qualified ESCO taking part in an generated by renewable energies shall
EPC project will be provisionally be determined by the competent price
exempt from the Business Tax/ VAT on department of the State Council. The establishment of energy conservation
revenues received from the project. council will consider the difference in capacity and public platforms

Taxes and incentives for renewable energy | 23

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
integrated demonstrations of fiscal Financial subsidies for renewable The amount of subsidies granted is
policy for energy conservation energy development subject to the nature, goals, investment
To promote the development and and utilization level for renewable
energy conservation in significant
utilization of renewable energy, financial energy activities. The distribution
fields, industries and regions
subsidies are granted to the following methods for financial subsidies include
promotion and upgrading of activities: competitive allocation, factor allocation
significant energy conservation and reimbursement on the actual cost
technologies demonstration of important basis.
technologies for renewable and new
other relevant activities approved by energy, and industrialization Additional information
the State Council.
development and utilization of Quota obligation
The allocation of the financial subsidies renewable and new energy The guidelines for quotas in the
for energy conservation is closely renewable energy sector have been
linked to the nature, goals, investment, development of platforms for
renewable and new energy included in the work plan of the State
achievements and utilization levels for Bureau of Energy and are expected to
energy conservation. The allocation integration of renewable and new be issued by 2015.
methods of financial subsidies include energy utilization
direct allowances, bonus, interest
discount and reimbursement on the other relevant activities approved by
actual costs basis. the State Council.

24 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Costa Rica
Support schemes Materials to build equipment for Operating subsidies
renewable energy use
Investment and other subsidies Costa Rica currently has no feed-in tariff
Law 7447 Tempered glass with less than 0.02 policy.
percent iron content
Law 7447 (Regulation of the Rational Other aspects
Use of Energy), Article 38, lists a Thermal insulation for thermal solar
number of energy-related products that collectors such as polysocyanurate Expansion Plan Generation
are exempt from the following taxes: and polyurethane insulation, additives (PEG)
for preparing them, or both
excise tax The Expansion Plan Generation (Plan
Plate-finned tubes and absorbent de Expansion de Generacion or PEG) is
ad valorem plates for water heaters Costa Ricas framework for medium and
general sales tax long-term planning from 2014 to 2035
Specific aluminum profiles to build
in the electricity sector. The first period
specific customs tax. solar water heaters
of the Plan covers construction sites
These exempt products include: Thermal insulation for water pipes until 2017, including the Reventazn
Hydroelectric Project (300 MW),
Multipurpose solar water heaters Any heat insulator useful to improve
which will come online in 2016. The
the insulation of storage tanks with
Water storage tanks for solar heating next period starting in 2018 includes
solar heated water systems
systems (boiler type) a recommended general program of
Measuring instruments related to action until 2035.
PV panels for power generation, any renewable energies variables, such
capacity as: temperature gauges, pressure Established renewable
Control systems for PV panels, wind gauge fluids, solar radiation meters, resources
and hydro generators working with and anemometers to measure wind Under the PEG, Costa Rica is developing
direct current (DC) speed and direction a variety of renewable energy
Static DC to alternating current (AC) Pump-fed systems with PV and wind resources to meet electricity demand.
converters for PV systems, wind and systems Hydropower has been the main source
hydroelectric generators with DC of power, due to its abundance, quality
Refrigerators, solar cookers and and cost, followed by geothermal and
systems hydraulic ram pumps. wind. Biomass, based on bagasse, and
Deep-cycle, lead-acid batteries Moreover, tax reductions for green solar are also contributing to the energy
and nickel-cadmium or nickel-iron technology have been introduced, such matrix.
batteries, with capacities greater than as a 10 to 30 percent tax reduction for
50 amps per hour hybrid cars.
Head economizers for hot water The identified potential of this resource
Temporary import
showers and sinks, with consumption includes about 1,700 MW that partially
Law 7557 (General Customs Law), or totally affects indigenous reserves.
of less than 9.5 liters per minute
Article 165, states that the products Another 780 MW is located in national
Efficient fluorescent and halogen listed above are exempt from import parks, where the law does not allow any
lighting taxes if they are imported with a kind of exploitation.
temporary purpose related to a
Wind and hydro-generators for use
not related to private generation
renewable energy project. After the Geothermal
renewable energy project is finished
of electricity (Law 7200 of The identified potential of geothermal is
and the imported products are no longer
28 September 1990) based on a very preliminary and limited
needed, they can be exported without
estimate. Most sources are located
Equipment for controlling voltage incurring any customs tax. The products
within national parks in the Central
and frequency for wind and hydro must remain in the country for no longer
and Guanacaste volcanic mountain
generators than 1 year and must then be exported
ranges and are not available for use.
or definitively imported without any
DC electronics equipment for use The only fields that can be developed
with PV panels, wind and hydro are Miravalles and Rincon de la Vieja
generators (Pailas and Borinquen). These fields have

Taxes and incentives for renewable energy | 25

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
a potential of 300 MW, out of which developing additional sources such as projects ranging in capacity from 1 MW
195 MW is already in operation. the following: to 20 MW.

Wind Biogas Biofuels

Costa Rica has been the pioneer of wind Biogas is the energy source that is Biofuels may become a significant
energy in Latin America. Since 1996, obtained from biomass. As with the addition to the countrys energy mix in
about 5 percent of the countrys energy sugar mills mentioned above, some the coming years. Mixtures of diesel
needs are met by wind. The annual small farms have developed systems with 5 to 20 percent of biodiesel can be
cycle of wind generation complements for personal consumption, with the used at any of the thermal plants in the
hydropower, since the strongest winds potential for larger-scale developments country, without adjustments or major
occur in the dry season. in the future. retrofits.

Biomass bagasse Municipal solid waste There is still no infrastructure for large-
scale production, storage or distribution
For bagasse, sugar cane mills have Solid waste can be used to generate chains. Small amounts have been
installed their own generation electricity through steam-producing experimentally used in thermal floors
equipment and are able to produce processes. Several municipalities by the Costa Rican Electricity Institute
more energy than they need at a low in Costa Rica have announced their (ICE).
cost. Additional investments in new interest in adopting this technology.
generation equipment have increased
these benefits. The seasonality of Solar
growing sugar cane complements the As prices for PV solar panels continue
seasonality of hydropower plants. to decline, this technology is becoming
increasing attractive to investors.
Emerging renewable resources Costa Rica's Regulatory Authority for
Along with existing sources of Public Services (ARESEP) has recently
renewable energy, Costa Rica is proposed new feed-in tariffs for PV

26 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes Credit for competitiveness and of projects (tariffs for the first quarter
employment (CICE) 2015):
Investments and other subsidies
The tax credit is equal to 6 percent of ground-based PV power plants:
The accelerated tax depreciation has all wages paid to employees during the
not been renewed as of 1 January 2011. EUR0.0662/kWh
calendar year for salaries that do not
However, companies can still apply a exceed 2.5 times the French minimum simplified building-integrated
declining-balance method to certain wage (salaries of employees who earn generating facilities: EUR0.1347/kWh
equipment used to produce renewable more than 2.5 times the minimum wage or EUR0.1279/kWh
energy. This method, which is optional, are excluded from the computation).
consists of multiplying the depreciation building-integrated generating
rate for the straight-line method by a The wages used to calculate the CICE facilities: EUR0.2655/kWh.
coefficient determined by law, based base are the same as wages used to As of 1 July 2011, the above-mentioned
on the assets expected useful life. In calculate employers social security tariffs have been adjusted quarterly
practice, when a company applies the contributions with respect to base pay, by the Ministry in charge of energy,
declining depreciation method at the holiday pay, benefits in kind, etc. depending on the number of grid
beginning of the depreciation period, it The tax credit may be applied to offset connection applications received by the
can obtain a tax depreciation higher than corporate income tax liability and the distribution system operators over the
the accounting depreciation. excess could be carried forward for 3 previous quarter.
Biofuels years and may be refunded if not fully A bonus of 5 percent or 10 percent
Biofuels benefit from a partial utilized at the end of this period. applicable on the above-mentioned
exemption of the internal tax on Operating subsidies tariffs was granted for the components
petroleum products and of the of the PV system made in Europe. This
general tax on polluting activities to Feed-in tariff bonus was cancelled effective May 2014
compensate for the additional costs Remuneration is available for electricity since this system was considered as
arising from biofuel production. Biofuels produced from the following sources non-compliant with EU rules on freedom
in gasoline include bioethanol and ethyl according to tariffs which are revised on of movement.
tertiary butyl ether (ETBE). This partial indexation formula.
The above-mentioned tariffs are mainly
exemption is applicable for the period
Wind applicable for installations below
between 2014 and 2015.
Onshore wind power plants: 100 KW power. For the installations
Research tax credit EUR0.082/kWh for 10 years and exceeding this threshold, they are
Companies may be granted a research between EUR0.028/kWh and subject to invitation to tender.
tax credit on their environmental EUR0.082/kWh for the next 5 years Geothermal
investments if the expenses they depending on the location of the wind
France: EUR0.20/kWh, in addition to
incur while carrying on such projects farms and the hours of electricity
an energy efficiency bonus of up to
correspond to research activities eligible production.
for this tax credit. The tax credit will
Offshore wind power plants:
be equal to 30 percent of the eligible French overseas departments:
EUR0.13/kWh for 10 years and
research expenses that do not exceed EUR0.13/kWh, in addition to an
between EUR0.03 and EUR0.13/kWh
EUR100 million and to 5 percent for energy efficiency bonus of up to
for the next 10 years, depending on
the eligible R&D expenses exceeding EUR0.03/kWh.
the location of the wind farms and the
EUR100 million.
hours of electricity production. Biomaterial (Biogaz)
The research tax credit will be offset
These tariffs should be modified further Between EUR0.0.8121/kWh and
against the corporate income tax due
for the implementation of offshore wind EUR0.1337/kWh, depending on the
during the year in which the expenses
farm development zones (see below). power of the plant, in addition to
are incurred. Any surplus tax credit will
an energy efficiency bonus of up to
constitute a receivable for the company Solar EUR0.04/kWh and to a bonus for
that can be used to pay the corporate Due to several recent changes in processing of animal manure up to
income tax for the three following years the law, different tariffs apply to PV EUR0.0.26/kWh.
and may be reimbursed afterwards. power plants, depending on the kind

Taxes and incentives for renewable energy | 27

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Hydro subject to the issuance of a building On 16 March 2013, the French Energy
EUR0.0607/kWh in addition to a permit. Specific authorizations exist Regulatory Commission issued a
bonus between EUR0.005/kWh for wind, hydro and biomaterial power second tender for offshore wind farms
and EUR0.025/kWh for small power stations. In addition to the building with 1 GW of new capacity. On May
plants, as well as a bonus of up permit, an exploitation authorization 7, 2014, the French government has
to EUR0.0168/kWh for electricity issued by the Minister of Energy is awarded a tender to build and run two
produced during the winter required for power plants with an offshore wind farms to a consortium led
installed load/installed power higher by French gas and power group, ENGIE.
EUR0.015/kWh for ocean hydraulic than 4.5 MW. For power plants with an
energy (wave energy, tidal energy and Furthermore, the Ministry of
installed power lower or equal to 4.5
other hydrokinetic energy sources). environment indicated that France
MW, only a declaration is required. For
wants to have 6000 MW offshore
Biomass wind plant, an environmental permit is
capacity before 2020. Therefore,
also required.
EUR0.043/kWh in addition to a bonus specific organizations need to identify
between EUR0.0771/kWh and Renewal of hydroelectric new zones for the construction of
EUR0.1253/kWh depending on the concessions: offshore wind parks. In the coming
energy efficiency, the nature of the The debate over the renewal of months, the French government should
resources used and the power of the hydraulic concessions and its corollary, be announcing a new tender.
plant. the liberalization of the market, goes Grid access:
lectricit de France (EDF) and other back several years and has been the
The producer/owner of a new power
electricity distributors must purchase subject of many reports and changes
plant has to apply for a grid connection
the electricity produced by a renewable by the public authorities. For the time
to the public distribution system such as
energies producer at fixed tariffs and for being, the renewal of hydroelectric
Rseau de Transport dElectricit (RTE),
a minimum duration. For example, there concessions has not been organized.
Electricit Rseau Distribution France
is a purchase obligation for EDF during a Therefore, the Government took two (ERDF) or a local distributing company.
15 year period for onshore wind power, approaches in the Energy Transition Some agreements have to be made by
geothermal power, and biomaterial for Green Growth Act currently in the owner of the power plant for the
power and a 20 year period for offshore discussion for this renewal: (i) the distribution of electricity produced by
wind power, solar power (subject to the grouping together of concessions the plant:
date of the operational start up of the for major valleys (known as the
facilities) and for hydro power. The tariffs public grid contract (Contrat daccs
barycenter method in order to
mentioned above correspond to the au rseau public)
optimize operations, and (ii) the
tariff applied to the power plants located possibility for the State to create grid connection contract (Contrat de
in metropolitan France. Increased public-private hydro-electric raccordement)
tariffs apply with respect to Corsica and companies to operate the renewed
overseas departments. contract regarding the use of the
equipment necessary for the grid
Additional information Offshore wind energy: connection (Contrat dexploitation
France has set a target plan for installing des ouvrages de raccordement).
Building and Construction
Authorization and Permission (BCAP): 6,000 MW of offshore wind energy by New disposal currently discussed by
2020 through a tender process. the French Parliament:
The construction of a power plant is
subject to the issuance of a building In April 2012, the French government The final version of the Energy Transition
permit. However, solar power plants announced an award of four offshore for Green Growth Act was voted on
(subject to certain conditions) and wind wind farm development zones (2 GW 17 August, 2015 and the following
turbines smaller than 12 meters are not of offshore wind energy capacity). measures can be outlined.

28 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
The introduction of a new model
electricity purchase agreement
called the supplemental
remuneration agreement.
This new agreement applies to
facilities with a capacity of over 500
kw. The purchase obligation remains
but is substantially modified as the aid
is granted in the form of a bonus in
addition to the market price. (This is an
ex post bonus, that is, one that will
ensure a known target remuneration
for the producer.) From now on, the
purchase price will no longer be set
upon signing for the entire term of the
agreement but will be adjusted based
on the market price and other economic
criteria related to the facility.
The promotion of new forms
of financing renewable energy
To reduce the difficulties often
encountered by developers in the
construction of wind power facilities, the
use of local financing is one of several
solutions offered by the Government.
To support this local financing, it is
provided that commercial companies
and local public-private companies
may be set up to offer residents living
near the Project construction site as
well as local authorities access to their

Taxes and incentives for renewable energy | 29

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes minimum of 20 percent of heat nautical mile zone or the German
generated by solar energy and with Exclusive Economic Zone (EEZ) of the
KfW Programs
heat sales of a minimum of 500 German North and Baltic Sea. Project
KfW Bankengruppe is a German kWh per year and meter of route financing for up to 10 offshore wind
government-owned development parks is available in the form of:
bank, supporting projects related to the heat storages with more than 10
environment as well as other areas. cubic meters direct loans granted by bank
syndicates (a maximum of EUR400
KfW Renewable Energies Program biogas pipes with a minimum
length of 300 meters (for biogas
Investments are available in three used for CHP purposes or as finance packages comprising loans
programs: biofuel) from KfW on-lent through a bank
Standard: in plants for electricity heat pumps with a rated heat direct loans limited to 70 percent
generation from renewable energy capacity of more than 100 kW of the total debt capital required
sources such as PV, biogas, hydro, per project and EUR700 million per
onshore wind or geothermal facilities for the development and
energy and heat generation in CHP use of deep geothermal energy
systems. with a drilling depth of more than direct loans to finance unforeseen
400 meters, a minimum thermal additional costs (a maximum of
Premium: in large plants for fluid temperature of 20 C and a EUR100 million per project).
heat generation from renewable minimum geothermal heat output
energies (solar panels, biomass, Eligible to apply: all project companies
of 0.3 MWth.
biogas, deep geothermal energy) as investing in the German EEZ or in the
well as CHP installations and heat All plants shall be commissioned in 12 nautical mile zone of the North Sea
networks/pumps not promoted accordance with their designated and the Baltic Sea.
under the Standard program. purpose for at least 7 years. Plants
Maximum funding: EUR5 billion.
eligible for remuneration under the
Storage: in new installations of Renewable Energies Act (Erneuerbare Loan-term: up to 20 years with a
stationary battery storage systems Energien Gesetz or EEG) 2014 are not repayment-free start-up period of up
combined with PV systems. entitled to be promoted. to 3 years.
Premium funding was initiated to The funding shall be granted as a In 2013, KfW provided a credit volume
strengthen the establishment of the long-term, interest-reduced loan up of EUR194 million. There was no
renewable technologies in the heat to 100 percent of the investment commitment in 2014 due to delayed
market through low-interest KfW costs (excluding VAT), maximum total investment activities previous to the
loans and repayment subsidies by the lending of EUR25 million per project reformed EEG 2014.
Federal Ministry for Economic Affairs (Standard) and EUR10 million per
and Energy. These technologies KfW Energy Efficiency Program
project (Premium).
include: Incentives for commercial enterprises to
Level of funding shall be increased invest in energy efficiency measures are
PV systems with more than 40 up to 10 percent for small to medium- granted through low interest rates and
square meters gross collector area sized enterprises (Premium). repayment bonuses and are available in
for the purpose of water heating
Eligibility for funding depends on the two programs:
and/or space heating of properties
with three or more residential units program part. Production Systems/Processes: for
or non-residential properties with Loan-term: 5, 10 or 20 years with a investment, modernization as well
minimum 500 square meters of repayment-free, start-up period of up as reinvestment measures leading to
usable area to 3 years. energy savings of at least 10 percent
biomass plants for the combustion (basic standard) or at least 30 percent
In 2014, KfW provided a total credit (premium standard) compared with
of solid biomass with a rated heat volume of EUR234 million for
capacity of more than 100 kW previous energy consumption or the
Premium and around EUR3.9 billion typical consumption level within the
heat-controlled biomass CHP with for Standard. Funding for Storage sector.
a thermal output at par with at least since initiating the program in May
100 kW and a maximum of 2 MW 2013 amounted to EUR134 million. Eligible to apply: all domestic and
foreign commercial companies
heat networks with a minimum KfW Offshore Wind Energy Program majority-owned by private
of 50 percent of heat generated Special promotion of offshore individuals as well as enterprises
by renewable energies or with a wind energy projects within the 12 under an energy contract, projects
30 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
carried out abroad by German KfW Energy Turnaround Financing Loan-term: up to 30 years with
companies, their subsidiaries or by Initiative five repayment years at the most.
joint ventures with major German High-volume loans are available Generally, projects shall be operated
participation. for large-scale investment projects in accordance with their designated
in Germany in the areas of energy purpose for 5 years.
Outside the EU, the share provided
by the German partner will be efficiency, innovative projects in the Administrative procedures:
financed. areas of energy conservation, electricity Applications must be filed, via credit
generation, storage and transmission, institution, with the governmental-
The funding is available as a loan up as well as the use of renewable energy. owned bank KfW or, in the case of the
to 100 percent of investment costs
Two promotional funds are available: SME Energy Efficiency Advice program,
and usually up to EUR25 million
with the BAFA.
per project. Limit may be increased direct loans under a banking
if the measures are particularly consortium, with KfW contributing Sources: KfW, BMWi Frderdatenbank
worthy of promotion. 50 percent to the financing of the Operating subsidies
Loan-term: 5, 10 or 20 years with up project.
The EEG 2014 became effective on
to 3 repayment-free start-up years. financing package composed of a 1August 2014. Remuneration is
Energy-efficient construction and loan on-lent through a bank and a available for electricity produced. All
rehabilitation: for the construction syndicated loan with participation tariffs and ranges in principle apply to
or modernization of non-residential by KfW. plants commissioned as of 1 August
buildings according to the standard 2014. Plants approved prior to 23
Amount of loan: usually from EUR25
of a KfW Efficiency House. This also January 2014 that began operations by
million up to EUR100 million per
applies to individual rehabilitation 31 December 2014 will still be governed
measures with respect to a buildings by the provisions of the previous EEG
shell or technical facilities. Loan-term: up to 20 years with a 2012.
repayment-free start-up period of up
Eligible to apply: domestic and The most important objectives of
to 3 years.
foreign commercial companies the EEG 2014 include the integration
that are majority-owned by private Eligible to apply: large commercial of renewable energies into the
individuals, companies purchasing enterprises in and outside Germany electricity market by mandatory direct
existing non-residential buildings with an annual group turnover marketing and a focus on cost-effective
and enterprises providing services EUR500 million to EUR4 billion. technologies.
for non-residential buildings under Commitment volume in 2014: Current regulations pave the way for
an energy contract involving third EUR140 million. another revision of the EEG expected
parties. by the end of 2016. By the beginning of
BMUB Environmental Innovation
Maximum funding: usually EUR25 2017 at the latest, financial support for
million per project, up to 100 all technologies shall be determined by
The Federal Ministry for the auctions. This transformation process
percent of eligible investment costs
Environment, Nature Conservation, will be structured in light of experience
as well as repayment bonuses of up
Building and Nuclear Safety (BMUB) gained through a pilot project testing
to 17.5 percent.
funds major industrial pilot projects in a tender scheme for ground-mounted
Loan-term: 5, 10 or 20 years with up environmental sectors such as climate solar plants. The pilot tender project was
to 3 repayment-free start-up years. protection and resource efficiency. KfW initiated in February 2015.
is responsible for the administrative and
Program incentives are complemented Expansion Corridors
financial side of the program, while the
by the SME Energy Efficiency Advice
Federal Environment Agency manages The percentage of renewable energies
program of the Federal Office for
environment technology issues. Funding is to be expanded within specific
Economic Affairs and Export Control
is available as an interest subsidy or as a corridors:
(BAFA), which subsidizes small and
loan with interest grant from the BMUB.
medium enterprises that identify energy by 2025 renewables are to produce
savings potential and reduce costs by Interest grants up to 30 percent of 40 to 45 percent of the total energy
improved energy efficiency. financeable costs, loans up to 70 mix
percent. No maximum amount.
Commitment volume in 2014: by 2035 renewables are to produce
EUR3.2 billion. Eligible to apply: domestic and foreign 55 and 60 percent of the total energy
companies, SMEs receive priority mix.
Taxes and incentives for renewable energy | 31

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
These targets are to be achieved by Operators of small plants can decide exceeds or falls below the targets of
individual corridors laid down for the to demand the fixed statutory the expansion corridor.
specific technology. payment from the grid operators
degression: according to breathing
instead of direct marketing. Fixed
Captive Consumption of Renewable caps between 0.5 and 1.27 percent
statutory rate will be reduced by the
Electricity Generation per quarter as of 2016.
saved direct marketing expenses,
Consumption of self-generated namely, ct 0.4/kWh or ct0.2/kWh Other methane gas (mine, landfill,
electricity from new plants is charged depending on the respective energy sewage sludge gas, etc.)
with 30 percent (until the end of 2015), source.
35 percent (in 2016) or 40 percent of fixed statutory payment depending
the EEG surcharge (from 2017). Existing In case of default marketing, plant on nominal generation capacity of the
plants and in exceptional cases new operators temporarily unable to individual plant: ct3.8/ kWh to ct8.42/
plants (for installations without grid market their electricity are entitled to kWh
connection, auto-generation without a tariff in the amount of 80 percent plants with a nominal generation
electricity purchasing source as well as of the respective fixed statutory capacity of more than 100 kW:
small plants with an installed capacity payment.
up to 10 kW) are exempted. fixed statutory payment just for
Technology-specific corridors and 50 percent of nominal generation
Mandatory Direct Marketing remunerations capacity per annum
Plants are to market their power directly. Hydro
additional flexibility premium:
Compulsory direct marketing is being no individual expansion corridor EUR40/kW installed capacity per
introduced in stages:
fixed statutory payment depending annum.
as of 1 August 2014, plants with an on nominal generation capacity of the degression: 1.5 percent per annum as
output of 500 kW and above individual plant: of 2016.
as of 1 January 2016 for plants with up to 5 MW: ct6.31/kWh to ct12.52/ Geothermal
an output of 250 kW kWh
fixed statutory payment: ct25.20/kWh
as of 1 January 2017 for plants with an more than 5 MW: ct4.28/kWh to
output of 100 kW or more. ct5.54/kWh degression: 5 percent per annum as
of 2018.
Market Premium more than 50 MW ct3.5/kWh.
In addition to the revenue from directly degression: 0.5 percent per annum as
sold electricity a market premium Onshore
of 1 January 2016.
can be claimed. The market premium expansion corridor: annual expansion
consists of a fixed statutory payment Biomass 2.5 GW (net)
(anzulegender Wert) differentiated by expansion corridor: annual increase of Repowering measures will be
technology and rated power minus a up to 100 MW (gross) considered only with respect to the
technology-specific monthly market
fixed statutory payment depending net increase of nominal power.
value (Monatsmarktwert).
on nominal generation capacity of fixed statutory payment:
In order to receive the market premium, the individual plant: ct5.85/kWh to
plants must be remote-controllable as of ct13.66/ kWh (biowaste installations ct4.95/kWh (basic payment)
1 January 2015, including plants already and small manure gas ct15.26/kWh to increased basic payment (initial
commissioned. ct23.73/kWh). payment) of 8.9 ct/kWh for at least
Fixed statutory payment for plants plants with a nominal generation 5 years; possibility of extension
being commissioned as of 2016 will be capacity of more than 100 kW: for locations with a reference yield
reduced to zero if the value of hourly below 130 percent.
fixed statutory payment just for
contracts at the EPEX Spot in Paris
50 percent of nominal generation breathing caps
is constantly negative for at least six
capacity per annum degression:
additional flexibility premium: basically 0.4 percent per quarter as
Exemptions from Mandatory Direct
EUR40/kW installed capacity per of 2016
Exemptions from mandatory direct decreases or increases in a range
marketing exist for small plants and in breathing caps: financial support between zero and 1.2 percent
case of so called default marketing: increases or decreases if growth

32 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
depending on reaching breathing 0.5 percent per month as of No Degression: awarded rate
caps. 1September 2014. remains unchanged.
Offshore degression decreases or increases For plants operational before
expansion corridor: 6.5 GW until according to breathing caps 1September 2015:
2020, 15 GW until 2030. in a range between zero and
Fixed statutory payment: up to a
2.8 percent on a quarterly basis.
fixed statutory payment: nominal generation capacity of
Ground-mounted plants in open 10 MW ct9.23/kWh
basic payment: ct3.90/kWh spaces
Support available for plants in areas
increased initial payment (Basic Support of plants in open spaces was being subject to an approved land-
model): ct15.4/kWh during the shifted from feed-in tariffs to a support use plan that has been:
first 12 years after commissioning involving a competitive tender process.
(extended depending on water The pilot project of tendering an average o approved prior to 1 September
depth and distance from shore) of 400 MW in three annual rounds 2003 or
was launched by the Federal Network o approved after 1 September 2003
acceleration model: If the offshore
Agency. Details are regulated in a where plants were erected either
wind farm is commissioned before
separate ordinance (FFAV). In the first on land to be devoted to different
31 December 2019, the operator
round, a total of 150 MW was put out usage (Konversionsflche) or
can select an increased initial
for tender, with the maximum rate set alongside freeways (Autobahnen)
payment of ct19.4/kWh for 8 years
at ct11.29/kWh. The highest awarded or railroad lines or
(extended depending on location
bid amounted to ct9.43/kWh, while the
with a payment of ct15.4/kWh for o a land-use plan that designated
average successful bid was ct9.17/kWh.
the prolonged period). the area as commercial-industrial
For plants operational as of prior to 1 January 2010.
1September 2015:
for the Basic model: annually ct0.5/ Degression: equivalent to plants
Plants must participate in the erected on buildings.
kWh as of 1 January 2018, ct1.0/
tender process and be awarded in
kWh as of 1 January 2020, and Additional information
order to obtain financial support in
ct0.5/kWh as of 1 January 2021.
form of the market premium. Duration of subsidized market
for the Acceleration model: premium: Up to 20 years plus the year
Contracts are awarded to the
ct1.0/kWh as of 1 January 2018 of initial operation.
tenders with the lowest offered
p.a. (in 2019 degression will be
fixed statutory payment value until
the total volume put out for tender
Grid connection from the offshore has been reached.
switch station to the shore supported
Eligible to apply:
by the transmission system operator
(Sec 17 par 2a EnWG). o For the year 2015, only those
sites already being permitted
under the EEG 2014 (certain
Expansion corridor: annual growth of sealed areas, land conversions,
2.5 GW (gross) land along freeways and railway
Plants from 10 kW installed capacity tracks) are eligible.
must be remote-controllable. o Bids must amount to at least
Plants of 800 watts to 10 kW 100 kW and may not exceed
must be equipped with adjustable 10 MW, multiple bids per round
performance inverters. allowed.

In and on buildings o Bids for energy generated in the

installations must be stated in
depending on the amount of nominal ct/kWh and have to indicate the
generation capacity: ct9.23/kWh to capacity of the installation in kW.
Duration of support: up to calendar
degression: 20 years (year of initial operation

Taxes and incentives for renewable energy | 33

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support Schemes Incentives Available under Law 3908/2011), cash grants
Investment Incentives Law 3908/2011 and leasing subsidies may not be
Investments and Incentives under
became effective February 2011, available to all qualifying investments.
Investment Incentives Law 3908/2011
replacing the previous incentive Law General Eligibility Requirements:
Article 6 of Law 4242/2014 stipulates 3299/2004. However, investments
that the final deadline for submitting According to Law 3908/2011, certain
made under the previous incentive Law
applications with regards to investment criteria should be met in order for
3299/2004 continue to be subject to the
projects under the provisions of the aforementioned incentives to
requirements of that law and are eligible
Law 3908/2011 was determined to be granted. In general, these criteria
for the incentives of that law. According
be 5 March, 2014. At this time, the include the following:
to Law 3908/2011, the following
competent Ministry is not accepting incentives are available: The investment should be initiated
further applications for launching
Tax relief, which constitutes an after the official eligibility approval.
investment projects. In order for
income tax exemption on profits Under certain conditions, the
respective incentive framework to
before taxes as determined on the investment may be initiated prior
remain active for new applications, a
basis of tax legislation. The amount to the official approval as above but
legislative amendment is required to be
of the tax relief granted becomes a in any case after the filing of the
introduced to the Greek Parliament.
tax free reserve for the equivalent respective application.
In light of the above, various entities amount. The minimum amount of the
including joint ventures (JVs) that qualify
Cash grants provided by the State investment is set at EUR1 million
as synergy and networking JVs and
that cover part of the expenses of the for large enterprises, EUR500,000
engage in the production of energy from
investment project for medium-size enterprises,
renewable resources such as wind and
EUR300,000 for small enterprises
hydro are generally eligible to apply Leasing subsidies provided by the and EUR200,000 for very small
under the provisions of Law 4242/2014 State that cover part of payable enterprises. The above minimum
(assuming that the relevant provisions of installments related to the leasing of amounts are reduced to 50 percent
the law are re-activated and applications new equipment. The leasing subsidies for General Business Investments.
submissions are re-initiated). Entities do not exceed a 7-year period. These
active in the production of energy from incentives may be granted solely or The enterprises must be established
PV systems are not eligible (NACE Code in combination. However, apart from in Greece and have the form of Investments are divided tax relief (which is available to all either a sole trader, a commercial
into General Business Investments and investments qualifying for incentives entity/partnership or a co-operative.
Special Investment Plans. Enterprises must maintain double-
entry accounting books or an income
and expenses book (category B of the
Code of Books and Records). Also,
enterprises that submit business
plans exceeding EUR500,000
(instead of EUR300,000 which was
provided by the prior investment
scheme of Law 3299/2004) must
operate in the form of a commercial
entity or co-operative
Investors own participation of at least
25 percent is required for investments
for which cash grants or tax relief is
Certain requirements exist in respect
to loans received that are to be used
for the subsidized investment
Special requirements may apply
depending on the nature of each
investment project.

34 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Operating Subsidies
According to the provisions of the relevant legislation (Laws 3468/2006, 3734/2009, 3851/2010, 3889/2010, 4062/2012 and
4254/2014) the following apply:

Price of energy (EUR/MWh)

Electricity generated by: Electricity Price (EUR/MWh)
Connected Non-connected
System Islands
(1) Wind energy generated from onshore wind farms with capacity less 105 85
than or equal to 5 MW
(2) Wind energy generated from stations with capacity of more than 5 MW 105 82
(3) Wind energy generated from stations in non-connected islands 110 90
(4) Hydroelectric plants with a capacity less than or equal to 1 MWe 105 85
(5) Hydroelectric plants with a capacity from 1 MWe up to 5 MWe 105 83
(6) Hydroelectric plants with a capacity between 5 MW and 15 MWe 100 80
(7) Solar energy from solar thermal stations with no storage 260 200
(8) Solar energy from solar thermal stations with a storage system which 280 220
ensures at least 2 hours of operation in the nominal capacity
(9) Geothermal energy of low temperature pursuant to par. 143 130
1f of article 2 law 3175/2003 (A 207)
(10) Geothermal energy of high temperature pursuant to par. 110 100
1 of article 2 law 3175/2003 (A 207)

(11) Biomass (or bio liquids) exploited through thermal processes 198 180
(combustion, gasification, pyrolysis) from stations with installed
capacity of less than or equal to 1 MW (excluding the biodegradable
fraction of household waste)
(12) Biomass (or bio liquids) exploited through thermal processes 170 155
(combustion, gasification, pyrolysis) from stations with installed
capacity between 1 MW and 5 MW (excluding the biodegradable
fraction of household waste)
(13) Biomass (or bio liquids) exploited through thermal processes 148 135
(combustion, gasification, pyrolysis) from stations with installed
capacity more than 5 MW (excluding the biodegradable fraction of
household waste)
(14) Gas release from landfills and biological cleaning installations and 131 114
biogas produced by biodegradable fraction of waste and organic
material/wastewater treatment and sludge recovered from plants
generated from stations with capacity of less than or equal to 2 MW
(15) Gas release from landfills and biological cleaning installations and 108 94
biogas produced by biodegradable fraction of waste and organic
material/wastewater treatment and sludge recovered from plants
generated from stations with capacity of less than 2 MW
(16) Biogas derived from the anaerobic digestion of biomass (energy crops, 230 209
silage, green fodder agricultural crops, livestock and agro-industrial
organic residues and waste edible oils and fats, expired food) and
generated from stations with capacity of less than or equal to 3 MW
(17) Biogas derived from the anaerobic digestion of biomass (energy 209 190
crops, silage, green fodder agricultural crops, livestock and agro-
industrial organic residues and waste edible oils and fats, expired
food) and generated from stations with capacity of more than 3 MW
Taxes and incentives for renewable energy | 35

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Price of energy (EUR/MWh)
Electricity generated by: Electricity Price (EUR/MWh)
Connected Non-connected
System Islands
(18) Other RES (including the stations for the energy exploitation of the 90 80
biodegradable fraction of municipal waste, not integrated in another
category, which meet the requirements of the European legislation as
in force from time to time)
(19) CHP1 using natural gas power less than or equal to 1 MW regarding 88 + GPA2 76 + GPA2
the categories () Combined cycle gas turbine with heat recovery
or () condensing steam turbine pursuant to article 3 of Ministerial
Decision 5-//1/.15641/14.07.2009 (B 1420)
(20) CHP1 using natural gas power less than or equal to 1 MW pursuant to 92 + GPA2 80 + GPA2
article 3 of Ministerial Decision 5-//1/.15641/14.07.2009 (
(21) CHP1 using natural gas power between 1 MW and 5 MW regarding 80 + GPA2 70 + GPA2
the categories () Combined cycle gas turbine with heat recovery
or () condensing steam turbine pursuant to article 3 of Ministerial
Decision 5-//1/.15641/14.07.2009 ( 1420)
(22) CHP1 using natural gas power between 1 MW and 5 MW and other 84 + GPA2 74 + GPA2
categories pursuant to article 3 of Ministerial Decision 5-//1/
.15641/14.07.2009 ( 1420)
(23) CHP1 using natural gas power between 5 MW and 10 MW regarding 74 + GPA2 65 + GPA2
the categories () Combined cycle gas turbine with heat recovery
or () condensing steam turbine pursuant to article 3 of Ministerial
Decision 5-//1/15641/14.07.2009 ( 1420)
(24) CHP1 using natural gas power between 5 MW and 10 MW and other 78 + GPA2 70 + GPA2
categories pursuant to article 3 of Ministerial Decision 5-//1/
.15641/14.07.2009 ( 1420)
(25) CHP1 using natural gas power between 10 MW and 35 MW regarding 68 + GPA2 62 + GPA2
the categories () Combined cycle gas turbine with heat recovery
or () condensing steam turbine pursuant to article 3 of Ministerial
Decision 5-//1/15641/14.07.2009 ( 1420)
(26) CHP1 using natural gas power between 10 MW and 35 MW and other 72 + GPA2 66 + GPA2
categories pursuant to article 3 of Ministerial Decision 5-//1/
.15641/14.07.2009 ( 1420)
(27) CHP1 using natural gas power more than 35 MW regarding the 61 + GPA2 57 + GPA2
categories () Combined cycle gas turbine with heat recovery or
() condensing steam turbine pursuant to article 3 of Ministerial
Decision 5-//1/15641/14.07.2009 ( 1420)
(28) CHP1 using natural gas power more than 35 MW and other 65 + GPA2 60 + GPA2
categories pursuant to article 3 of Ministerial Decision 5-//1/
.15641/14.07.2009 ( 1420)
(29) Other CHP1 connected to the interconnected system 85 80
(30) Other CHP connected to the non-interconnected system
95 90

1 CHP: Combined Heat and Power

2 GPA: Gas Price Adjustments

36 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Additional Information
Operating Incentives: Law 3468/2006
implemented the EU directive 2001/77
concerning the promotion of renewable
energy sources and regulates the
production of electricity from renewable
energy sources in Greece, (not including
the feed-in tariffs for solar energy parks
for which specific feed-in tariffs have
been determined by Law 3734/2009)
as amended by Laws 3734/2009
3851/2010, 3889/2010 and 4254/2014.
The feed-in tariffs referred to in the
previous table were introduced by Law
Duration: In general, the sale agreement
for electricity produced by stations
using renewable resources and CHP
(High-efficiency co-generation of
electricity and heat) and combined heat
and power is valid for 20 years and may
be extended under certain conditions.
The sale agreement for electricity
produced by solar thermal stations is
valid for 25 years and may be extended
under conditions.
Administrative Procedures: The specific
licenses required depend on the
installed power. Main licenses and
authorizations include the following:

production license
establishment/installation license
operation license
approval of environmental terms
conclusion of connection agreement
with Public Power Corporation (PPC)
conclusion of sale agreement of
electric power with the Administrator
Grid Access: Generally, priority access
to the grid is provided to renewable
energy producers for connection to the
mainland grid, subject to the fulfillment
of all conditions and requirements
provided by the Code of Grids

Taxes and incentives for renewable energy | 37

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes providing tax incentive to power by companies engaged in the business
companies. However, the new of generation or the generation and
Investment and other subsidies government stated in the current distribution of power in addition to
Foreign Direct Investment (FDI) budget that they do not intend to go normal depreciation.
The growth of the clean energy sector ahead with the DTC.
Further, power companies have been
in India has been impressive. India Financing provided with an option to claim
permits FDI up to 100 percent in the depreciation under the straight line
sector under the automatic route in The Indian Renewable Energy
Development Agency (IREDA) has method. However, a company can
renewable energy generation and claim either accelerated depreciation
distribution projects that are subject to been established under the Ministry of
New and Renewable Energy (MNRE) orgeneration-based incentives (GBIs)
the provisions of the Electricity Act of but not both.
2003. Under the Act, no prior approval (formerly known as the Ministry for
Non-Conventional Energy Sources) as a
of regulatory authorities is required for Quota obligations
infusion of foreign investment, the only specialized financing agency to promote
and finance renewable energy projects. Renewable Purchase Obligation
exception being if investment is made
in a limited liability partnership (LLP). Operating subsidies
The National Action Plan on Climate
According to Reserve Bank of India Feed-in tariff Change (NAPCC) has recommended
(RBI) guidelines on external commercial an increase in renewable energy
Generation Based Incentives (GBI)
borrowings (ECBs), the definition of penetration to 15 percent by 2020 at the
infrastructure covers sectors such To attract foreign investors, the
national level.
as energy which in turn covers sub- government has taken several initiatives
sectors such as electricity generation/ such as introducing GBI schemes to In accordance with this goal, SERCs
transmission/distribution, oil pipelines, oil/ promote projects under independent are required to set fixed Renewable
gas/liquefied natural gas (LNG) storage power producer (IPP) mode for wind and Purchase Obligations (RPOs) for
facilities, and gas pipelines that support solar power. distribution companies to enable the
gas distribution networks for cities. purchase of a certain percentage of
Under MNREs Generation Based
their total power requirement from
With a view to strengthen the flow of Incentive scheme, wind power projects
renewable energy sources. Currently,
resources to the infrastructure sector, (which are not availing the Accelerated
state-level RPOs vary between
RBI also permits raising ECBs for project Depreciation benefit) are eligible for an
2percent and 14 percent of their total
use in special purpose vehicles (SPVs) in incentive of INR0.50 per unit of power
energy demand. Open access and
the infrastructure sector. fed to the grid for a minimum period
captive consumers are also required to
of 4 years and a maximum period of
A companys ECB funding (under comply with RPOs.
10 years, subject to a ceiling of INR10
the automatic route/approval route) million per MW. To align the availability of renewable
is subject to restrictions on use, energy sources with the requirement
tenure,etc. This incentive can be claimed by wind
of the obligated entities to meet their
projects commissioned on or after
Tax holiday under the domestic RPO across states, the Renewable
1 April 2012, through IREDA, and is
income tax law Energy Certificate (REC) market has
over and above the tariff approved
been introduced, and RECs started
Undertakings engaged in the generation by the State Electricity Regulatory
trading in February 2011. However,
or generation and distribution of power Commissions (SERCs).
the REC mechanism has not been
have been offered a 10-year tax holiday
Accelerated depreciation widely adopted, and steps are being
for renewable energy plants if power
Under the domestic income-tax law, considered to review the market.
generation begins before 31 March
companies involved in renewable energy We believe that going forward the
2017. However, the plants have to pay
such as solar and wind are provided with enforcement of RPOs will create the
a minimum alternative tax at the rate
accelerated depreciation at 80 percent volumes needed for the REC market.
of approximately 20.4 to 21.4 percent
(based on the income), which can be on a written down value (WDV) basis.
Additional information
offset over the next 10 years. However, windmills installed on or after 1
April 2012, but before 1 April 2014, would Renewable Energy in India
The former Finance Minister had be eligible for depreciation at the rate of Indias grid-connected renewable energy
released the Direct Taxes Code, 2013 15 percent on WDV basis. capacity has reached 36.5 GW as of 30
(DTC 2013) for public discussion/
An additional 20 percent depreciation on June 2015 with wind energy at 23.8 GW
comments which, among other things,
a WDV basis is also available on assets and solar energy at 4.1 GW (MNRE). The
offered alternative mechanisms for
that are installed after 31 March 2005 Indian government has announced an

38 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
ambitious plan to scale up Indias solar incentives in the form of a VAT at EPC contracts
energy capacity to 100 GW and wind 5percent, a significant reduction over The taxation of EPC contracts offers
energy capacity to 60 MW by 2022. the 15 percent VAT rate levied by some various challenges and opportunities.
other states. Given the variety of tax and The EPC contract can be either
National Solar Mission (NSM)
fiscal incentives available, one needs structured as a single contract or as a
The objective of the Jawaharlal Nehru to quantify the tax cost and explore the divisible contract. The selection of either
National Solar Mission (JNNSM), which structuring options before investing in option can cause a sizeable impact on
was launched in 2010, is to establish the solar sector. the tax costs and working capital of the
India as a global leader in solar energy.
Tax planning project.
MNRE has recently revised the National
For investors based overseas, an entry The selection of schemes for the
Solar Mission target from 20 GW by
strategy for India is highly important. payment of indirect tax liabilities
2022 to 100 GW by 2022. The ministry
To achieve tax efficiency with regard on renewable energy power plant
plans to focus on deploying large-scale
to taxability of gains on sale of shares, construction offers various tax planning
rooftop projects to achieve a capacity of
many companies opt to route the avenues for renewable energy power
40 GW by 2022, developing several solar
investments through an intermediate projects. Furthermore, any scheme
parks to build further 40 GW capacity,
entity in a tax-friendly jurisdiction. can involve difficulties in compliance,
and encouraging large-scale projects to
However, the provisions of General Anti such as a restriction on procurement of
generate the remaining 20 GW.
Avoidance Rules to be effective from goods outside the state.
In Phase 2 Batch 1 of the National 1April 2017 need to be kept in mind
The procurement of goods and supply
Solar Mission, the Solar Energy while structuring the investments.
chain structuring play a vital role in the
Corporation of India (SECI) auctioned
Typically, renewable energy companies solar power project costs, since the tax
750 MW of solar projects divided into
in India procure equipment and services rates are different for procurement of
open and domestic projects, with
from overseas. In this scenario, contract goods from outside India, from other
each kind offering 375 MW. This has
structuring from a tax perspective helps states or from the same state.
prompted a strong interest, with bids
renewable energy companies to achieve
from 58 developers totaling 2,170 MW, Generally, the EPC contractor
major tax efficiency upfront. In the case
a number significantly higher than the also undertakes the operation and
of multiple parties coming together
original offer. maintenance of the power plant.
and bidding as a consortium, contract
The taxability of an operation and
Besides the national program, solar structuring is critical to avoid the risk
management (O&M) contract has
programs at the state level are also of the consortium being taxed as an
been the subject of disputes in various
driving solar growth in the country. Association of Persons that would
result in the denial of tax treaty benefits
Tax and fiscal incentives
and other incentives. The exemption provided under the
Tax cost forms a substantial part Customs and Excise Act is subject to
of engineering procurement and In India, based on the nature of
various conditions and compliances.
construction (EPC) project costs, operation, different forms of entities
Hence, it is very important to ensure the
which can range from 10 percent to can be established. Operating through
compliance of the respective conditions
20 percent of the total renewable an LLP by forming a joint venture or
because the benefits envisaged may not
energy project cost. Considering the wholly owned subsidiary could be
be available otherwise.
special focus on renewable energy, the one of the possible options where the
Central Government has offered various foreign company is looking at a long- The proposed introduction of the
incentives for developing renewable term presence in India. However, one Goods and Services Tax will also play
energy power projects, including needs to rule out other relationships a major role in estimating the cost of a
exemption from customs and excise and entities before proceeding with any renewable energy power project.
duties on specific goods required for particular option.
Given the variety of tax and fiscal
setting up these projects. In addition, the renewable energy incentives available, one needs to
However, these exemptions are sector is capital intensive, so investing quantify the tax cost and explore the
subject to the fulfillment of prescribed companies need to carefully explore structuring options, before planning the
conditions and compliances to be the options available for funding their capex, at the tender/bid stage and also
undertaken by the EPC contractor or IPP. projects and repatriating profits in a tax- at the time of awarding contracts, so
efficient manner. that tax costs are optimized.
Furthermore, some of the state
governments have provided the

Taxes and incentives for renewable energy | 39

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes expenditure incurred on R&D of certain energy-efficient equipment or
activities. For accounting periods vehicles. This scheme has been extended
Investments and other subsidies prior to 1January 2015, a credit can for 3 years, to the end of 2017.
Corporate tax relief be claimed on incremental qualifying
Irish tax law provides tax relief for expenditure over the amount spent on Operating subsidies
corporate equity investments in certain R&D activities in the base year (that Quota obligation
renewable energy projects. Commonly is, an accounting period ending in
Under an EU Directive, the Irish
known as Section 486B relief, the law 2003). Companies can use a volume-
government has an obligation to
allows a deduction from a companys based regime (a 25 percent credit
ensure that, by 2020, 16 percent of all
profits for its direct investment in for every EUR incurred) on the first
energy consumed in Ireland across the
new ordinary shares in a qualifying EUR200,000 of qualifying expenditure
electricity, heat and transport sectors
renewable energy project. There are for periods commencing between
is from renewable sources. The Irish
a number of conditions that must be 1 January 2013 and 31 December 2013
government has planned that the 16
satisfied for the investment to qualify and the first EUR300,000 for periods
percent overall target will be achieved
for the relief, and the relief is capped at commencing between 1 January 2014
by 40 percent of electricity consumed
certain levels. Examples of renewable and 31 December 2014. For accounting
being from renewable sources,
energy projects that would qualify for periods beginning on or after 1 January
12 percent of consumption in the heat
the relief include those in the solar, 2015, the requirement to subcontract
sector being from renewable sources,
wind, hydro and biomass categories. the base year (2003) R&D expenditure
and 10 percent of consumption in the
This relief expired on 31 December 2014 has been removed and all qualifying
transport sector being from renewable
and investments made after this date R&D expenditure will be eligible for the
will not qualify for the relief. 25 percent tax credit.
Feed-in tariff
EII scheme Qualifying expenditure includes
expenses such as salaries, overhead, Ireland currently has two Renewable
In 2011, the Irish government Energy Feed in Tariff (REFIT) schemes
introduced the Employment and materials consumed, etc. [A tax
deduction is also available against the open for applications. The REFIT 2
Investment Incentive (EII) scheme, scheme applies to onshore wind,
designed to promote the creation of companys profits which are taxable
at 12.5 percent. This can result in a small hydro and landfill gas. The
jobs and encouraging R&D activities. REFIT 3 scheme applies to biomass
The EII scheme provides tax relief 37.5 percent net subsidy for a trading
entity (12.5 percent corporation tax technologies. The schemes operate by
for eligible individuals who invest in guaranteeing a minimum floor price
certain qualifying small and medium deduction and a 25 percent R&D tax
credit)]. The tax credit can be used in the for supplies of energy generated from
sized trading companies. The relief renewable sources. The 2015 reference
takes the form of a deduction from an first instance to shelter a groups current
year corporation tax liability. It can also prices for the REFIT 2 and REFIT 3
individuals taxable income in the year schemes are as follows:
of investment and a further deduction be carried back for offset against the
after a three-year investment term has companys corporation tax liability in the REFIT 2
passed (subject to certain conditions preceding period, or carried forward to
reduce future corporation tax liabilities. Category Price
being met). A number of conditions
Instead of carrying the credit forward, a Onshore wind EUR69.72/MWh
must be satisfied for an investment to
company may elect (subject to certain (above 5 MW)
qualify under the scheme. However,
the legislation includes some helpful conditions) to have any remaining Onshore wind EUR72.167/MWh
provisions designed to ensure that excess credit paid as a cash refund by (equal to or less
renewable energy projects meet the Revenue over 3 years. than 5 MW)
qualifying criteria. Accelerated capital allowances Hydro (equal to or EUR88.068/MWh
less than 5 MW)
R&D tax credit Companies are entitled to claim
accelerated capital allowances (tax Biomass Landfill EUR85.622/MWh
A company can claim an additional
depreciation) of 100 percent for capital Gas
tax credit of 25 percent on qualifying
expenditures incurred on the purchase

40 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
REFIT 3 Additional information includes expertise in fund servicing,
administration and asset management.
Category Price In addition to the above, the Irish Fund promoters are attracted to Ireland
AD CHP (units EUR157.613/ government has committed to a due to its open, transparent and well
less than or equal MWh 20percent national energy savings regulated investment environment, its
to 500 kW) target by 2020 which represents a strong emphasis on investor protection,
reduction of approximately EUR2.4 its efficient tax structure (with a
AD CHP (units of EUR136.598/
billion in energy spend across all 12.5 percent corporate tax rate) and its
greater than 500 MWh
sectors. To support this target, the dynamic, innovative business culture.
government has set itself the target
AD (non CHP) EUR115.583/ of achieving a 33percent reduction In addition to Irelands credentials as
(units less than or MWh in energy use in the public sector. As a leading investment funds location,
equal to 500 kW) a result of these energy reduction the case for Ireland as a global center
AD (non CHP) EUR105.076/ measures, substantial investments in for green asset management is even
(units of greater MWh renewable energy projects/funds are more compelling. For many years a
than 500 kW) being actively encouraged, resulting in large number of Irish companies have
Biomass CHP EUR147.106/ real investment opportunities in Ireland. successfully developed renewable
(units less than or MWh and sustainable projects and related
Ireland as a hub for green asset technologies on a global scale. As a
equal to 1500 kW) management result, Ireland has been able to create
Biomass CHP EUR126.091/ Global investment is booming in green an unparalleled talent pool with the
(units of greater MWh and clean-tech industries that produce requisite expertise to support green
than 1500 kW) renewable energy, increase energy investments. The combination of these
Biomass EUR99.822/MWh efficiency or provide sustainability two factors sets Ireland apart.
combustion (non- for using energy solutions. Major investors include
CHP) crops pension funds, life funds, large A number of green investment funds
corporations and high net worth have established operations in Ireland
EUR89.314/ and all indications would suggest that
MWh for all other individuals. These investors are attracted
to a variety of fund structures to diversify the scale of this activity will increase
biomass considerably in the short to medium
the risk between different green
investments and different geographies. term. A public private partnership body
The energy supplier is also entitled to known as the Green IFSC (GIFSC) has
a balancing payment for every kWh With almost 25 years expertise been established to promote Ireland as
purchased from the generator. The and experience, Ireland has one of a center of excellence for green asset
balancing payment under REFIT 2 and the most sophisticated investment management.
REFIT 3 is fixed at EUR9.90/MWh. The management industries globally. This
full EUR9.90/MWh is payable to the
supplier where the market payment
is equal to or less than the reference
price. If the market price exceeds the
reference price but is less than the
combination of the reference price
plus balancing payment, the balancing
payment shall be EUR9.90 less the
amount by which the market payment
exceeds the reference price. However,
where the market payment is equal to
or greater than the combination of the
reference price plus balancing payment,
no balancing payment is payable.

Taxes and incentives for renewable energy | 41

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes and 500 kW, 7 percent for plants Subsidies available under the Fifth
whose output is between 500 kW Energy Incentive Decree
Renewable energy in Italy: recent
and 900 kW, and 8 percent for plants The Fifth Energy Incentive Decree ,
changes in legislation
whose output is higher than 900 kW. which redefined the subsidy scheme for
In 2014, the Italian Ministry of Economic the production of photovoltaic energy,
Development issued three decrees Incentives for plants producing other
forms of renewable energy continues to apply.
implementing the general provisions
contained in Law Decree no. 145/2013 Under the decree of 6 November 2014, The decree established that both feed-
and Law Decree no. 91/2014, which owners of certain plants that benefit in tariffs (for plants with a production
provided incentives for the energy from incentives provided under Law capacity of up to 1 MW) and premium
sector. Decree no. 145/2013 can request tariffs (for plants with a production
that the incentives be extended by capacity higher than 1 MW) would be
Two of the decrees concerned the solar available as follows:
another 7years. This option is available
photovoltaic industry while the third
for existing plants that benefit from
decree extended incentives to non- EUR20/Mwh for plants going into
incentives such as green certificates and
photovoltaic renewable energy sources. operation by 31 December 2013
all-inclusive tariffs (a type of premium
New feed-in tariff system tariff). EUR10/Mwh for plants going into
The decree of 16 October 2014 has operation by 31 December 2014
Certain types of plants are excluded:
made certain changes to the way in photovoltaic plants whose incentives EUR5/Mwh for plants going into
which feed-in tariffs are paid for energy end on 31 December 2014, and biomass operation after 31 December 2014.
produced by photovoltaic plants. The and biogas plants whose output is not
GSE now offers feed-in tariffs in the The decree also provided:
higher than 1 MW and whose incentives
following way: end on 31 December 2016. an inclusive feed-in tariff for plants
with a capacity of up to 1 MW. This
through a fixed monthly premium a Companies wishing to take advantage
capacity is the sum of a base feed-in
bonus on top of the market price of of this new scheme must submit their
tariff (determined for each energy
electricity equal to 90 percent of a request to the GSE.
source, type of plant and capacity
plants annual production capacity
New opportunities for companies class) and any premiums, such as
through a final balance paid by operating in the wind sector those for high efficiency, emission
30June of the following year Law Decree no. 91/2014 established reductions, etc.
and based on the plants actual various measures to promote a special incentive for plants:
production. development and boost production of
renewable energy. In particular, the with a capacity higher than 1 MW
Photovoltaic plants whose output is
higher than 200 kW decree established an incentive for with a capacity of up to 1 MW that
investments in new capital goods listed do not choose the all-inclusive feed-
Under the decree of 17 October 2014,
in one of the sub-categories of division in tariff.
which came into effect on 1 January
28 of ATECO 2007 (machinery, systems,
2015, owners of photovoltaic plants
equipment, etc.). These goods must be Other types of subsidies
whose output is higher than 200 kW
located and used in Italy. Division 28 is Support for energy saving
are now able to choose between three
important for the energy sector because improvements
options for feed-in tariff payments. These
it also includes wind turbines.
three options, paid by the GSE, are: There is a rebate for energy saving
The incentive, is a tax credit of improvements. The rebate is 65 percent
a feed-in tariff paid over 24 years from
15percent of the difference between of the cost of investments made in
the plants first period of production
the new investment and the average 2014 and 50 percent of the cost of
and recalculated annually from the
amount of investment in the same kind investments made in 2015.
second part of the 24-year period
of capital goods over the previous 5
In particular, the rebate is available for
a feed-in tariff paid over 20 years, with years (it is possible to exclude the period
the documented costs of:
a lower tariff in the first period and a in which investments were highest).
higher one in the second period to The facilitation affects investment made a) installing solar thermal panels to
make up the difference from 25 June 2014 to 30 June 2015. produce hot water for industrial or
The tax credit has to be indicated in the domestic use, or for swimming pools,
a feed-in tariff paid over 20 years,
taxreturn. sports facilities, nursing and care
reduced by 6 percent for plants
whose output is between 200 kW homes, schools and universities

42 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
b) replacing winter heating systems burden from 34 percent to 27.5 percent. For the moment, the reverse
with condensing boilers and However, the courts decision does not charge method will only be used for
simultaneously installing a apply retroactively. transactions concluded within4 years
distribution system of the entry into force of the 2015
Although companies no longer have to
c) purchasing and installing solar pay RHT from 12 February 2015, those
shading systems that adopt the calendar year as their tax Non-operating or dormant
year must still pay RHT for 2014. These companies
d) purchasing and installing winter heating
companies RHT obligations will end The IRES rate is 38 percent for dormant
systems that run on biomass fuels.
upon payment of their 2014 balance. companies. A company is considered
These rebates may not exceed dormant if:
Reverse charge mechanism
EUR60,000 for costs a) and c), and
EUR30,000 for costs b) and d). The 2015 Stability Law extended it reports a tax loss in its tax return for
the application of the reverse charge 5 consecutive years
Support for energy plants in method for the payment of VAT to the
Southern Italy it is subject to minimum IRES and
renewable energy sector. VAT payments
The Ministry of Economic Development now have to be made by the purchaser
has allocated EUR120 million to and not the supplier. This is the case for it is not eligible to claim a VAT refund.
companies in the south of Italy that companies involved in the transfer of:
There is a special test to determine
invest in renewable energy plants.
greenhouse gas emission shares whether a company is dormant: if the
This is for companies of all sizes in the
under the EU emissions trading actual amounts reported in the profit
regions of Calabria, Campania, Apulia
system (EU ETS System) and loss account are lower than the
and Sicily.
presumed amounts, the company is
certificates and similar documents
Additional information deemed to be dormant.
relating to energy and gas within the
Taxation EU ETS System Depreciation
Companies are still subject to IRES gas and electricity to a taxable dealer Wind and solar plants are subject to
(corporate income tax) of 27.5 percent (defined as a taxable entity whose ordinary amortization/depreciation rules
and IRAP (a regional business income core business is the resale of gas, for tax purposes.
tax) of between 3.9 percent and 4.82 electricity, heat or cooling energy and For solar plants, the depreciation rate
percent. whose own consumption of these is 4 percent if the asset is considered
products is insignificant). immovable property and 9 percent if the
Robin Hood Tax
On 19 December 2014, the GSE asset is considered movable property.
On 11 February 2015, the Italian
Constitutional Court declared the Robin announced that, from 1 January 2015, For wind plants considered as
Hood Tax (RHT), a surtax on energy invoices issued to it for electricity and immovable property, the depreciation
companies, to be unconstitutional. This electricity certificates would be subject rate is 4 percent.
decision significantly lowers their tax to the reverse charge method, as the
GSE is a taxable dealer.

Taxes and incentives for renewable energy | 43

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Feed-in tariff 2. The development plan applied for acquires solar or wind power generation
Feed-in tariffs for renewable energy interconnection to transmission line equipment and places in business
became available in Japan in July 2012. with the electric power company. within 1 year from the acquisition. The
The feed-in tariff rate for solar energy taxpayer can choose one incentive from
3. The applicant is required to submit the following, assuming the equipment
is Japanese yen (JPY)31.32/kW for the
copies of land register and purchase is placed in business by 31 March 2016:
period from 1 April 2015 to 30 June
agreement/order for equipment to
2015 and JPY29.16/kW for the period
the Ministry of Economy, Trade and 1. 30percent special depreciation in
from 1 July 2015 to 31 March 2016,
Industry (METI) within 180 days from addition to ordinary depreciation
respectively. The feed-in tariff rate for
the next day of approval.
wind power energy is JPY23.76/kw 2. 100percent depreciation (that is, total
from the period from 1 April 2015 to The METI rescinds its approval if the acquisition costs expensed upfront)
31 March 2016. The operation period is required documents are not submitted for wind power generation equipment
20years. The feed-in tariff rate is revised within the deadline or the submitted
3. Tax credit (7percent of acquisition
annually. documents are not sufficient to
costs, only available for small and
substantiate land and equipment for
In order to obtain the feed-in tariff, medium sized enterprises (SMEs).
solar energy.
the applicant is required to meet the An SME is a company with its paid-in
following conditions: Green Investment Tax incentive capital of JPY100 million or less and
Green Investment Tax incentive is is not 50percent or more owned by
1. The power plant development plan is a large corporation with its paid-in
available for the taxpayer who obtained
approved by the government. capital of JPY100 million.
approval for the feed-in tariff and

44 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
As a result of the Energy Reform Act a Clean Energy Certification. These Electricidad or CFE) initiative, which
of 2014, Mexico has become more terms may increase in the following aims to fund energy efficiency projects,
appealing to foreign investors, and the years. It is possible to relocate this electrical and thermal energy programs,
countrys potential for renewable energy Certification, granted by the Energy cogeneration and distributed production
has not been overlooked. Mexico is Regulatory Commission to any other with renewable sources for industries,
one of the leading countries in terms of period, allowing for the transfer of businesses, services and housing. This
installed capacity of geothermal energy, excess or missing certificates, which trust has two different categories:
and wind and solar are showing strong will promote price stability.
FIDE Energy Efficiency Its main
growth rates. The country also enjoys
Support Schemes objective is to increase the efficient
abundant sunshine, with solar energy
Tax Incentives application of electricity by linking
potential higher than 5 kWh/m per day.
projects between technological
Accelerated depreciation.
Mexico now has one of the most innovation and electricity consumption
Investments in machinery and
ambitious goals for renewable energy through the implementation of
equipment for the energy production
in the world. The Renewable Energies efficient technologies. The following
derived from renewable energy will
Exploit and Energy Transition Financing equipment is included in this program:
be fully depreciated in a 12-month
Law (Ley para el Aprovechamiento air conditioners, thermal insulators,
period. This applies to solar, wind,
de Energas Renovables y el remote monitoring systems,
hydraulic kinetic and potential energy,
Financiamiento de la Transicin electronic ballasts, water pumps, air
power derived from the oceans,
Energtica or LAERFTE) stipulates that compressors, processing equipment,
geothermal, and from biomass or
35 percent of the nations electricity will light-emitting diode (LED) lighting and
come from non-fossil fuels by 2024. transformers, among others.
Exempt duty. The polluting equipment
Potential Renewal Resources in FIDE Business Eco-credit This
and its parts will be exempt from the
Mexico by 2030 fund promotes the efficient and
Import and Export General Tax.
Energy Type WW cost-effective use of electricity. This
Other schemes program applies to all production
Wind 40,268 sectors in Mexico. In the current
CONACYT This is a program scheme
Geothermic 40,000 created to provide resources for year, FIDE submitted the Distributed
Hydraulic 53,000 those companies interested in R&D Generation Support Program which
Solar 24,300 investment, technology and innovation aims to grant incentives to domestic
development to create new products, users, specifically a 10 percent
Biomass 83.500-119,498
procedures or services. There are three incentive of the total cost of each
*SENER/Electrical Research Institute (IIE)
types of approaches: system with the remaining 90 percent
funded by patrimonial resources
Mexican Energy Reform 2014: Innovapyme: exclusively for small and of FIDE. (As of today, this program
relevant matters concerning clean medium-sized entities (SMEs) that is pending to be released, and it is
energy and environmental protection carry out R&D projects individually convening specialized companies
In accordance with the Power Industry or with universities and/or research which are part of the distributed
Law a part of the Energy Reform centers. generation sector).
Act of 2014 public and private power
Innovatec: focused on large entities. Other Practical Tools
industry infrastructure projects must
It also can be carried out individually,
achieve sustainability for the areas FOTEASE (Fund for Energy Transition
or with universities and/or research
that are planned to be developed. and Sustainable Exploit of Energy)
Any party interested in carrying out A fund created to promote the use,
energy projects must submit before Proinnova: for every type of entity. development and investment in
the Ministry of Energy an assessment The project must be proposed with at renewable energy and energy efficiency.
of the social impact caused by the least two collaborations (universities Last year, an amount of Mexican peso
performance of such project as well or research centers). In some cases, (MXN)1,000,000,000 was granted by
as its mitigation measures in order there must be a balance of the the Federal Government to support
to obtain necessary permissions or designated resources among the energy efficiency and renewable energy.
authorizations. involved parties.
One-Stop Window for Renewable
In this regard, the Ministry of Energy FIDE Private Trust, founded in 1990, Energy Its main purpose is to
will establish during the first quarter of based on the Federal Electricity contribute to the promotion of
every year, the terms required to receive Commission (Comisin Federal de investment in renewable energy

Taxes and incentives for renewable energy | 45

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
projects through the simplification of Developing Programs
requirements and the administrative Integrated Energy Services Program
process. It is a mechanism created seeks to provide to the Federal Public
to increase the installed capacity of Administration buildings (Administracin
electricity generation through the Pblica Federal or APF) self-supply
automation of involved processes. capacity for electricity through
Preferential rate It consists in a lower renewable energy, thereby reducing the
service charge for the transmission of cost for operation and site maintenance.
renewable energy; the normal energy Mini-hydroelectric projects promotes
rate is 0.30 MXN/kWh and a 0.14 the use of technologies for the
MXN/kWh rate will apply in the first exploitation of renewable energy;
mentioned cases. the use of clean technologies in the
Energy bank This tool will allow the development of productive activities;
conservation of excess energy produced and the diversification of primary energy
by the supplier for its future consumption sources that include renewables.
or potential sale to the CFE. Program of productive activities with
Net Metering In scale projects of renewable energy in rural areas
30kWp, the electricity cost for energy supports rural electrification with
delivered to the national grid will be technical and economic activities that
offset. use renewable energy.

46 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
The Netherlands
Support schemes or 36 percent of the investment o Certain formal conditions apply
costs. The maximum qualifying to requests for the accelerated
Investment and other subsidies
investment cost that is taken into depreciation.
The following schemes are applicable account is 25 million per taxpayer
for solar, wind, geothermal, hydro, o Free depreciation/depreciation at
per calendar year.
biomaterial and offshore technologies. will is subject to a maximum annual
o Investments must be included on budget, to be determined annually
An additional deduction of 41.5 the Environmental List (Milieulijst) (38 million in 2015).
percent of the amount invested in to be qualifying assets.
qualifying assets is available under Applicability: Not directly applicable to
the Energy Investment Allowance o The amount per qualifying renewable energy, although assets for
(Energie-investeringsaftrek or EIA): investment must be more than which this tax incentive is applicable
2,500. can be used as part of the production of
o Investments must be included on the energy from renewables.
Energy List (Energielijst) to qualify. o A granted MIA will be revoked
partially or in full (added back to the Capital invested in green funds
o The maximum amount of fiscal profit) on alienation of the (appropriated funds invested in
investment for which the EIA can assets within a five-year period. environmentally friendly projects
be claimed per calendar year per or groene fondsen) is exempt from
taxpayer is 118 million. Pro rata o No prior use of asset that is the
personal income tax:
calculation applies in the case of object of investment is permitted.
transparent entities. o A private investor will not be taxed
o The EIA and the MIA cannot be
for capital invested in green funds.
o The amount per qualifying applied simultaneously.
investment must be more than o The maximum amount of invested
o Certain formal conditions apply to
2,500. capital exempted on an individual
requests for the MIA.
basis is 56,928.
o A granted EIA will be revoked o The MIA is subject to a maximum
partially or in full (added back to the o A tax credit will be granted of 0.7
annual budget, to be determined
fiscal profit) on alienation of the percent of the invested capital,
annually (93 million in 2015).
assets within a five-year period. with a maximum amount of
Applicability: Not directly applicable to invested capital of 56,928 on an
o No prior use of the asset that is the renewable energy, although assets for individualbasis.
object of investment is permitted. which this tax incentive is applicable
Applicability: Investments in green funds.
o The EIA and the Environmental can be used as part of the production of
Investment Allowance (see below) energy from renewables. Operating subsidies
cannot be applied simultaneously. Free depreciation/depreciation Feed-in tariff
o Certain formal conditions apply to at will is granted on qualifying
As of 1 April 2014, the regulation for the
requests for the EIA. environmentally friendly assets
feed-in tariff (Stimulering Duurzame
(Willekeurige afschrijving
Energieproductie or SDE+) for 2014 has
o The EIA is subject to a maximum milieuinvesteringen or VAMIL):
opened. This regulation includes the
annual budget, to be determined
o Investments must be included on following features:
annually (119 million in 2015).
the Environmental List (Milieulijst)
Applicability: Not directly applicable to a budget ceiling established for all
to qualify.
renewable energy, although assets for types of renewable energy such as
which this tax incentive is applicable o Free depreciation of up to wind, geothermal, solar photovoltaic,
can be used as part of the production of 75percent of the investment biomass and hydro
energy from renewables. costs of the qualifying asset is
phased opening
granted. The maximum qualifying
An additional deduction is granted investment costs that are taken into a free category to enhance
of up to 36 percent of the amount account amount to 25 million per investments in certain technologies
invested in qualifying environmentally taxpayer per calendar year.
friendly assets under the feed-in tariff granted for a certain
Environmental Investment Allowance o The total amount of qualifying period (5, 8, 12 or 15 years)
(Milieu-investeringsaftrek or MIA): investments must be more than
a maximum subsidy amount for
2,500 per application.
o Depending on the asset, the the Netherlands, to be determined
amount that can be deducted o No prior use of asset that is the annually (EUR3.5 billion in 2015).
from the fiscal profit is 13.5, 27, object of investment is permitted.
Taxes and incentives for renewable energy | 47

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
New Zealand
Support schemes Additional information
Investments and other subsidies Operating incentives
Schemes are applicable for solar, wind, Wind generation is required to be
hydro and biomaterial energy sources. bid into the market. However, it is
automatically dispatched, and the
Historically, renewable generation
generator receives the same pool
projects may have qualified for free
price as other dispatched generation.
allocation of carbon credits. Current
Generation from all other renewable
policy is that generation which results
sources is treated the same as
in greenhouse gas emissions will incur
generation from carbon. The lowest bid
a carbon cost under the NZ Emissions
price is dispatched first.
Trading Scheme. This includes
geothermal generation.

Operating subsidies
Feed-in tariff
Remuneration is available for electricity

48 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes such project costs. From the income hydro plants generating 1 MW and
year 2015, the maximum funding for built after 1 January 2004
Investments and other subsidies R&D projects using in-house R&D
Energy Fund existing renewable power plants
resources is Norwegian krone (NOK)15
that permanently increase their
The state-owned corporation Enova is million per year. The SkatteFUNN R&D
electricity production with new
the driving force for an environmentally cost ceiling for R&D projects also using
construction beginning on or after
friendly energy conversion by private external pre-approved R&D resources is
7 September 2009.
and public enterprises. Enova is funded NOK 33 million per year. Total costs for
through the Energy Fund that supports in-house and external resources must Any entity that delivers power to end
environmental change in the use and not exceed NOK 33 million. consumers is obliged to purchase
production of energy. The management electricity certificates, and it is the end
of the Energy Fund is governed by an
Operating subsidies consumer who finances the scheme
agreement between the Norwegian Feed-in tariff through increased costs when invoiced
Ministry of Oil and Energy and Enova. There are no national-based feed-in for usage. The electricity certificate
tariffs in Norway. However, there is a scheme is managed by the Norwegian
Enova offers financial support based on
green certificate scheme. Water Resources and Energy
defined programs for various renewable
energy and environmentally friendly Premium
projects based on an application Quota obligation
Electricity green certificates
principle. In 2014, the Energy Fund Starting in 2008, the Norwegian
supported 1400 new projects in The issuance of electricity certificates is
emissions trading system for
the private and public sectors, and an economic subsidy scheme that will
greenhouse gas emissions expanded
supported 4500 new energy measures make it more remunerative to invest in
to include nearly 40 percent of the
in residential buildings. power production based on renewable
emissions related to Norway. It is
energy sources such as hydro, wind,
Other allowances also affiliated with the European
solar and bio energy. The scheme is
system for quotas. The Norwegian
The Norwegian General Tax Act includes regulated by the Green Certificates Act.
system for quota obligation applies to
regulations regarding tax allowances
The Norwegian government has greenhouse gas emissions in Norway
known as SkatteFUNN to support
entered into an agreement with the and to emissions from activities on the
R&D projects. The SkatteFUNN R&D
Swedish government establishing a Norwegian part of the continental shelf.
tax incentive scheme is a government
common electricity certificate market
program designed to stimulate R&D in The quota system applies to emissions
for electricity that will contribute to
Norwegian trade and industry. Under in connection with:
increased production of renewable
the SkatteFUNN scheme, any type of
energy. Moving toward 2020, Sweden energy production
business enterprise engaged in R&D
and Norway will increase their power
activities may apply to the Research refining of mineral oil
production from renewable energy
Council for support for their projects.
sources to 26.4 TWh. Power plants coke production
R&D projects under the SkatteFUNN
that are included in the scheme receive
scheme are aimed at obtaining new production and processing of iron and
electricity certificates that can be sold
knowledge or technical skills that can steel including roasting and sintering
in the Norwegian-Swedish electricity
benefit the company in connection with of iron ore
certificates market. Power suppliers
the development of new or improved
and certain power users are required production of cement, lime, glass,
goods, services or means of production.
to purchase electricity certificates for a glass fiber and ceramic products, as
Support for R&D projects is granted share of the electricity they sell or use. well as the production of paper, board
in the form of a tax deduction. When and pulp from timber or other fibrous
The following power producers may
determining the tax deduction under materials
apply, subject to certain requirements,
the SkatteFUNN scheme, a distinction
for electricity certificate approval for aviation activities.
is made between SMEs and large
whole or parts of its production based
enterprises. SMEs may be granted Any person engaged in any of
on its total production:
a tax deduction of 20 percent of the the activities mentioned above is
R&D costs associated with a given power plants based on renewable required to surrender allowances
R&D project. Large enterprises may be energy sources and built after corresponding to any emissions
granted a deduction of 18 percent of 7September 2009 to which the duty to surrender

Taxes and incentives for renewable energy | 49

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
allowances applies. The Norwegian used in connection with the extraction Enterprises that join the Environmental
Emissions Trading Registry shall or transportation of petroleum on the Agreement on NOx are entitled to a
contain information on the allocation, Norwegian continental shelf. The tax is tax exemption from the date when
issue, holding, transfer, surrender classified as a deductible operating cost they joined. From the same date,
and cancellation of allowances. An associated with petroleum activities, the enterprise will have a payment
operator will, by 30 April each year, which contributes to reducing the obligation vis--vis the business sectors
transfer a number of allowances ordinary tax and special tax actually paid NOx Fund. According to the Participant
corresponding to the volume of by the oil companies. Agreement, affiliated enterprises will
emissions for which reporting develop a measure plan identifying
The CO2 tax was reduced according to
is mandatory, generated by the possible NOx reducing measures within
the estimated emissions trading price
installation in the previous calendar 2 years after affiliation.
when the Norwegian emissions trading
year to a specified settlement account
system was introduced. The purpose of the plan is to identify
in the registry.
profitable measures the enterprise can
Nitrous Oxide (NOx) tax: The NOx tax
Additional information is calculated per kg for NOx emissions
implement on its own accord, and to
identify cost-effective NOx reducing
Indirect taxes: Indirect taxes are generated during the production of
measures whose implementation are
used as a policy instrument to reduce energy from the following energy
dependent on support from the NOx
the consumption of products that are sources:
Fund. As of 23 May 2014, a total of 787
detrimental to the environment. enterprises, ships and rigs had joined
propulsion machinery with a total
CO2 tax: Gasoline, mineral oil, gas for installed capacity of over 750 kW the Environmental Agreement on NOx
inland usage and petroleum activities 20112017. The Norwegian government
motors, boilers and turbines with a
are subject to a CO2 tax. A CO2 tax wishes to begin negotiations regarding
total installed capacity of more than
related to petroleum activities shall continuation of the Environmental
10 MW
be paid per liter of oil and natural gas Agreement on NOx after 2017. This
liquids and per standard cubic meter of flares on offshore installations and on is stated in the governments new
gas burnt off or emitted directly to air facilities on land. maritime strategy.
on platforms, installations or facilities

50 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes income tax liability by each contract and operation of electricity plants generating
activity. power through renewable resources.
Investments and other subsidies
Peru has not implemented subsidies, If one of the contracts generates tax Electricity generated with RERs is
but it has implemented certain tax losses that carry forward, such losses considered when it is first delivered into
incentives for energy producers could be offset against the profits the electricity distribution network.
producing energy on renewable derived from another contract or
This benefit will be in force until
resources. geothermic related activities.
31 December 2020. However, it could
However, Peru has not implemented Investments applied to a geothermic be expected that further provisions
feed-in tariff schemes, premiums resource concession agreement that would be enacted in order to extend the
to renewable energy producers or may not have reached the exploitation referred benefit.
renewable energy quota obligation to stage can be accumulated with
Early recovery of the Input VAT derived
energy producers. the same kind of investment made
by electricity generating corporations:
with another contract that may have
Concessionaires of electricity-
Additional information reached the exploitation stage. These
generating activities through RERs are
accumulated investments can be
Peru is a country with abundant natural entitled to the early recovery of the
amortized either on a production basis
resources, but whether a particular Input VAT paid for capital expenditures,
or proportionally over a five-year period
resource is considered renewable is services and building contracts directly
on a straight line method.
determined only by a general consensus related to the electricity generating
rather than by legal definitions. This Import of goods: Import of goods and activities, provided they do not enter
consensus appears to be changing, and inputs required to exploit geothermic into the productive stage.
some resources like water, which was resources under concession are exempt
Selective Consumption Tax (Impuesto
once considered renewable, are no from all existing or to be existed taxes
Selectivo al Consumo or ISC): The ISC
longer considered as such. provided such goods or inputs were
excise tax is applicable to, among
included in the specific list approved by
Apart from issues related to water, other goods, fuels. As of 1 January
the Energy and Mining Ministry.
no clear tax policy exists that might 2008 until 1 January 2016, the Peruvian
promote investment into renewable Contribution: Geothermic government has established a schedule
energy. However, a number of benefits concessionaires are obliged to pay a for applying a specific amount as an
can be identified in the Peruvian taxation 1 percent contribution applied to the ISC on certain fuels such as diesel
system. energy average price up to the level 2, kerosene and others that contain
of hydroelectric generation. Such harmful contaminants like sulfur.
Geothermic resources law: The Peruvian
contribution cannot exceed 1 percent of
government grants 30-year concessions
the annual sales of the concessionaire.
to explore and/or exploit aboveground
and underground geothermic resources Accounting: Local accounting could be
that are not hydrocarbon-based. carried in foreign currency. For such
purpose, concessionaires must be
Income tax stability: Geothermic
authorized by the Ministry of Economy.
concessionaires will be subject to
the common tax regime of income Investment in generating electricity
tax in force at the time of signing the through hydro-power and other Renewable
concession agreement during the Energetic Resources (RER): Electricity
term of the concession. For 2015 and generation through hydro, wind, solar,
2016, the income tax regime will be geothermic, biomass, wave or tidal
28 percent, for 2017 and 2018, it will be powers or other RERs is subject to
27 percent and from 2019 and onward, it an annual maximum of 20 percent
will be 26 percent. accelerated depreciation regime for
Income Tax purposes.
Income tax assessment: Geothermic
concessionaires having more than Accelerated depreciation is applicable to
one geothermic resource concession electricity plants entering into operation
agreement that may also perform as of 29 June 2008. Accelerated
activities related to geothermic depreciation is applicable to machinery,
resources and connected activities shall equipment and building infrastructures
individually and annually assess their required for the installation and

Taxes and incentives for renewable energy | 51

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Investments and other subsidies equipment, and material must be
Republic Act 9513 or the Renewable directly and actually needed and used
Energy Act of 2008 exclusively in the RE facilities.
In 2009, Republic Act (RA) 9513, Net Operation Loss Carry-Over
otherwise known as the Renewable (NOLCO) of seven years
Energy Act, was passed. The law is The RE developers NOLCO during
intended to accelerate the development the first 3 years starting commercial
and commercialization of renewable operation may be carried over as a
energy resources in the Philippines. deduction from the gross income for
It includes, among other items, the the next seven consecutive taxable
establishment of the Renewable years immediately following the year of
Portfolio Standard which sets a loss, provided it has not been previously
minimum percentage of generation offset and is not the result of the
from renewable energy resources incentives under RA 9513.
by power generators, distribution
utilities and suppliers; the creation of Zero percent value-added tax (VAT) rate
a renewable energy market; and the The sale of fuel or power from RE
adoption of the feed-in tariff system. sources shall be subject to 0 percent
VAT. All RE developers are entitled to
RA 9513 also provides for fiscal
zero-rated VAT on purchases of local
incentives to renewable energy (RE)
supply of goods, properties and services
developers of renewable energy
needed for plant facilities. This incentive
facilities such as hybrid systems in
may be used throughout the whole
proportion to and to the extent of the RE
process of exploring and developing
component for both power and non
RE sources up to its conversion to
power-applications. Incentives include
power, including those performed by
the following:
subcontractors and contractors.
Income Tax Holiday (ITH)
Special realty tax rates on equipment
Duly registered RE developers are and machinery
exempt from income taxes for the first
Realty and other taxes on equipment,
seven years of commercial operations.
machinery and other improvements
Additional investments are entitled to
actually and exclusively used for RE
additional income tax exemptions that
facilities shall not exceed 1.5 percent
do not exceed three times the period of
of their original cost less accumulated
the initial availability of the ITH.
normal depreciation or net book value. In
Ten percent corporate tax rate an integrated resource development and
A corporate tax rate of 10 percent generation facility, only the power plant
(reduced from the regular 30 percent) shall be subject to real property tax.
on net taxable income shall be imposed Accelerated depreciation
on all RE developers after seven years of
If an RE project fails to receive an ITH
the ITH.
before its full operation, it may apply
Ten year duty-free importation of RE for an accelerated depreciation in its
machinery, equipment and materials tax books provided that the project
This incentive is available within or its expansions shall no longer be
the first 10 years of RE certification, eligible for an ITH under an accelerated
provided that an endorsement from the depreciation.
Department of Energy (DOE) is obtained
before importation. The machinery,

52 | Taxes and incentives for renewable energy

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Taxes and incentives for renewable energy | 53

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Cash incentive given to RE Hybrid and cogeneration systems are entitled to duty-free importation and
developers for missionary Incentives and tax exemptions VAT exemption on all types of agricultural
electrification under RA9513 may be claimed by inputs, equipment and machinery.
RE developers shall be entitled to a cash registered RE developers of hybrid and Tax rebate for purchase of RE
generation-based incentive per kilowatt- cogeneration systems using both RE components
hour rate generated that is equal to sources and conventional energy, but
Rebates for all or part of the tax paid
50 percent of the universal charge for only as to the equipment and machinery
for purchases of RE equipment for
power needed to service missionary utilizing RE resources.
residential, industrial, or community use.
areas where it operates. This incentive is
Benefit of a priority dispatch
chargeable against the universal charge Operating subsidies
for missionary electrification. Qualified and registered RE generating
units with intermittent RE resources Feed-in tariff
Tax exemption of carbon credits shall be considered must dispatch The feed-in tariff system is a scheme
All proceeds from the sale of carbon based on available energy and shall that involves the obligation on the part
emission credits are exempt from all enjoy the benefit of priority dispatch. of the power industry participants to
taxes. REgenerating units with intermittent source electricity from RE generation at
RE resources include plants using wind, a guaranteed fixed price applicable for
Tax credit on domestic capital
solar, run-of-river hydro or ocean energy. a given period of time, which shall in no
equipment and services
Incentives for RE commercialization case be less than 12 years.
RE operating contractor holders
purchasing RE machinery, equipment, Incentives are given to all manufacturers The feed-in tariff system is mandated
materials and parts from a domestic and suppliers of locally-produced RE for wind, solar, ocean, run-of-river,
manufacturer shall be entitled to a tax equipment and components, provided hydropower and biomass energy
credit that is equivalent to 100 percent they are duly accredited by the DOE. sources.
of the value of the VAT and customs
Tax and duty-free importation of Meanwhile, the Feed-In Tariff Allowance
duties that would have been paid on the
components, parts and materials imposes a uniform charge on all On-
equipment, materials and parts had they
exemption from VAT and importation Grid electricity consumers supplied
been imported.
tariffs and duties with electricity through the distribution
Exemption from the universal charge network. This ensures that the RE
Tax credit on domestic capital developers under the feed-in tariff
Power and electricity generated through components, parts and materials
the RE system for the generators own system will be remunerated in full for the
consumption or for free distribution to ITH and exemption available for electricity they generated. In October
off-grid areas shall be exempt from the 7years from day of accreditation 2014, the Energy Regulatory Commission
universal charge. (ERC) provisionally approved the feed-
Zero-rated VAT transactions with local in tariff allowance of PHP0.0406/kWh
Payment of transmission charges suppliers. effective in the January 2015 billing of all
Power and electricity produced from an Incentives for farmers of biomass On-Grid electricity consumers.1
intermittent RE resource may opt to pay resources
the transmission and wheeling charges, For a period of 10 years under RA 9513,
on a per kilowatt-hour basis at a cost those engaged in the farming of crops
equivalent to the average kilowatt-hour and trees used as biomass resources
rate of all other electricity transmitted
through the grid.

1. ERC Case No. 2014-109 RC dated 28 October 2014.

54 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
The current feed-in tariff rates2 are as follows:

ERC-approved Feed-in Tariff Rates

(PHP/kWh) (USD/kWh) Installation Targets
Run-of-River Hydropower 5.9 0.14 250
Biomass Energy 6.63 0.15 250
Wind Power 8.53 0.19 200
Solar Power 8.693 0.22 50
Ocean Energy 10
Total 760

(Based on exchange rate: USD1 = PHP43)

Additional information
Green energy option End-users are given the option to choose RE resources as their source of energy by enrolling under
this program.
Nationality requirement Under the Philippine Constitution, the exploration, development and utilization of natural resources
in the Philippines is an area generally reserved for Filipino citizens or domestic companies with at least 60 percent of their
capital owned by Filipino citizens.
The DOE has awarded 664 projects under the RE Law, as of April 2015.4

Awarded Projects Potential Capacity MW Installed Capacity MW

Grid-Use Own-Use Grid-Use Own-Use Grid-Use Own-Use
Hydro Power 403 1 7,621.54 1.50 122.73 -
Ocean Energy 8 - 31.00 - - -
Geothermal 42 - 750.00 - 1,896.19 -
Wind 50 1 1,272.00 0.006 336.90 -
Solar 82 11 1,749.53 3.580 108.90 -
Biomass 44 22 345.00 5.80 191.80 143.18
Sub-Total 629 35 11,769.07 10.886 2,656.52 143.18
Total 664 11,779.96 2,799.70

In March 2015, the ERC approved the Installed Generating Capacity (IGC) per Grid and National Grid, as well as the Market
Share Limitation (MSL) per Regional Grids and the National Grid for the year 2015. This aims to prevent a person or entity
(solely or jointly) to operate or control more than 30 percent of the IGC of a Grid, and/or 25 percent of the National IGC.5

2. ERC Resolution No. 10, series of 2012.

3. ERC Resolution No. 06, series of 2015 changed the feed-in tariff rate for solar power from PHP9.68 to 8.69.
4. Summary of projects, renewable energy registration and accreditation,
DOE website (
5. 2015 press releases, ERC website (

Taxes and incentives for renewable energy | 55

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes production of electricity in high and employment (such as new
efficiency cogeneration biomass manufacturing plants, innovative
Investment and other subsidies
from 40 kWe to 5 MWe. technologies), R&D activities (such
Support schemes are applicable as development or improvement of
for solar, wind, geothermal, All companies may apply for support.
products, services or technologies),
hydro, biomaterial and offshore The level of support, given in the other activities such as environmental
technologies. form of preferential loan, is up to protection, training sessions, and
Renewable energy is exempt from 85 percent of eligible cost of the logistics
excise tax. project (depending on the investment
incentives from the Polish
type). The amount of support reaches
In some cases solar photovoltaic Government (R&D projects,
up to Polish Zloty (PLN)40 million.
modules could be excluded from real environmental projects, and
estate tax as other constructions. The Stork Program will be investments of considerable
implemented in the years 2015 importance for the Polish economy
Agriculture tax payers may claim a 2023, whereas concluding loan from 2011 to 2020).
refund of investment costs if the agreements is possible up to 2020
investment relates to renewable Incentives obtained by the investors
and the spending is possible up to
energy (up to 25 percent). in Poland are subject to Polish and EU
state aid rules which determine, among
Subsidies and grants from the EU Support for a low-carbon and other things, the maximum level of
Structural Fund in Poland or other resource-efficient economy: Part support, beneficiaries and the detailed
domestic institutions (for example, 1) energy and electricity audits, conditions of support.
the National Fund of Environmental Part 2) improvements of energy
Protection and Water Management). effectiveness of companies, and Operating subsidies
Currently the following sources of Part 3) e-accumulator-ecological Green certificate system/feed-in tariff
financing for renewable energy projects battery for industry
Remuneration for renewable energy
are available: Companies investing in undertakings produced: the average market price
leading to energy savings may apply of PLN163.58/MWh for the last year
The Stork Program financing
for support. (2014) plus the market value of green
of distributed, renewable energy
certificate (certificate of origin) granted
sources (RES) Support under Part 1) will be given
by the Energy Regulatory Office.
Support under the Stork Program will in the form of grant up to 70 percent
be given for investments involving of eligible investment costs. Support Quota obligation
construction or reconstruction of RES under Part 2) and Part 3) is given in the Rates (2015): 14 percent of all energy
installations with capacities from the form of preferential loans. The amount produced (floors relate to all types
following ranges: of support extends from PLN300,000 of renewable energy). The quota is
to PLN50 million. The maximum level increasing in stages and will reach
wind power plants from 40 kWe of the loan may not exceed 75 percent 15 percent in 2016 to 20 percent in 2021.
to 3 MWe of eligible cost of the project.
photovoltaic systems from Additional information
All three parts will be implemented in
40 kWp to 200 kWp the years 2014 2017; the spending is Legal basis
photovoltaic systems (installed possible up to 2017. The Act of Energy Law enacted on
on buildings / on lands) from 10April 1997 and the respective
200 kWp to 1 MWp
Other incentives decrees from the Ministry of Economy,
Besides aid sources mentioned above, which will be subject to several
energy from geothermal waters amendments in 2016. Moreover it
the investor may also apply for other
from 5 MWt to 20MWt should be noted that beginning in 2016,
incentives related to a broadly defined
hydropower plants to 5 MWe energy sector, in particular: the provisions of the new Renewable
Energy Sources Act (RES Act) will enter
biomass-fired heat sources from grants from EU funds for the Financial into force.
300 kWt to 20MWt Framework from 2014 to 2020 and
national programs designed for, The following is a summary of key
biogas plants from 40 kWe to changes.
among other things, investment
2 MWe

56 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Green certificates scheme licensed activity and requires a permit the relevant green certificate, however,
Current RES law is based on the support granted by the president of Energy no longer than until 31 December 2035.
scheme in the form of green certificates Regulatory Office. Such a permit can
The certificates substitution fee will be
and stays in force until the end of 2035 be sought by an entity that meets
frozen at the current (2014 2015) level,
for all operating wind farms and projects requirements specified in the Energy
that is, PLN300.03/MWh (approximately
completed before implementation of Law, especially the ability to provide the
EUR70/MWh) and will not be subject to
the new RES law. financial, organizational and technical
indexation in the coming years.
resources required to perform the
Electricity producers may apply to the licensed activity. As a rule, permission Option to pay substitution fee will not
president of Energy Regulatory Office is given for the fixed term but not longer be available in the event when green
for green certificates (also known than 50 years. certificate prices fall below 75 percent
as certificates of origin), if they have of the substitution fee (PLN225/MWh or
produced renewable energy or if they Grid access
approximately EUR54/MWh).
are required to pay substitute fees Priority access is granted over
calculated in line with the energy law. nonrenewable electricity producers. The Existing biomass co-firing installations
The green certificates are similar to costs of connecting to the electricity will receive half of a certificate per each
securities; they are transferable and grid are determined by the actual costs MWh produced (with an overall cap on
tradable on the regulated market (for incurred to construct the line. Those production equal to the average amount
example, the Polish Power Exchange) costs may be partially refunded to the from 2011 to 2013). By 31 December
or within the over-the-counter market. investor, depending on the year and 2020 the Ministry of Economy should
Generally, if energy producers do production capacity. announce a new ratio.
not achieve the minimum level of Hydro plants above 5 MW capacity will
Overview of the implemented
share of renewable energy (for2015 be excluded from the support system.
changes to the RES supporting
14percent), they are obliged to
mechanism (based on the RES Act All projects under the green certificates
purchase green certificates at the
enacted on 20 February 2015) system will have an opportunity to move
market (for redemption) or has to make
binding from 2016 to the reverse auction system (within
a compensation payment. Currently the
certificates substitution fee amounts New RES Act (which is the the proposed support period).
to PLN300.03/MWh (approximately implementation of the provisions
Key provisions for new
EUR70/MWh). of Directive 2009/28/WE into the
installations reverse auction
Polish law) is based on the reverse
Sale system
auction system, providing support in
Electricity distributors have a legal form of a feed-in tariff for the auction The support system for RES
obligation to acquire a certain amount winner through 2035 (and 2040 for installations producing the energy for
of renewable energy generated in off-shore farms), mainly in force from the first time after 1 January 2016 shall
Poland. For the year of 2015, the above 1January2016. be organized through a reverse auction
percentage limit of renewable energy system, giving fixed price for the energy
Key provisions for existing (indexed by CPI on an annual basis) for
will amount to 14 percent. Otherwise,
installations modified green 15 years until the end of 2035 (or the
the electricity distributor is obliged to
certificates system end of 2040 for offshore wind farms).
buy the missing amount of renewable
energy (by means of green certificates) The green certificates system shall be
Auctions will be arranged at least once
on the market. The prices of renewable available for the installations in which
a year, separately for small (installed
energy have been determined based the energy has been produced for the
power under 1 MW) and large (installed
on average prices of energy in the first time before 1 January 2016 and for
power over 1 MW) installations and also
previous year. (The amount for 2014 installations which have been modernized
separately for the new (first production
was PLN163.58/MWh). The renewable after that date (under specific conditions
after winning an auction) and previous
electricity producers have priority over described in the RES Act).
(participating previously in the green
other producers with regards to the The green certificates shall be granted certificate system) installations.
distribution of produced energy. to the RES energy producers for However biomass units of over 50 MW,
Administrative procedures 15 consecutive years from the first large multi-fuel installations as well
production of the energy confirmed by as large hydro power plants will be
Business activity in the area of
excluded from auctions.
production of renewable energy is a

Taxes and incentives for renewable energy | 57

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
The pool of offers with the lowest prices introduction of separate reference new RES fee added to distribution fees
that meet volume specification under prices for each type of the renewable (approximately PLN2.51/MWh in the
the given auction shall qualify for the technology (the reference prices first year of the auction system).
support. The annual cap for volume will be set each year by the Minister
The provisions of the new support
and value subject to the tender(s) will of Economy, 60 days prior to the
system for RES introduce a limit to the
be determined by the government relevant auction). As for the previous
state aid. The total value of support
through 31 October of the preceding installations, the reference price shall
granted under these provisions taken
year. The RES support shall depend be calculated as a sum of (i) the average
together with any other state aid shall not
on the installed power in the relevant market price of energy in the last quarter
exceed the difference between the value
RES installation. The RES operators of (published by the President of URE)
of the volume of electricity generated by
the installations with power lower than and (ii) the average price of the green
the installation calculated by multiplying
500 kW will be obliged to sell energy certificates for years 20112013 (i.e.
that volume by the reference price and
in the declared amount at the tender PLN239.83). Tenders submitted during
the value of the same volume calculated
price (regardless of current market the auction in excess of the reference
by multiplying it by the average market
conditions). The other RES operators price will be automatically rejected.
price announced by the President of URE
(installed power of at least 500 kW) will
The winning party of the auction will valid as of the day of the submitting of an
be entitled to the difference between
have to start production of electricity offer in a tender.
average market price and the price
within approximately two months
offered in the tender (in case the market The state aid includes: a) a difference
regarding the previous installations and
price is lower than the price offered in between revenues earned from
within 48 months regarding the new
the auction) payable by the Renewable tenders and the equivalent of revenues
installations (for solar energy within
Energy Settlements Operator, a State- calculated based on the average market
24months and offshore wind farms
owned company responsible for price announced by the President
within 72 months) under penalty of
settlements of reverse auctions. of URE, b) revenues earned from
losing the RES support for 3 years.
certificates of origin, c) tax reliefs, and d)
In regard to the new installations,
A portion of costs of the system will other investment-related aid.
the auction mechanism entails the
be charged to end customers, via a

58 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes The profit which can be reinvested Administrative procedures: The activity of
represents the balance of profit production of electricity from renewable
Investment and other subsidies sources requires a license granted by
(loss) account for the period,
Tax incentives namely the accumulated ANRE. Such a license can be obtained
In Romania, the following tax incentives accounting profit from the by an entity by filling a request for
may be applicable to energy produced beginning of the year, in the year in accreditation and accompanied by a
from the following renewable sources: which the investment is realized. specific set of documentation.
wind, solar, geothermal, hydraulic The tax relief is granted up to the
The license is granted for a fixed term,
utilized in power plants with an installed limit of corporate tax due for the
but no longer than 25 years. In case of
capacity of maximum 10 MW, biomass period in which these investments
production of electricity from renewable
and residues fermentation gas. are made.
sources, the maximum period during
Electricity from renewable sources is The corporate tax relief applies which ANRE should issue the relating
excise duties exempt. only for new fixed assets. Also, license is of 30 days.
taxpayers which benefit from this
Accelerated depreciation for Green certificate scheme: In order to
incentive are required to keep the
tax purposes can be used for promote investments in renewable
specific fixed assets for at least half
technological equipment, tools and electricity production capacities, a
of their normal economic useful
installations computers and related Tradable Green Certificates (TGC or GC)
life established according to the
peripheral equipment. system has been in place in Romania
accounting applicable regulations,
since 2004, coupled with a supplier
Buildings and land used within but no more than 5 years.
quota obligation system. Under this
hydroelectric, thermoelectric and Taxpayers who benefit from framework, energy producers are
nuclear power plants, as well this incentive cannot apply the entitled to receive a set amount of GCs
as buildings and land relating to accelerated depreciation method according to the amount of electricity
transformation and connection posts, for this equipment. generated and delivered by them from
are not subject to local taxes. renewable sources. The revenue from
Operating subsidies GC sales represents additional revenue
Reinvested dividends can be dividend
tax exempt, provided the dividends Green certificate system for eligible renewable producers on top
are used for the purpose of creating of electricity sales on the market.
The price of a green certificate has
new work places or developing the been set between the Romanian According to Law 220/2008, the
activities of Romanian entities. new leu (RON) equivalent of EUR29/ producers of electricity from renewable
Incentives (for example, exemption General Certificate (GC) and EUR59/GC. sources benefit from a different number
from payments to unemployment Currently, the price of a green certificate of green certificates depending on the
funds or income tax) can be is equivalent with the maximum value of fuel used. For example:
applicable for the companies which EUR59/GC, since the demand of GC is
0.7 GC/MWh for new hydroelectric
fulfill certain conditions imposed by higher than the offer.
power plants with installed capacity
the legislation in force.
Quota obligation of maximum 10 MW
Reinvested profit starting 1 July 1 GC for each 2 MWh for
The Romanian Regulatory Authority in
2014 is applicable for tax relief. hydroelectric power plants with an
the Field of Energy (ANRE) calculated
This involves profit reinvested in installed capacity of maxim 10 MW
the estimated quota of GCs acquisition
the production and/or acquisition
for 2015 for the electricity suppliers
of technical equipment (machines, 0.5 GC/MWh for wind power, up to
as 0.274 GC/MWh supplied to final
equipment and work installations) 31December 2017 and 0.25 GC/
used for carrying out economic MWh beginning 1 January 2018
activities put into operation no later Additional information 3 GC/MWh for solar power.
than 31 December 2016.
Legal basis: Electricity Law 123/2012 The support scheme is granted for a
The types of equipment eligible and Law 220/2008 for approval of the period of 3 to 15 years, depending on
for this tax relief are defined in support scheme for electricity from the age of the plants and the installed
subgroup 2.1 of the Catalogue renewable sources (Law 220/2008) and capacity. Eligible electricity producers
regarding the classification and the the secondary relating legislation issued will be able to enter the scheme only if
normal useful life of fixed assets. by ANRE. the commissioning/refurbishment of

Taxes and incentives for renewable energy | 59

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
the power plant are performed before Electricity suppliers and electricity the RON equivalent of EUR29/GC and
31 December 2016. producers previously mentioned have EUR59/GC. Currently, the price of a
the obligation to acquire annually a green certificate is equivalent with the
Sale: The annual mandatory GCs
number of GCs which is equivalent maximum value of EUR59/GC, because
acquisition quota is established
to the product between the annual the demand of GC is higher than the offer.
based on the quantity of renewable
mandatory GCs acquisition quota and
electricity produced and on the During the period 1 July 2013 to
the quantity of electricity detailed in the
final electricity consumption of the 31March 2017, trading is temporarily
paragraph above, supplied annually to
previous year, without exceeding the deferred for a certain number of GC for
final consumers.
level corresponding to the mandatory each 1MWh generated and delivered
quota for the electricity produced from For 2015, the estimated quota of by the electric energy producers from
renewable sources. acquisition of GCs for the electricity renewables resources, accredited by
suppliers is 0.274 GC/MWh delivered ANRE up to 31 December 2013, as
The quantity of electricity for which the
to final consumers. Any supplier that follows:
annual mandatory GCs acquisition quota
fails to fulfill this obligation must pay
is established includes the electricity 1GC for hydroelectric power plants
the equivalent value of the GC at a
purchased by electricity suppliers for with installed capacities of maximum
premium of EUR119.7702 per each non-
their own consumption or for the sale to 10 MW
purchased certificate.
final consumer, the electricity used by
the electricity producers for their own The GCs are issued by the transmission 1GC for wind power plants
consumption (other than CPT), and for system operator and are valid for 12 2GC for solar power plants.
the supply of end consumers directly months. The trading value of a GC has
connected to the power plant. been established by ANRE as between

60 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
South Africa
Support schemes Section 12I provides for an additional of assessment. The deduction is
allowance on assets (new or used), calculated at 95 cents per kilowatt hour
Investment and other subsidies applied to a project that qualifies (or equivalent) of energy efficiency
Carbon emissions incentives as an Industrial Policy Project (IPP) savings. The energy efficiency savings
defined in relation to assets used in the have to be measured and confirmed
Certified emissions reduction
manufacturing sector. The project must by a measurement and verification
be approved by the Minister of Trade and (M&V) body as defined in the published
Section 12K of the Income Tax Act Industry. The only projects that qualify regulations in relation to section 12L.
provides for a tax exemption on for this allowance are greenfield projects No deduction is allowed if the taxpayer
any amount received or accrued in costing more than South African rand receives a concurrent benefit in respect
respect of the disposal of any certified (ZAR)50 million or brownfield projects of energy efficiency savings.
emission reduction (CER) derived in costing more than ZAR30 million, less
the furtherance of a qualifying clean No person may receive the section
than ZAR50 million or 25percent of
development mechanism (CDM) project 12L allowance in respect of energy
expenditure on existing assets.
carried on. generated from renewable sources
The incentive in relation to a qualifying or co-generation other than energy
To stimulate the uptake of CDM projects project comprises: generated from waste heat recovery.
in South Africa, income from primary Furthermore, a person generating
CERs, which was exempted from 75 percent of the cost of a new energy through a captive power plant
income tax from 2009 to 2012, will be and unused manufacturing asset may not receive the allowance unless
extended to 31 December 2020, in used in an IPP within an Industrial the kilowatt hours of energy output of
line with the adoption of the second Development Zone (IDZ); or that captive power plant for that year of
commitment period of the Kyoto 35 percent of the cost of a new and assessment is more than 35 percent
Protocol. unused manufacturing asset that is of the kilowatt hours of energy input in
The VAT Act does not provide for used in an IPP respect of that year of assessment.
exemption from VAT on the disposal of If the qualifying project constitutes Production of renewable energy
a CER. It is arguable that the disposal a Preferred Project (as defined), the allowance
of a CER should be viewed as a supply incentive comprises: Section 12B provides for an accelerated
of services for VAT purposes and that,
capital allowance for machinery, plant,
on exportation of a CER, this service is 100 percent of the cost of a new
implements, utensil and articles owned
zero-rated for VAT purposes. and unused manufacturing asset
by the taxpayer or acquired by the
used in an IPP within an IDZ; or
Energy efficiency incentives taxpayer in terms of an installment
55 percent of the cost of a new and credit agreement which was brought
Industrial policy projects additional unused manufacturing asset used into use for the first time by the taxpayer
allowance in an IPP. for purpose of its trade.
This is an incentive in relation to
The incentive (i.e. tax deduction) is This section applies where the assets
industrial policy projects, including
limited to: are used for purposes such as the
greenfield and brownfield manufacturing
generation of electricity from wind
projects. One of the qualifications ZAR900 million for greenfield projects
power, solar energy, hydropower to
for eligible projects is the use of with preferred status
produce electricity of not more than
improved energy efficiency and cleaner
ZAR550 million for greenfield projects 30 megawatts and biomass comprising
production technology. Measurement
with qualifying status organic wastes, landfill gas or plant
and verification (M&V) of savings will
be required to verify that savings are ZAR550 million for brownfield
sustained over the incentive benefit projects with preferred status The allowance is calculated as 50 percent
period. of the cost of the assets and the direct
ZAR350 million for brownfield
cost of installation or erection thereof for
Under Section 12I of the Income Tax projects with qualifying status.
the taxpayer in the first year, 30 percent
Act (Industrial Policy Projects), projects
Energy efficiency savings allowance in the second year, and 20 percent in the
that have already received incentives or
Section 12L allows as a deduction, third year. The allowance also applies to
grants under other types of schemes
in determining the taxable income all improvements (other than repairs) and
will be excluded. Such projects need
of a taxpayer, an amount in respect supporting structures that would form
to be ring-fenced and taken out of the
of energy efficiency savings by the part of the machinery, plant, implement,
equation when calculating and reporting
taxpayer with regard to that year utensil or article.
savings for the tax claim.

Taxes and incentives for renewable energy | 61

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Research and development Environmental incentives Deductions in respect of
allowance environmental conservation and
Environmental treatment and maintenance
Aside from the section 11(a) general
recycling or waste disposal asset
deduction of 100 percent, section 11D Section 37C states that expenditures
provides for an additional 50 percent incurred by a taxpayer to conserve or
deduction for revenue expenditure Section 37B provides for an allowance maintain land in terms of a five-year
incurred in respect of eligible R&D with regard to the cost incurred biodiversity management agreement
activities, as well as for prototypes and in acquiring a new and unused entered into in terms of the National
pilot plants created solely for purposes environmental treatment and recycling Environmental Management:
of R&D that is not intended to be asset or environmental waste Biodiversity Act will be deemed to be
used for production purposes after disposal asset used in the context of expenditures incurred in the production
completion of the R&D. From 1October manufacturing and which assets are of income and for the purposes of trade
2012, the additional 50 percent uplift required by any law for purposes of and will therefore be deductible.
will only apply to R&D projects for protecting the environment.
Land used by the taxpayer for the
which a pre-approval application form The allowance in respect of an production of income and for the
was submitted and approved by the environmental treatment and recycling purposes of trade (the productive land)
Department of Science and Technology. asset is 40 percent of the cost of the needs to be in the immediate proximity
For capital expenditure, an accelerated asset in the first year and 20 percent per of the land that is subject to the
allowance is available of 50 percent in annum for the next 3 years. The cost of biodiversity management agreement
the first year, 30 percent in the second waste disposal assets can be written off for section 37C to find application. In
year, and 20 percent in the third year. on a straight line basis over 20 years (5 addition, the expenditure deductible in
percent per year). terms of this section is not allowed to
exceed the income generated by the
taxpayer on the productive land.

Special Economic Zones (SEZ)

(legislation not yet in force)
Special Economic Zones
In terms of section 12R, any qualifying
companies, which are South African
incorporated companies, alternatively,
companies which have their place of
effective management in South Africa,
and which are located in a SEZ, will be
entitled to apply a reduced income tax of
15percent (as opposed to 28percent).
The precise requirements to qualify for
the reduced rate of tax referred to above
have not yet been determined by the
legislature. New or improved buildings
in a SEZ
A qualifying company located within
a SEZ may deduct from its income an
allowance equal to 10percent of the cost
to the qualifying company of any new or
unused building owned by the qualifying
company or any new or unused
improvement to a building owned by the
qualifying company. The building must be
used by the qualifying company and used
by it in the course of trade.

62 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
South Korea
Support schemes Operating subsidies Quota obligation
Investments and other subsidies Feed-in tariff In 2012, the existing feed-in tariff
In 2004, the South Korean government The feed-in tariff was abrogated at the was replaced by an RPS that was
passed the Act on the Promotion of end of 2011 due to the introduction approved by the government
the Development, Use and Diffusion of the Renewable Portfolio Standard assembly in March 2010.
of New And Renewable Energy (the (RPS) in 2012. (The government The RPS requires 17 state-run and
Act). With the goal of becoming one of maintains a feed-in tariff only for private power utilities, as of 2015,
the five largest producers of new and existing recipients. The existing with a capacity in excess of 500 MW
renewable energy, the government has recipients may have options to to generate three percent of the
announced that a total of South Korean either maintain their feed-in-tariff or energy production from renewable
won (KRW)40 trillion (EUR25.8 billion, exchange them for REC (Renewable sources in 2015. This percentage will
USD34.2 billion) will be invested in Energy Certificate) that enables be increased in stages to 10 percent
renewable energy by 2015. transactions under the RPS). by 2024.
This investment includes KRW22.4 To accommodate small renewable In terms of the standard price per
trillion invested by the nations 30 energy facilities that could not certificate, REC for solar power was
largest industrial groups by 2013, KRW7 receive support by RPS, the Seoul KRW175,503 averagely in 2013,
trillion of government contribution, Solar Power Plant Support Plan while REC for non-solar power was
and KRW10.6 trillion from other private was announced in May 2013. The determined to be KRW 137,844. In
sectors. South Korea has already plan supports operations from the 2014, the average price of REC for
seen substantial financial investment installation of solar power plants to solar power was KRW113,997, and
in renewable energy in recent years, sales for small entities under 100kW that of REC for non-solar power was
including KRW1.8 trillion (EUR1.3 billion, capacity established since 2012 in KRW113,174.
USD1.8 billion) from the government in Seoul. According to the plan, the
the last 2 years (20122013). small entities can receive KRW50/ The total RPS target for 2015 is set
kWh (approximately 10 percent of by 12,339,927 MWh, increased from
According to the second national the last years target of 11,578,809
installation cost) for the amount
energy plan announced in January 2014, MWh, while the RPS target for solar
generated in 2014, and KRW100/kWh
the former renewable energy target, power rose 46 percent from 1,353,000
for 2015. The subsidy is given for 5
11percent of the total energy supply MWh to 1,971,000 MWh in 2015.
years from the first year of provision.
from renewable sources by 2035, has Itwas announced that the total RPS
been reaffirmed. Premium target for 2015 is 12,339,927 MWh;
To reach this goal, the government is The R&D tax credit program is applied increasing 9.3 percent from the target
implementing initiatives in four major for renewable energy technologies. for 2014, while the RPS target for
areas: Import duties are reduced by 50 percent solar power after 2015 is 1,971,000
for all components and/or equipment MWh increased by 6.8 percent from
strategic R&D and commercialization used in renewable energy power the last year target. The Renewable
promotion of industrialization and plants that cannot be manufactured Fuel Standard (RFS) has been
market creation domestically. This import duty premium launched on 31 July 2015. The RFS
will be abrogated on 31 December 2015. requires oil refiners and oil importers
promotion of exports of new and and exporters to blend a certain
renewable energy products The Financial Support Program for
amount of new and renewable energy
Renewable Energy in South Korea is
infrastructure development. fuel into their transportation fuels. The
comprised of four main categories:
RFS target in 2015 has been affirmed
The total budget for renewable energy R&D support, soft loans for renewable
as 2.5 percent with biodiesel only.
in 2015 has reached KRW7.8 trillion projects, feed-in tariffs and renewable
(EUR619.09 million, USD697.2 million) energy distribution support. Additional information
to develop technologies; support The total budget of 2015 consists One Million Green Homes Project: As a part
renewable energy distribution, and of KRW6.4 billion for R&D support, of the 2009 budget, the government
promote entering overseas markets. KRW319.2 billion for the feed-in appropriated KRW94.3 billion (USD72
The government also supports overseas tariff, KRW115 billion for soft loans, million) for the One Million Green
renewable energy business for small and KRW102.9 billion for distribution Homes Project. The intent is to build
and medium-sized enterprises with a support. one million homes by 2020 that use
budget of KRW10 billion in 2015.

Taxes and incentives for renewable energy | 63

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
one of the following renewable energy independent microgrids
technologies: solar thermal, solar
PV rentals
photovoltaic, geothermal, biomass and
wind energy. Each year, the government electric vehicle servicing and charging
will set a new budget for the coming
recycling wasted heat from thermal
year. The budget in 2014 is KRW54.9
power plants.
billion, and the cumulative budget for
the Project reached KRW671.2 billion The new energy businesses are
from 2004 to 2014. expected to create a market worth
KRW4.6 trillion by 2017. This is based
The green homes being built are
on an investment of KRW1.83 trillion in
environment-friendly and use new
2015, including KRW800 billion raised in
and renewable energy resources. In
the private sector.
addition, green homes create no carbon
emissions and use less energy, water
and natural resources.
New Energy Businesses: The government
announced six new energy businesses
in 2014:

electricity demand response

integrated energy management

64 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes applied in a given fiscal year and that tax on electricity generation
have not been used in that fiscal year
Tax incentives tax on spent nuclear raw and
because the tax due was insufficient
The following includes a brief radioactive waste
may be carried forward to the following
description of certain tax incentives that 18 tax years. If the tax due is insufficient tax on spent nuclear raw and
have not been specifically created for for the application of these tax credits, radioactive waste storage
the renewable energies sector. Careful a cash refund in the amount of the
tax planning is therefore required to take fee on use of continental waters to
pending tax credits can be requested to
advantage of these tax incentives. generate electricity (hydroelectricity
the Spanish Tax Administration, with a
Reduction of income from certain discount of 20 percent of the amount of
intangible assets the pending tax credits (i.e. the payment The electrical energy attributable to
in cash implies a reduction of the the use of fuels in facilities that use
The net income derived from the license pending amount of the tax credit). any of the non-consumable renewable
of the right to use or exploit or from the
energies as primary energy shall not be
transfer of certain intangible assets as Tax credits for technological innovation
subject to a premium-based economic
defined in article 23 of CIT Law, shall be activities applied or refunded will have
regulation. This affects solar-thermal
included in the CIT taxable base with a a limit of 1 million Euros per year. In
installations in particular.
60 percent reduction, provided certain addition to that, R&D and technological
requirements are met. activities tax credits applied or refunded Operating subsidies
will have a joint limit of 3 million Euros
R&D Corporate Income Tax credits per year. Remuneration of energy production
R&D tax credits: The tax credit base shall facilities under the special regime has
consist of the amount of research and Capital duty exemption been revised through Royal Decree-
development expenses and, if applicable, As a result of the modifications Law 9/2013, which entered into force
investments in tangible fixed assets introduced by RD 13/2010, Spanish on Sunday 14 July 2013. Such Royal
and intangible assets, excluding real Transfer Tax Law foresees an exemption Decree-Law comprises the following
estate and land. Tax credit rates are set of the Capital Duty regarding: main provisions:
at 25 percent of the expenses incurred
incorporation of companies 1. The amendment of Article 30.4 of the
in the tax period for this purpose. In
Electricity Sector Law, which basically
the event that the expenses incurred share capital increase
provides that:
in pursuing the R&D activities in the
contributions of shareholders that do
tax period exceed the average of those The new remuneration framework
not constitute a share capital increase
incurred in the 2 preceding years, of special regime facilities (including
the rate established in the preceding transfer to Spain of the office of facilities in operation) will be
paragraph shall apply up to that average, effective management of a company established by Royal Decree issued
and 42 percent to the amount by which not previously located in the EU. by the Council of Ministers.
that average is exceeded.
Tax allowances on local taxes In addition to the compensation for
Additional tax credits can be applied for For certain local taxes such as the sale of energy valued at market
expenses corresponding to expenses construction and urban canon, tax price, facilities may receive a specific
of qualified personnel (wages) allowances could be agreed with the remuneration consisting of a term
engaged exclusively in R&D activities corresponding local authority. The tax per unit of installed capacity, to cover,
(17percent), and for investments in allowances to be agreed would depend where appropriate, the investment
tangible fixed assets and intangible on each local authority, and should be costs of a typical installation that
assets, excluding real estate and land, negotiated on a case-by-case basis. cannot be recovered from the sale
used exclusively for R&D activities. of energy and a term per operation,
Taxes on Energy if applicable, to cover the difference
Tax credits for technological innovation
between operating costs and
activities: The tax credit base shall Taxes on electricity generation
revenues for the market share of such
consist of the amount of the expenses These taxes are not strictly typical installation. The regulated
incurred in the technological innovation environmental taxes. Revenues that will tariff regime, for a given period and
activities. The tax credit rate is arise from them will finance the Spanish updatable according to a prefixed
12 percent. deficit of the cost of generation and formula, is consequently abolished.
distribution of electricity.
Tax credits for R&D and technological
innovation activities that have not been

Taxes and incentives for renewable energy | 65

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In order to calculate the specific Royal Decree 1578/2008 of 26 remunerated with: i) revenues from
remuneration of a typical installation, September the sale of the energy valued at market
it is necessary to consider, over its price and ii) specific remuneration
Article 4 and paragraph 2 of the fifth items which, if necessary, cover those
regulatory life and referring to the
transitional provision of Royal Decree- investment and operating costs that an
activity of an efficient and well-
Law 6/2009, of 30 April. efficient and well-managed enterprise
managed company:
5. To maintain compensation flows to does not recover on the market.
standard revenues from the sale
facilities, such repealed rules shall apply The specific remuneration is calculated
of energy generated, valued at the
temporarily, except for certain aspects, on the basis of standard facilities, along
market price of production.
pending the approval of the Royal its whole regulatory useful life, so that it
standard operating costs. Decree with the new regulation. Thus, guarantees the fair return to standard
the facilities will continue receiving facilities.
standard value of the initial
the current compensations under the
investment. The activity is assumed to be carried
transitional provisions commented
Therefore, the determination of above subject to regularization with the out by an efficient and well-managed
these parameters or assumptions new methodology as of 14 July 2013. enterprise. For calculating the
will be critical in order to assess the remuneration parameters, the new
6. Two immediate measures to reduce remuneration framework takes into
remuneration for each installation. It will
the costs of the electricity system are account: i) revenues from selling energy
be necessary to wait for the approval of
approved. The efficiency complement valued at the market price, ii) necessary
Royal Decree.
to facilities that were receiving it under operating costs for developing the
The costs or investments that are Article 28 of Royal Decree 661/2007 activity and iii) the initial investment
made in connection with rules or acts is abolished, as well as the reactive costs of the standard facility.
that are not applicable throughout all power bonus of article 29 of the same
of Spain (i.e. regional authorizations regulation. The new remuneration system for these
and registrations) will not be taken facilities generally consists of:
Following the approval of RDL 9/2013,
into account. Also, the costs and
the procedural steps began for all other revenue from market sales (EUR/
investments that do not respond
regulatory texts. Specifically, a new MWh)
solely to the activity of electricity
Electricity Sector Law was passed (Law
production. unitary remuneration for investment
24/2013, of 26 December). This new law
2. The introduction of an additional first confirmed the general principles already
provision, called reasonable return applied by Royal Decree-Law 9/2013. unitary remuneration for the
on production facilities entitled to operation (EUR/MWh).
Royal Decree 413/2014 of 6
economic premium regime means
June introduces the regulatory The calculation of the unitary
that as of 14 July 2013, special regime
implementation of the principles set out remuneration for investment and the
facilities shall receive a supplement
in Royal Decree-Law 9/2013, regulating operation is carried out on the basis of
for their investment costs based on
the current legal and economic standard facilities considering standard
standards by technologies, according
system of facilities for renewables, investment and operation costs, as well
to a cost formula of 10-year Treasury +
co-generation and waste. This Royal as the future estimate of the market
300 basis points, representing a return
Decree establishes a new remuneration revenue for such standard facilities.
of 7.5percent.
system which is based on the principle
Order IET/1045/2014 of 16 June
3. The above-mentioned return is before of fair return and in standard facilities
defines the values of the above new
taxes and may be revised every 6 years. with standard costs and efficient
remuneration parameters.
4. The repeal of the following provisions:
Under this new scheme, renewable
Royal Decree 661/2007, of 25 May
electricity production facilities are

66 | Taxes and incentives for renewable energy

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Support schemes Operating subsidies
For each MWh produced by renewable
Depreciation of windmills
sources (solar, geothermal, wind, wave,
Swedish tax law allows taxpayers to bio fuels or hydro) the producer receives
depreciate windmills for corporate one certificate. (Some limitations
income tax purposes at a rate that exist for hydro power generation). A
is much faster than the actual rate distributor is obliged to buy certificates
of economic loss. The maximum up to a certain percentage of the
depreciation allowance is 30 percent power distributed. In this way a market
of the aggregate book value at the is established for selling and buying
beginning of the tax year, plus the certificates.
building or acquisition costs that have
been made during the year. To support the transition to more
sustainable energy sources for heating
If a straight-line depreciation of and transportation, no taxes are levied
20 percent per annum results in a lower on renewable fuels while energy taxes,
aggregate book value in any year, the CO2 taxes and sulfur taxes are levied on
annual depreciation allowance may fossil fuels.
be increased correspondingly. The
depreciation allowance is calculated on There is also a fee-based system for the
a pool basis, with the book value of all reduction of greenhouse gas emissions.
the taxpayers assets taken into account
in order to calculate the maximum
depreciation allowance.

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Support schemes Documents and transactions discount is applied to the lease,
related to the power plants easement and utilization right of energy
Investment and other subsidies transfer lines for 10 years in both
and concluded throughout the
The General Investment Incentive investment period are exempted investment and operating periods to the
Regime changed in June 2012. The new from stamp tax and duties. power plants that are in operation or to
incentive regime is applicable to ENR be in operation until 31 December 2020.
investments, mainly by providing the Operating subsidies
following: Additional information
Feed-in tariff
VAT exemption on purchase (or The tariff and the government purchase If the mechanical and
import) of investment equipment guarantee are applied for 10 years electromechanical equipment
following the start of operations of used in renewable energy facilities
customs duty exemption on import of that have started operation before
a generation power plant until 31
investment equipment 31 December 2015 are manufactured
December 2015.
exemption from other funds and in Turkey, an additional incentive
Resources: of between ct0.4 and ct3.5/kWh
Hydro: USD cent (ct)7.3kWh for 5 years will be provided to such
Other subsidies facilities, under certain conditions.
Wind: ct7.3/kWh
The new Electricity Market Law 6446 Renewable energy-based electricity
became effective as of 30 March Geothermal: ct10.5/kWh power plants with an installed
2013. The incentives provided under capacity of maximum 1 MWe and
Solar: ct13.3/kWh
this law apply to investors holding other similar investments are allowed
a generation license and who start Biomass (including landfill): ct13.3/ to operate without a generation
operating before 31 December 2015: kWh license.
A 50 percent discount is applied to Discount on fees
the transmission system utilization The new Electricity Market Law 6446
fee for 5 years following the start of has become effective as of 30 March
operations. 2013. Under this law, an 85 percent

68 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
United Kingdom
Support schemes Feed-in tariff (small scale generation) UK electricity market. The key market
mechanisms relevant to this publication
Investments and other subsidies Tariff support payments for small-scale
are Feed-in Tariffs with Contracts for
Exemptions are in effect from the electricity generation from a variety of
Difference (CfDs) to give revenue
Climate Change Levy and EU Emissions technologies.
certainty to investors in low-carbon
Trading Scheme. Renewable Heat Incentive generation and the Carbon Price Floor
Long term tariff support payments for which imposes a fossil fuel tax.
Operating subsidies
renewable heat generation. The CfD for each low carbon generation
Renewables Obligation Scheme
technology is available from 2014/15,
Long term banded quota mechanism Additional information
lasting 15 years for most technologies and
designed to support renewable Summer Budget 2015: In the Summer is scheduled to replace the Renewable
electricity generation. Budget 2015 it was announced that Obligation Scheme which is to be phased
Feed-in Tariff with Contract for there would be a consultation on reform out for new projects by 31 March 2017.
Difference of the environmental tax regime, and in
The table below sets out the CfD strike
particular the administrative complexity
Tariff support payments for large-scale prices for renewable technologies for
and burden facing businesses. Any
electricity generation from a variety of 2014/15 to 2018/19 (with each year
changes to legislation are expected to
technologies. beginning on 1 April). Support will be
take effect no earlier than 2016 onwards.
paid based on net renewable electricity
Electricity Market Reform: The Energy Act generated.
2013 brought in major reforms to the

All Prices in GBP/MWh 2015/16 2016/17 2017/18 2018/19

Advanced Conversion Technologies (with or without CHP) 155 155 140 140
Anaerobic Digestion (with or without CHP) 150 150 140 140
Dedicated Biomass (with CHP) 125 125 125 125
Energy from Waste (with CHP) 80 80 80 80
Geothermal (with or without CHP) 145 145 140 140
Hydro 100 100 100 100
Landfill Gas 55 55 55 55
Sewage Gas 75 75 75 75
Onshore Wind 95 95 90 90
Offshore Wind 155 150 140 140
Biomass Conversion 105 105 105 105
Wave 305 305 305 305
Tidal Stream 305 305 305 305
Large Solar Photo-Voltaic 120 115 110 100
Scottish Islands Onshore N/A N/A 115 115

The first allocation of CfDs was conducted electricity from renewable sources. number of ROCs to meet an obligation,
by way of an auction under which projects Renewable generators receive it must pay an equivalent amount of
submitted a proposed price. Generally, Renewables Obligation Certificates British Pound (GBP)44.33 per MWh
the final strike prices agreed for the (ROCs) for each MWh of electricity (2015/2016 rate, GBP43.30 per MWh for
successful projects were below the generated, and these ROCs can be 2014/15) into a buy-out fund. This fund is
headline strike prices set out above. sold independently of the electricity used to cover the administration cost of
generated, allowing renewable the scheme and the rest is distributed
Renewables Obligation (RO) scheme:
generators to receive a premium to the back to suppliers in proportion to the
This requires electricity suppliers
wholesale electricity price. Where an number of ROCs they produced. There
to source a specific percentage of
electricity supplier has an insufficient is a banded ROC mechanism whereby

Taxes and incentives for renewable energy | 69

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
different renewable electricity technologies receive different levels of support The government had previously
according to their technological maturity and levelized costs (see table below). confirmed that applications for the RO
regime can be made for new generating
Band 15/16 support 16/17 support capacity until 31 March 2017, thereby
(ROC/MWh) (ROC/MWh) extending the scheme until 2037. From
Advanced gasification/pyrolysis 1.9 1.8 2027 the Department of Energy &
Climate Change (DECC) will fix the price
Anaerobic Digestion 1.9 1.8
of the ROC for the remaining 10 years
Co-firing (low-range) 0.5 0.5 of the RO at its long-term value, and buy
Co-firing (mid-range) * 0.6 0.6 the ROCs directly from the generators
Co-firing (high-range) * 0.9 0.9 to reduce volatility in the final years of
the scheme. Renewable generators may
Co-firing (low-range) with CHP* 1** 1**
not receive a CfD and also participate in
Co-firing (mid-range) with CHP* 1.1** 1.1** the RO regime.
Co-firing (high-range) with CHP* 1.4** 1.4**
However, in July 2015, the Government
Co-firing of regular bioliquid 0.5 0.5 announced that following consultation
Co-firing of regular bioliquid with CHP 1** 1** the grandfathering of the ROC
Co-firing of relevant energy crops (low range) 1 1 payments will not apply for new
generating capacity from biomass
Co-firing of relevant energy crops with CHP 1.5 1.5
conversion and biomass mid-range
(low range)
and high-range co-firing projects from
Conversion (station or unit) 1 1 December 2014. It also announced that
Conversion (station or unit) with CHP 1.5 1.5 it was consulting on ending the ability
Dedicated biomass 1.5 1.4 of new solar projects of under 5 MW
total installed capacity to claim support
Dedicated biomass with CHP 1.9 1.8
under the RO scheme from 1 April
Dedicated energy crops 1.9 1.8 2016, effectively ending the RO scheme
Energy from waste with CHP 1 1 for such projects a year earlier than
Geothermal 1.9 1.8 previously announced.
Geopressure 1 1 Carbon Reduction Commitment (CRC) Energy
Hydro 0.7 0.7 Efficiency Scheme: CRC is a mandatory
Landfill gas closed sites 0.2 0.2 carbon emissions reporting and charging
mechanism for large public and private
Landfill gas heat recovery 0.1 0.1
sector organizations in the UK.
Microgeneration 1.9 1.8
Participants in the CRC need to measure
Onshore wind 0.9 0.9
and report their electricity and gas
Offshore wind 1.9 1.8 supplies annually, from which the
Sewage gas 0.5 0.5 carbon dioxide content is calculated.
Building mounted solar PV 1.5 1.4 The organizations are then required to
buy an amount of carbon allowances
Ground mounted solar PV 1.3 1.2
to cover their carbon emissions,
Standard gasification/pyroly sis 1.9 1.8 either from the Government or on the
Tidal barrage 1.9 1.8 secondary market. For 2015/16 an
Tidal lagoon 1.9 1.8 allowance for one tonne of CO2 varies
between GBP16.10 and GBP16.90.
Tidal stream*** 5 5
Allowances bought earlier in the year
Wave*** 5 5 (based on forecast emissions) are
Source: Department of Energy and Climate Change website cheaper than those bought towards the
*Includes solid and gaseous biomass and energy crops end of the period under the comply or
**These support levels are only available in circumstances where support under the RHI is not available buy sale mechanism.
*** Five ROCs subject to 30 MW cap at each generating station. Two ROCs for any additional capacity added
above 30 MW cap

70 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Supplies of commodity liable to: 2015-16 2016-17 public grants previously received,
including the Renewable Heat
Carbon Price Support Rates of CCL
Premium Payment (RHPP), will be
Natural gas (GBP per kilowatt hour) 0.00334 0.00331 deducted to avoid a double subsidy.
LPG (GBP per kilogram) 0.05307 0.05280
Non-domestic RHI, which provides
Coal and other taxable solid fossil fuels 1.56860 1.54790 a subsidy, payable for 20 years, to
(GBP per gross gigajoule) eligible, non-domestic renewable
CPS Rates of Fuel Duty heat generators and producers of
Gas oil; rebated bioblend; kerosene 0.04990 0.04916 biomethane. The tariff payments
(GBP per litre) are dependent on the technology
of the heat generation source and
Fuel oil; other heavy oil; rebated light oil 0.05730 0.05711
the size of the plant, with payments
(GBP per litre)
ranging from between GBP0.0156
Source: HMRC per kWh and GBP0.1016 per kWh for
installations with an accreditation
date on or after 1 July 2015.
Various rules on exemptions exist of electricity generated on or after
depending on overlaps with EU ETS and 1August 2015. It is possible to continue EU Emissions Trading Scheme exemption:
Climate Change Agreements (CCAs) to redeem LECs in respect of electricity Renewable generators are exempted
which provide a partial exemption generated prior to 1 August 2015 under from the requirement to purchase
for some organizations from paying transitional arrangements that are carbon allowances in order to generate
CRC providing sufficient reductions in currently subject to consultation. electricity, as stipulated by the EU
carbon footprint are achieved through Emissions Trading Scheme.
Carbon Price Floor: The Carbon Price
interventions made by the business and
the relevant industry sector.
Floor (CPF) applies a levy on fossil Corporation tax
fuels used to generate electricity and
Capital allowances
Climate Change Levy (CCL), Renewable so represents a cost advantage to
Source Energy Exemption: CCL is a renewable generators, who will not be Tax relief is available on qualifying capital
specific energy tax on the supply of gas subject to the CPF. Published rates from expenditure incurred through the capital
and electricity to non-domestic users 1 April 2015 are: allowances regime under one of the
in the United Kingdom. CCL applies following categories:
Feed-in tariffs (small scale generation):
at a rate of GBP0.00554 per kWh from
Feed-in tariffs are available for small- Research and Development
1April 2015, increasing to GBP0.00559
scale, low-carbon electricity generated Allowances (RDAs) 100 percent
per kWh from 1 April 2015.
by private/business users (maximum first year allowances on qualifying
Most electricity generated from a capacity 5 MWh) providing payment of research and development (R&D)
renewable source has been exempt from up to GBP0.1366 per kWh generated expenditure that is capital in nature.
the CCL. Levy Exemption Certificates (depending on the type and size of the
Enhanced Capital Allowances
(LECs) are issued to generators of system used to generate renewable
(ECAs) 100 percent first year
renewable source energy for each MWh energy); plus a guaranteed GBP0.0485
allowances on assets that are
of electricity produced. LECs transfer per kWh sold on to the UK electricity
energy saving and water efficient
along with the electricity and can be used grid. Typically the tariffs last for 20 years.
technologies. If a company is loss
by electricity suppliers to support the
Renewable Heat Incentive (RHI): Two making, the entity can benefit from
CCL exemption and so, like ROCs, they
schemes operate to provide long a 19percent cash tax credit of its
have a value that a renewable generator
term tariff support for renewable heat surrenderable loss, subject to specific
can realize. This value is the CCL rate in
generation: restrictions. However, ECAs are
place for electricity when the electricity
explicitly not available in respect of
is generated. HMRC require a number of Domestic RHI, which is available expenditure on plant or machinery
conditions to be met for the exemption for domestic properties where that generates electricity or heat
to apply and a LEC alone is not sufficient households receive payments of or produces biogas or biofuel, that
evidence to support exemption from CCL. between GBP0.0714 and GBP0.1951 attracts a feed-in tariff (small scale
per kWh for applications submitted generation) or RHI payment.
However, in July 2015, the Government
between 1 July 2015 and 30 August
announced that the exemption from
2015, depending on the technology
CCL for renewable electricity generation
generating the renewable heat. Any
would cease to be available in respect

Taxes and incentives for renewable energy | 71

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Main rate 18 percent reducing on remediating contaminates from 130 percent super-deduction regime is
balance for qualifying expenditure on sites or undertakes work on a derelict also available to large companies until
plant and machinery. site, then an enhanced tax relief (Land 31March 2016.)
Remediation Relief) of 150 percent can
Special rate 8 percent reducing Patent Box: The Patent Box regime
be claimed. If a company is loss making,
balance. Assets typically found within enables companies to apply a lower
the entity can benefit from a 16percent
this category of assets include certain rate of corporation tax of 10 percent to
cash tax credit of its surrenderable loss,
integral features to buildings and long- profits derived from patented inventions
subject to specific restrictions.
life assets (useful economic life of and certain other innovations, phased
25years or more). R&D incentives: These incentives enable in over 5 years from 1 April 2013. The
companies to obtain additional benefits company must own or exclusively
Capital allowances are also available
from their investments in R&D. An license-in the patents, and must
where a person makes a payment to
enhanced tax deduction of 230percent undertake qualifying development on
a third party (i.e. network provider,
is available for small and medium- them to be eligible for the lower tax
National Grid), but does not necessarily
sized enterprises (225 percent prior to rate. (Other forms of IP protection
own or operate the asset. This is dealt
1April2015) for revenue expenditure on may also qualify.) A new regime is
with under a separate part of the capital
qualifying projects designed to achieve being introduced from 1 July 2016 with
allowances regime, that is, Contribution
an advance through the resolution of the benefits available based on the
scientific or technological uncertainty. proportion of the innovation undertaken
As a way to incentivize investment in Where expenditure is capital in nature, by the claimant company. The exact
plant and machinery, HMRC introduced RDAs may be claimed (see above). details of the new regime have not
the Annual Investment Allowance (AIA) yet been finalized but are expected
For loss making SMEs a tax credit
which provides a 100 percent first to be announced in the 2015 Autumn
of 14.5 percent can be claimed by
year allowance for a certain amount of Statement. It is expected that there will
surrendering R&D losses. Large
qualifying capital expenditure. The AIA be a limited window in which to access
companies may instead claim an R&D
was set at GBP500,000 per annum benefits under the existing regime, and
Expenditure Credit (RDEC) that gives a
for the period from 1 April 2014 to once in the existing regime, benefits will
taxable payment of 11percent capable
31December 2015. It will be reduced to be grandfathered until 30 June 2021.
of being accounted for in operating
GBP200,000 as of 1 January 2016.
profit (10 percent prior to 1 April 2015).
Other direct tax allowances/
The RDEC translates into an effective
incentives potentially relevant to
benefit of 8.8 percent after tax on
renewables generators:
qualifying revenue expenditure with
Land remediation relief: Where a company the benefit available for profit and loss
incurs expenditure (capital or revenue) making companies. (Note: The old

72 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
United States
Support schemes Whether a taxpayer has begun The definition of begin construction
construction of a facility before is the same for the ITC in lieu of the
Investment and other subsidies 1January 2015 will depend on the PTC as for the PTC.
Production Tax Credit (PTC) relevant facts and circumstances.
Investment Tax Credit (ITC)
Applicable for wind, geothermal,
The IRS will closely scrutinize Applicable for solar, geothermal, qualified
landfill gas, trash combustion, open-
a facility. It may determine that fuel cell or micro turbine property,
loop biomass, closed-loop biomass,
construction has not begun on combined heat and power systems,
hydropower and wave tide.
a facility before 1 January 2015 small wind and geothermal heat pumps.
The PTC provides a tax credit for if a taxpayer does not maintain
the production of electricity from a continuous program of The ITC provides a credit for qualifying
renewable sources and the sale of construction. energy property.
that electricity to an unrelated party. If a facility is placed in service prior The ITC for any taxable year is the
Credit amount is: to 1 January 2017, a taxpayer will energy percentage of the basis
be deemed to have maintained a of each energy property placed in
USD cent (ct)2.3/kWh for continuous program of construction service during the taxable year.
wind, closed-loop biomass and (Notice 2015-25).
geothermal Credit amount is:
The safe harbor rule provides that 30 percent of eligible costs for fuel
Ct1.2/kWh for other renewable construction of a facility will be
energy resources. cell, solar, and small wind property
considered as having begun before
Available for facilities that begin 1January 2015, if: 10 percent of eligible costs for
construction prior to 1 January 2015. combined heat and power, micro
the taxpayer pays or incurs within turbine property and geothermal
Available for a 10-year period the meaning of Reg. section heat pumps.
beginning the year the facility is 1.461-1(a)(1) and (2) 5 percent or
placed in service. more of the total cost of the facility The ITC is generally available for
before 1 January 2015; and eligible property placed in service on
There are two methods that a or before 13 December 2016.
taxpayer may use to establish that subsequently, the taxpayer makes
construction has begun: continuous efforts to advance Grant in lieu of PTC and ITC
towards completion of the facility Applicable for tangible personal property
A taxpayer may establish the (as determined under Notice 2013- or other property that is an integral part
beginning of construction when 29). of a qualified facility (as defined by the
physical work of a significant
PTC and ITC rules).
nature is started, or If a facility is placed in service prior
to 1 January 2017, a taxpayer will be The American Recovery and
A taxpayer may establish the deemed to have made continuous Reinvestment Act of 2009 (ARRA)
beginning of construction by efforts to advance towards enacted a grant program which
meeting a safe harbor rule (as completion of the facility (Notice provides a cash grant in lieu of the
determined under Notices 2013-29, 2015-25). PTC or ITC.
2013-60, 2014-46 and 2015-25).
Investment Tax Credit (ITC) in lieu of ARRA permits PTC or ITC projects to
In general: the PTC elect a grant of up to 30 percent of
Work performed by the taxpayer Applicable for facilities that are eligible costs of construction of PTC or ITC
and work performed for the for the PTC and that begin construction energy property in lieu of tax credits.
taxpayer by other persons before 2014.
Projects must begin construction
under a binding written contract
The ITC is available in lieu of the PTC. before 2012 and submit a
that is entered into prior to the
grant application no later than
manufacture, construction, or The ITC provides a credit for qualifying 30September 2012.
production of the property for use energy property.
by the taxpayer in the taxpayers Projects must be placed in service:
trade or business (or for the The credit amount is 30 percent of
the eligible cost basis of the property. before 2014 for PTC-eligible
taxpayers production of income) is
facilities (before 2013 for wind)
taken into account in determining Eligible property is tangible personal
whether physical work of a property or other property that is before 2017 for other ITC eligible
significant nature has begun. integral to a PTC-eligible facility. projects.

Taxes and incentives for renewable energy | 73

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Operating subsidies RPS legislation has been enacted. A
total of 29 states and the District of
Quota obligation Columbia have an RPS. The states
Renewable Portfolio Standards (RPS) include Arizona, California, Colorado,
This standard generally places an Connecticut, Delaware, Hawaii, Illinois,
obligation on electric supply companies Indiana, Kansas, Maine, Maryland,
to produce a specified fraction of their Massachusetts, Michigan, Minnesota,
electricity from renewable energy Missouri, Montana, Nevada, New
sources and enumerates mechanisms Hampshire, New Jersey, New Mexico,
that are permitted to achieve New York, North Carolina, Ohio, Oregon,
compliance, such as renewable energy Pennsylvania, Rhode Island, Texas,
credits (RECs). Currently no federal Washington and Wisconsin.

74 | Taxes and incentives for renewable energy

2015 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Support schemes The main benefit consists of CIT solar thermal energy for residential
exemptions equivalent to: users. The new program provides
Investment and other subsidies loans, financial discounts and payment
General Investment Regime 90 percent of net fiscal income
facilities for those who install solar
generated by the promoted activity for
Investment Law 16.906 declares the thermal technology in their houses.
all fiscal years up to 31 December 2017
national interest of the promotion and Quota obligation
protection of domestic and foreign 60 percent of net fiscal income
investment and, through Decree 2/012, generated by the promoted activity Law 18.585 also introduced the
establishes the following benefits for the for all fiscal years from 1 January 2018 obligation of incorporating solar thermal
investments carried out in the country: to 31 December 2020 technology in sport clubs, hospitals,
hotels and heated swimming-pools,
Corporate Income Tax (CIT) exemption 40 percent of net fiscal income under certain circumstances. According
equivalent to a percentage of the generated by the promoted activity to this law, at least 50 percent of the
investment in fixed assets (machinery, for all fiscal years from 1 January energy required to heat the water should
equipment and civil works). The 2021 to 31 December 2023. come from solar thermal energy. If this
referred percentage varies between Other benefits: requirement is not fulfilled, the permit for
20 percent and 100 percent of eligible the construction works is denied.
investment and it is determined by The law declares of national interest
the national production of machines New public buildings (that is, state
the score the project receives for its
and equipment necessary for the owned) are also obliged to incorporate
impact in terms of:
production of these renewable this source of energy.
employment energies and also applies to this As from June 2012, the Ministry of
decentralization activity the CIT exemption described Industry is entitled to request for all
in the Particular Investment Regime new industrial and agro-industrial
exports for renewable energy. As a condition developments to perform a technical
clean production for the application of this exemption, study on the feasibility of incorporating
at least 35 percent of their cost must solar thermal technology into the project.
industrial indicators. correspond to Uruguayan inputs.
Capital Tax exemption for the fixed Additional information
Purchase of the wind turbine and its
assets included in the investment: accessories are exempt from VAT. Uruguay is recognized as a country
civil works: 8 years for civil works in with excellent conditions for the
Promotion of solar thermal energy development of renewable energy,
Montevideo and 10 years in the rest
In 2009, Law 18.585 declared of national attracting the attention of national
of the national territory
interest the investigation, fabrication, and international investors. The
machinery and equipment for the implementation and development of government with the support of the
useful life. solar thermal energy. The law, along opposition parties has set forth the goal
with Decree 451/011, established of becoming a model country in this
Fiscal credit for VATs included in civil
the exemption of VAT, Internal Excise area. The authorities intend that, by this
Tax (IMESI), duties and custom taxes year, at least 50 percent of the primary
Exemption from all taxes and duties applicable to: energy matrix of the country will come
levied on the import of machinery and from renewable sources.
equipment that is not competitive National and imported (non
with national industry. competitive with the national Wind
industry) goods and services Although the focus is placed on all
Particular Investment Regime for necessary to fabricate solar collectors types of renewable energy, the most
renewable energy in Uruguay. popular continues to be wind power. The
Within the frame of Law 16.906, Decree initial goal of reaching 300 MW of wind
Sale of solar collectors fabricated in
354/009 establishes particular benefits generation by 2015 has been passed
for the generation of electricity from with flying colors, since the country is
non-traditional renewable sources Import of solar collectors non- already generating more than 500 MW.
(defined as the native renewable sources competitive with the national A new goal of 1,400 MW has been set
such as wind, solar thermal, solar PV, industry. for 2017, assuming all the awarded wind
geothermal, tidal and wave energy, as farm projects will be implemented. By
In 2012, the Government launched a
well as the energy produced from the that year, the Investment in this area will
Solar Program focused on developing
use of different types of biomass). probably reach USD2.6 billion.

Taxes and incentives for renewable energy | 75

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Biomass projects offered are currently coming to industrial forestry residues (saw mill
In 2010 the government set the goal of life and, in virtue of this, a new tender residues, black liquor, etc)
incorporating 200 MW from biomass call for biomass projects is expected to
rice husks
sources to the primary energy matrix be launched during 2015.
by 2015. Accordingly, the Uruguayan residues from sugar cane, sweet
Uruguay has several natural resources
energy utility (Usinas y Trasmisiones sorghum and other cereals
that can be used as primary elements
Elctricas or UTE) promoted one tender for the generation of biomass energy: excellent conditions for elephant grass
during 2011, in which the total amount
offered by the private companies extensive forests providing wood for a guaranteed supply of biomass from
exceeded 350 MW. However, not all the energy generation livestock and agriculture.

Solar Photovoltaic
In May 2013 the Government launched
a tender call for the purchase of solar PV
energy. The tender considers projects
of three different ranges: i) 500 kW to
1 MW, ii) 1 MW to 5 MW, and iii) 5 MW
to 50 MW.
For ranges i) and ii), the bidders had to
offer a price and the total amount to be
awarded could not exceed 6 MW. On
the other hand, for range iii), bidders had
to adhere to a pre-established price of
USD91.5/MWh, and the total amount to
be awarded could not exceed 200 MW.
The companies that participated in the
referred tender call proposed projects
for a total amount of 166 MW. Some of
these projects are already generating
50 MW and others are still under
construction. New tender calls are
expected to be launched within the next
few years.

76 | Taxes and incentives for renewable energy

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Top Five Countries 2014
Annual investment/net capacity additions/production in 2014
Investment in renewable power and China United States Japan United Kingdom Germany
fuels (not including hydro > 50 MW)
Investment in renewable power Burundi Kenya Honduras Jordan Uruguay
and fuels per unit GDP1
Geothermal power capacity Kenya Turkey Indonesia Philippines Italy
Hydropower capacity China Brazil Canada Turkey India
Solar PV capacity China Japan United States United Kingdom Germany
CSP capacity United States India
Wind power capacity China Germany United States Brazil India
Solar water heating capacity 2
China Turkey Brazil India Germany
Biodiesel production United States Brazil Germany Indonesia Argentina
Fuel ethanol production United States Brazil China Canada Thailand
Total capacity or generation as of end-2014
Renewable power (including hydro) China United States Brazil Germany Canada
Renewable power (not including hydro) China Unites States Germany Spain/Italy Japan/India
Renewable power capacity per capita Denmark Germany Sweden Spain Portugal
(among top 20, not including hydro3)
Biopower generation United States Germany China Brazil Japan
Geothermal power capacity United States Philippines Indonesia Mexico New Zealand
Hydropower capacity 4
China Brazil United States Canada Russia
Hydropower generation4 China Brazil Canada United States Russia
Concentrating solar thermal Spain United States India United Arab Algeria
power (CSP) Emirates
Solar PV capacity Germany China Japan Italy United States
Solar PV capacity per capita Germany Italy Belgium Greece Czech Republic
Wind power capacity China United States Germany Spain India
Wind power capacity per capita Denmark Sweden Germany Spain Ireland
Solar water collector capacity2 China United States Germany Turkey Brazil
Solar water heating collector Cyprus Austria Israel Barbados Greece
capacity per capita2
Geothermal heat capacity5 China Turkey Japan Iceland India
Geothermal heat capacity Iceland New Zealand Hungary Turkey Japan
per capita 5

Countries considered include only those covered by Bloomberg New Energy Finance (BNEF); GDP (at purchasers prices) and population data for 2013 and all from World
Bank. BNEF data include the following: all biomass, geothermal, and wind generation projects of more than 1 MW; all hydropower projects of between 1 and 50 MW; all
solar power projects, with those less than 1 MW estimated separately and referred to as small-scale projects or small distributed capacity; all ocean energy projects; and
all biofuel projects with an annual production capacity of 1 million litres or more.
Solar water collector (heating) rankings are for 2013 and are based on capacity of water (glazed and unglazed) collectors only; including air collectors would affect the
order of capacity added, placing the United States slightly ahead of Germany rather than in sixth place, and would not affect the order of top countries for total capacity or
per capita.
Per capita renewable power capacity ranking considers only those countries that place among the top 20 worldwide for total installed renewable power capacity, not
including hydropower. Several other countries, including Austria, Finland, Ireland, and New Zealand, also have high per capita levels of non-hydro renewable power
capacity, with Iceland likely the leader among all countries.
Country rankings for hydropower capacity and generation differ because some countries rely on hydropower for baseload supply whereas others use it more to follow the
electric load and to match peaks in demand.
Not including heat pumps.

Note: Most rankings are based on absolute amounts of investment, power generation capacity or output, or biofuels production; if done on a per capita, national GDP, or
other basis, the rankings would be quite different for many categories (as seen with per capita rankings for renewable power, solar PV, wind, and solar water collector

Taxes and incentives for renewable energy | 77

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Appendix A: REN21 2014 Renewable Global Status Report
Table 1. Renewable energy support policies

Energy production payment

Reductions in sales, energy,
Renewable energy targets

Public investment, loans,

Investment or production
Heat obligation/mandate

Capital subsidy, grant, or

CO2, VAT, or other taxes

Feed-in tariff/premium

Electric utility quota

Biofuels obligation/
obligation / RPS

Tradable REC
Net metering

tax credits

or grants

Australia *
Canada R*
Czech Republic R
Denmark R R
France R R
Germany R
Greece R
Italy R R
Japan R R
Malta R
New Zealand
Poland R R
Russia R
San Marino
Slovenia R
South Korea
Spain2 R
Switzerland R
Trinidad and Tobago
United Arab Emirates R*
United Kingdom
United States3 R* R* R* R* R

existing national (could also include state/provincial), existing state/provincial (but no national), new (* indicates state/provincial),
R revised (* indicates state/provincial), x removed/expired
1 Certain Caribbean countries have adopted hybrid net metering and feed-in policies whereby residential consumers can offset power, while commercial consumers are
obligated to feed 100% of the power generated into the grid. These policies are defined as net metering for the purposes of the Global Status Report.
2 Spain removed FIT support for new projects in 2012. Incentives for projects that previously had qualified for FIT support continue to be revised.
3 State-level targets in the United States include RPS policies.

78 | Taxes and incentives for renewable energy

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Table 2. Renewable energy support policies (continued)



Energy production payment

Reductions in sales, energy,
Renewable energy targets

Public investment, loans,

Investment or production
Heat obligation/mandate

Capital subsidy, grant, or

CO2, VAT, or other taxes

Feed-in tariff/premium

Electric utility quota

Biofuels obligation/
obligation / RPS

Tradable REC
Net metering

tax credits

or grants

Algeria R R
Argentina R
Bosnia and Herzegovina
Brazil R
Bulgaria R
China R R
Colombia R
Costa Rica R
Dominican Republic
Macedonia, Republic of
Marshall Islands
Romania R
South Africa R R R
St. Lucia R
St. Vincent and the Grenadines1
Thailand R
Tunisia R
Turkey R

existing national (could also include state/provincial), existing state/provincial (but no national), new (* indicates state/provincial),
R revised (* indicates state/provincial), x removed/expired

Note: Countries are organised according to annual gross national income (GNI) per capita levels as follows: high is USD 12,746 or more, upper-middle is USD 4,125 to USD
12,745, lower-middle is USD 1,046 to USD 4,125, and low is USD 1,045 or less. Per capita income levels and group classifications from World Bank, Country and Lending
Groups, accessed March 2015. Only enacted policies are included in the table; however, for some policies shown, implementing regulations may not yet be developed or
effective, leading to lack of implementation or impacts. Policies known to be discontinued have been omitted. Many feed-in policies are limited in scope of technology.
Source: See Endnote 1 for this section.

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Table 3. Renewable energy support policies

Energy production payment

Reductions in sales, energy,
Renewable energy targets

Public investment, loans,

Investment or production
Heat obligation/mandate

Capital subsidy, grant, or

CO2, VAT, or other taxes

Feed-in tariff/premium

Electric utility quota

Biofuels obligation/
obligation / RPS

Tradable REC
Net metering

tax credits

or grants

Cabo Verde
Cte dIvoire
El Salvador
Kyrgyz Republic
Micronesia, Federated States of
Palestinian Territories4
Sri Lanka
Ukraine X
Burkina Faso
Kenya R
Tanzania R
existing national (could also include state/provincial), existing state/provincial (but no national), new (* indicates state/provincial),
R revised (* indicates state/provincial), x removed/expired
4 The area of the Palestinian Territories is included in the World Bank country classification as West Bank and Gaza. They have been placed in the table using the 2009
Occupied Palestinian Territory GNI per capita provided by the United Nations (USD 1,483)
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Energy and Natural Resources
KPMG in the Netherlands
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Tax Partner,
KPMG in Germany
T: +49 40 32015 5855

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Publication name: Taxes and incentives for renewable energy
Publication number: 132663-G
Publication date: September 2015