Kentucky is a relatively industrialized state, with 44 percent of all energy consumption occurring in the industrial sector (compared to 33 percent for the U.S. as a whole). Kentucky industries have the potential to save millions of dollars by adopting technologies and practices that improve energy efficiency, conserve resources and increase product yields.
The U.S. Department of Energy created the Advanced Manufacturing Office (AMO) to coordinate national efforts to improve industrial energy efficiency and environmental performance. AMO works with diverse partners that will help U.S. manufacturers succeed.
Financing Navigator- check out this tool to explore alternative financing options. Many are available in Kentucky or in your community.
If you are looking for ways to make energy efficiency improvements to your facility, consider these incentives and sources of capital:
State Sales or Use Tax Refund: (KRS § 139.518 and 103 KAR 31:200) – This sales tax exemption allows manufacturers to apply for a refund for the amount of sales or use tax paid on the purchase of new or replacement equipment for renewable energy or energy efficiency projects. Energy efficiency projects must decrease the measurable amount of energy used by the facility by at least 15% percent while maintaining or increasing the production for the same period. The types of equipment that are allowable under this policy are not specified, but the program explicitly excludes improvements to buildings (e.g. windows, lighting) and replacement parts. Project should reduce consumption of energy or energy-producing fuels in the manufacturing process. The manufacturer must file an application for pre-approval with the Department of Revenue (Application 51A300) prior to purchasing new or replacement equipment. Further assistance can also be obtained by contacting the Department of Revenue, Sales and Use Tax at 502-564-5170 or at DORWebresponseSalesTax@ky.gov.
Other Tax Incentives: The Cabinet for Economic Development offers a number of tax incentives for making investment is your commercial or manufacturing business. Not all are designed specifically to help with energy-related projects, but depending upon what you need done, these may be of assistance. Some require advance approval. Consider these options:
Kentucky Reinvestment Act (KRS 154.34) KRAFactSheet.pdf: Covers 50-100% of eligible equipment and related costs to maintain jobs.
- Kentucky Enterprise Initiative Act (KRS 154.31) KY Enterprise Investment Act.pdf: Provides a refund of sales and use tax paid for certain building and construction materials, research and development equipment and electronic processing equipment.
Industrial Revenue Bonds (IRBs)
Energy Project Assessment Districts (EPAD): sometimes called Property Assessed Clean Energy (PACE) districts, these local government legal entities have to be authorized through ordinance in your community. Once an ordinance is passed and procedures put in place a community can offer low-cost financing securitized through your property tax assessment. Find out if your community offers EPAD. Learn more below: