It is enacted by the General Assembly as follows:

SECTION 1. Title 44 of the General Laws entitled "Taxation" is hereby amended by adding thereto the following chapters:

44-56-1. Renewable energy sales tax refund -- Sales tax refund on sales of qualifying renewable energy systems. -- (1) The division of taxation shall refund any tax paid pursuant to the provisions of chapter 18 of this title resulting from the sale of any qualifying renewable energy system.

As used herein, a qualifying renewable energy system shall be either a photovoltaic system, a solar domestic hot water system, solar space heating system, or wind-generating system as used herein:

(A) For photovoltaic systems, the system shall be able to generate electricity directly from sunlight and be able to have it provide electricity for the home. Said systems shall either be "stand alone" systems that use batteries for storage of electricity or "grid interconnected" systems that allow the electric meter to spin backwards during periods where the photovoltaic system is generating more electricity than the load of the house. These systems shall have an electrical permit that has had a final inspection done by the electrical inspector for the city or town of the installation.

(B) For solar domestic hot water systems, the system shall consist of solar collectors, pump, heat exchanger and storage tank designed to heat water. These systems must have a plumbing permit that has had a final inspection done by the plumbing inspector for the city or town of the installation.

(C) For solar space heating systems, the system shall consist of solar collectors, pump, heat exchanger, storage tank(s) and a method of distributing the heat to areas of the house that need heat. These systems shall have a mechanical permit that has had a final inspection done by the mechanical/plumbing inspector for the city or town of the installation.

(D) For wind energy systems, the system shall produce electricity through the use of wind generators or wind turbines, that can be used directly, as in water pumping applications, or can be stored in batteries for household usage. Wind energy systems shall be used alone, or can be used as part of a hybrid system, in which their output shall be combined with photovoltaics, and/or a fossil fuel generator.

(2) Purchasers of qualifying renewable energy systems shall receive a sales tax refund upon application to the State Division of Taxation upon submission of:

(a) A form prescribed by the Tax Administrator containing;

(1) A list of equipment purchased;

(2) The names and addresses of vendor and purchaser;

(3) For purposes of local municipal property tax assessment, qualifying renewable energy systems shall not be assessed at more than the value of a conventional heating, conventional hot domestic hot water systems, or energy production capacity that otherwise could be necessary to install in the building. Qualifying systems shall include photovoltaic systems (renewable energy systems), solar domestic hot water systems and active solar space heating systems.

44-57-1. Tax credit for principal or secondary residence. - - (a) An eligible person, as defined in section 44-57-3, who pays all or part of the cost of an eligible renewable energy system, as defined in section 44-57-4, which is installed in a dwelling as defined in section 44-57-1 shall be entitled to a tax credit against the tax liability imposed by chapters 11 and 30 of title 44 of the general laws. The credit, which shall be nonrefundable, shall be computed in accordance with section 44-57-5.

(1) "Active" means a solar renewable energy system that uses mechanical parts to collect, store and move heat;

(2) "Applicant" means a party who files a Rhode Island tax return and applies for a residential alternative energy device tax credit under this section;

(3) "Application form" means the form that goes to the state energy office that will determine if systems meet the requirements for this tax credit;

(4) "Array" means any number of photovoltaic modules connected together electrically to provide a single electrical output;

(5) "BTU" means British Thermal Unit;

(6) "Consumer disclosure" means a form provided by the state energy office describing the renewable energy system. The contractor fills this form out and gives it to the buyer of a renewable energy system. It shows estimated energy savings of the renewable energy system, required conservation items, required maintenance and freeze protection information and other data required by the state energy office;

(7) "Consumer information" means literature that is provided by the state energy office to contractors, solar dealers, and consumers informing them about the tax credit contained in this chapter and general consumer information;

(8) "Contractor" means a person or company who sells and/or installs renewable energy systems;

(9) "Contractors' certification" means a contractor system certification issued by the state energy office to a contractor for a specific renewable energy system. Such a system shall allow the contractor to install that device for the tax credit without getting a separate system certification for each job;

(10) "Contractors' registration board" means the board established pursuant to the provisions of chapter 5-65 responsible for issuing contractors' registration numbers and cards to contractors who are required by state law to be registered. The board shall also be responsible for ensuring that all registered contractors abide by the guidelines of the contractors' registration board;

(11) "Director" means the director of the RI State Energy Office or the director's representative;

(12) "Domestic water heating" means the heating of water used in a dwelling for bathing, clothes washing, dishwashing and other related functions;

(13) "Dwelling" means real property inhabited as a principal or secondary residence and located within this state. "Dwelling" includes, but is not limited to, an individual unit within multiple unit residential housing for purposes of this subsection:

(a) "Principal residence" means the dwelling owned by the applicant who on the date of the application has legal title to a dwelling, including the mortgagor under a duly recorded mortgage of real property, the trustor under a duly recorded deed of trust or a purchaser under a duly recorded contract for the purchase of real property, and who inhabits the dwelling for no fewer than fourteen (14) days in the calendar year for which the credit is claimed;

(b) "Secondary residence" means vacation property owned by the applicant;

(c) Not qualifying - Primary or secondary residences shall not include motor homes or recreational vehicles.

(14) "Grid interconnect form" means the form required on "grid-connected photovoltaic systems" that is signed by the contractor, the master electrician who makes the grid interconnection and the homeowner. This form shall be sent to both the participating utility company and the state energy office.

(15) "Hybrid" means a renewable energy system that uses some active and passive elements as part of the system.

(16) "Installing contractor" means the contractor or subcontractor who actually installs the renewable energy system. This may or may not be the same person or company as the solar dealer.

(17) "Inverter" means the device used to convert direct current (DC) to alternating current (AC) in a photovoltaic system.

(18) "kWh" means kilowatt-hour; 1 kWh = 3413 BTUs.

(19) "Module" means the smallest non-divisible self-contained physical structure housing interconnected photovoltaic cells and providing a single DC electrical output.

(20) "MM" means million.

(21) "Net cost" means what the applicant paid to purchase the renewable energy system. Net cost includes permit and inspection fees. Net costs may include the value of federal tax credits, grants or utility incentives. Net cost does not include service contracts, rebates, discounts or refunds.

(22) "Owner-built" means a renewable energy system that is assembled and installed on an owner's property and with an owner's labor only.

(23) "Passive" means a renewable energy system that relies on heated liquid or air rising to collect, store and move heat without mechanical devices.

(24) "Placed in service" means the date when a renewable energy system is ready and available to produce useable energy.

(25) "Solar dealer" means the person or company who signs a contract or proposal with a customer to provide and/or install solar equipment.

(26) "Solar domestic hot water system" means a configuration of solar collectors, pump, heat exchanger and storage tank designed to heat water. System types include forced circulation, integral collector storage, thermosyphon, and self-pumping. For the purpose of determining system yields, a configuration of components is considered a new system if changes occur in any of the following: type or size of collectors; heat exchanger type or effectiveness; size of storage tank; or system type.

(27) "State energy office" means the Rhode Island state energy office, also known as the governor's office of energy assistance, within the department of administration.

(28) "System certification" means certification that a renewable energy system as described in the application meets criteria for the tax credit.

(29) "System approval" means an approval given to renewable energy systems that meet all of the requirements of the state energy office.

(30) "Used equipment" means any solar tank or collector which previously has been installed or any piece of equipment not under current manufacturers' warranty.

(31) "Verification form" means a form filed with the division of taxation (upon request) by an applicant claiming eligibility for the tax credit. A contractor shall submit a copy of the form to the state energy office.

(32) "Watt" means the electrical unit of power or rate of doing work. The rate of energy transfer equivalent to 1 ampere of electrical current at 1-volt potential.

(33) "Wh" means watt hours-power consumed by a load over a specified time. As used herein, 1000 Wh=1 kilowatt-hour (kWh).

(34) "Wind energy system dealer" means the person or company who signs a contract or proposal with a customer to provide and/or install wind energy equipment.

(35) "Wind energy system" means a system that produces electricity through the use of wind generators or wind turbines. The electricity shall be used directly, as in water pumping applications, or shall be stored in batteries for household usage. Wind energy systems shall be used alone, or they shall be used as part of a hybrid system, in which their output is combined with photovoltaics, and/or a fossil fuel generator.

44-57-3. Eligibility. -- In order to be eligible to receive a renewable energy system tax credit, pursuant to the provisions of this chapter, a person shall:

(1) Pay income taxes in Rhode Island; and

(2) Own, rent, or be the contract buyer of the dwelling(s) to be served by the renewable energy system. Such dwelling(s) must be in the main or secondary residence of the person who applies for the tax credit, or of a tenant; or

(3) Own, or be the contract buyer of the renewable energy system and pay all or part of the cost of the renewable energy system; or

(4) Be the contractor that owns the dwelling for speculative sale in which the renewable energy system is installed.

44-57-4. Eligible devices. -- (A) To earn a tax credit, pursuant to the provisions of this chapter, the renewable energy system shall be either a photovoltaic system, a solar domestic hot water system or an active solar space heating system, or a wind-generating system:

(1) For photovoltaic systems, the system must be able to generate electricity directly from sunlight and be able to have it provide electricity for the home. These systems can either be "stand alone" systems that use batteries for storage of electricity or "grid interconnected" systems that allow the electric meter to spin backwards during periods where the photovoltaic system is generating more electricity than the load of the house. These systems must have an electrical permit that has had a final inspection done by the electrical inspector for the city or town of the installation.

(2) For solar domestic hot water systems, the system must consist of solar collectors, pump, heat exchanger and storage tank designed to heat water. These systems must have a plumbing permit that has had a final inspection done by the plumbing inspector for the city or town of the installation.

(3) For solar space heating systems, the system must consist of solar collectors, pump, heat exchanger, storage tank(s) and a method of distributing the heat to areas of the house that need heat. These systems must have a mechanical or plumbing permit and has had a final inspection done by the mechanical/plumbing inspector for the city or town of the installation.

(4) For wind energy systems, the energy produced by wind generation can be used directly, as in water pumping applications, or it can be stored in batteries for household usage. Wind generators can be used alone, or they can be used as part of a hybrid system, in which their output is combined with photovoltaics, and/or a fossil fuel generator, and shall:

(a) Be a system that is built, installed and operated in accord with the manufacturer's specifications;

(b) Be a system with manufacturers' warranties against defects in products and materials;

(c) Be a system that complies with general and specific standards set forth in this chapter as they apply to renewable energy systems. These shall include:

(i) A photovoltaic system;

(ii) A solar domestic hot water system;

(iii) An active solar space heating system;

(iv) A wind energy system.

(B) The following systems and/or devices shall not be used to qualify for a solar tax credit:

(1) A passive solar space heating system;

(2) Passive solar hot water system;

(3) A sunspace or solar greenhouse;

(4) Photovoltaic systems installed on boats or recreational vehicles;

(5) Solar pool collectors;

(6) Existing renewable energy systems;

(7) Used equipment;

(8) Repairs and replacements of existing renewable energy systems; and

(9) Wind systems installed on boats or installed vehicles.

44-57-5. Computation of tax credit. -- (1) The tax credit on each system as provided for in this chapter shall be determined as follows:

(A) Photovoltaic systems:

(1) Photovoltaic systems shall have a minimum module size of twenty-four (24) square feet; and

(2) Be connected to a battery storage system or be grid interconnected;

(3) Qualifying systems shall receive a tax credit of:

(a) 25% of the cost of the system for systems claimed in year 2000;

(b) 20% of the cost of the system for systems claimed in year 2001;

(c) 15% of the cost of the system for systems claimed in year 2002;

(d) 10% of the cost of the system for systems claimed in year 2003;

(e) 5% of the cost of the system for systems claimed in year 2004.

(4) The maximum cost of the system shall not exceed fifteen thousand dollars ($15,000). Provided, systems costing more than fifteen thousand dollars ($15,000) will receive a tax credit based on a fifteen thousand dollar ($15,000) system cost.

(B) Solar domestic hot water systems:

(1) Solar domestic hot water systems shall have a minimum collector area of sixty (60) square feet; and

(2) A solar storage tank that is at least eighty (80) gallons.

(3) Qualifying systems shall receive a tax credit of:

(a) 25% of the cost of the system for systems claimed in year 2000;

(b) 20% of the cost of the system for systems claimed in year 2001;

(c) 15% of the cost of the system for systems claimed in year 2002;

(d) 10% of the cost of the system for systems claimed in year 2003;

(e) 5% of the cost of the system for systems claimed in year 2004.

(4) The maximum cost of the system shall not exceed seven thousand dollars ($7,000). Provided, systems costing more than seven thousand dollars ($7,000) will receive a tax credit based on a seven thousand dollar ($7,000) system cost.

(C) Active solar heating systems:

(1) Active solar space heating systems shall have a minimum collector area of one hundred twenty-five (125) square feet; and

(2) A system for storing and/or distributing the heat to the living area of the house.

(3) Qualifying systems shall receive a tax credit of:

(a) 25% of the cost of the system for systems claimed in year 2000;

(b) 20% of the cost of the system for systems claimed in year 2001;

(c) 15% of the cost of the system for systems claimed in year 2002;

(d) 10% of the cost of the system for systems claimed in year 2003;

(e) 5% of the cost of the system for systems claimed in year 2004.

(4) The maximum cost of the system shall not exceed fifteen thousand dollars ($15,000). Provided, systems costing more than fifteen thousand dollars ($15,000) will receive a tax credit based on a fifteen thousand dollar ($15,000) system cost.

(D) Wind energy systems:

(1) Wind energy systems must have a rotor diameter of at least forty-four inches (44"); and

(2) Have a minimum factory rated output of at least two hundred fifty (250) watts at twenty-eight (28) mph.

(3) Qualifying systems shall receive a tax credit of:

(a) 25% of the cost of the system for systems claimed in year 2000;

(b) 20% of the cost of the system for systems claimed in year 2001;

(c) 15% of the cost of the system for systems claimed in year 2002;

(d) 10% of the cost of the system for systems claimed in year 2003;

(e) 5% of the cost of the system for systems claimed in year 2004.

(4) The maximum cost of the system shall not exceed fifteen thousand dollars ($15,000). Provided, systems costing more than fifteen thousand dollars ($15,000) will receive a tax credit based on a fifteen thousand dollar ($15,000) system cost.

(2) For purposes of the tax credit, the cost of the renewable energy system shall be the net cost of acquiring the system, and shall not include:

(a) Unpaid labor including the applicant's labor;

(b) Operating and maintenance costs;

(c) Land costs;

(d) Legal and court costs;

(e) Patent search fees;

(f) Fees for variances;

(g) Loan interest;

(h) Service contracts;

(i) Cost of moving a used renewable energy system from one site to another;

(j) Cost of repair or resale of a system;

(k) Any part of the purchase price that is optional, such as an extended warranty or an upgraded monitoring system; and

(l) Delivery fees.

44-57-6. Application for system certification. -- Applicants for the tax credit shall obtain a systems certification from the state energy office, except if the system is installed by a contractor holding a contractor certification issued by the state energy office. Applications for a system certification shall be made on a form provided by the state energy office. All applications shall contain a statement that the system and contractor or owner-builder will meet all federal, state and local requirements all applications shall state the net cost and location of the renewable energy system.

44-57-7. Forms of application for system certification. -- Application forms for the renewable energy system certification for the respective systems shall contain the following:

(a) Photovoltaic systems. -- Renewable energy credit application form for photovoltaic systems shall include:

(1) A proof of purchase, which can be the contract or invoices, dated in the year for which the applicant is claiming the credit;

(2) A copy of the signed electrical permit and a completed grid interconnect application form;

(3) The cost of the renewable energy system;

(4) The brand name of the module;

(5) The module(s) area;

(6) A description of the storage provided if storage is a part of the system;

(7) Storage brand and model;

(8) Storage capacity;

(9) The brand name of the inverter if an inverter is part of the system;

(10) The capacity of the inverter;

(11) Orientation and tilt of the device;

(12) The name, address and phone number of the Solar Dealer; and

(13) The name, addresses and phone number of the installing contractor including any required licenses.

(b) Solar domestic hot water systems. -- Renewable energy system certification application form for solar domestic hot water systems shall include:

(1) A proof of purchase which can be the contract or invoices dated in the year for which the applicant is claiming the credit;

(2) The number of collectors;

(3) The manufacturer and/or supplier;

(4) The collector dimensions and/or the net area of the collectors;

(5) The amount of heat storage;

(6) The system type;

(7) A description of the freeze protection of the system;

(8) A description of the overheat protection for the system;

(9) The system model;

(10) The orientation and tilt of the device;

(11) A consumer disclosure signed by the applicant and the contractor or supplier, if any;

(12) A statement that the purchaser has received a copy of consumer information supplied by the state energy office of Rhode Island.

(c) Solar space heating systems. -- Renewable energy system certification application form for solar space heating systems shall include:

(1) All of the data required for solar domestic hot water systems above;

(2) A description of the heat distribution system;

(3) A heat loss estimate for the house;

(4) An estimate for the solar contribution of the heating load.

(d) Wind energy systems. -- Renewable energy tax credit application form for wind energy systems shall include:

(1) A proof of purchase, which can be the contract or invoices, dated in the year for which the applicant is claiming the credit;

(2) A copy of the signed electrical permit and a completed grid interconnect application form if applicable;

(3) The cost of the renewable energy system;

(4) The brand name of the wind generator or wind turbine;

(5) The rotor diameter of the wind generator or wind turbine;

(6) The voltage of the wind generator or wind turbine;

(7) The output of the wind generator or wind turbine;

(8) A drawing or description of the mounting system;

(9) A description of the storage provided if storage is a part of the system;

(10) Storage brand and model;

(11) Storage capacity;

(12) The brand name of the inverter if part of the system;

(13) The capacity of the inverter;

(14) Site plan showing the existing buildings on the property, the location of the wind generator or wind turbine, the height of the tower if applicable including the set-back from all property lines and the distance to the batteries and/or inverter. On systems using a tower, show all objects (trees, buildings, etc.) that are under 30 feet below anything within 500 feet. Show the prevailing wind direction on the Site Plan;

(15) The name, address and phone number of the wind energy system dealer; and

(16) The name, addresses and phone number of the installing contractor including any required licenses.

44-57-8. Contractor Certification. -- (1) When the state energy office finds that each sale and installation of a renewable energy system can meet the standards adopted under the provisions of this chapter without requiring a system certification, the state energy office may issue a contractor certification to a contractor. A contractor certification may be required for tax credit eligibility of a specific renewable energy system if the office determines that this will improve installation quality and program efficiency. A contractor certification applies only to the specific products, plans, specifications, and installations and operation procedures approved by the state energy office in the contractors certification.

44-57-9. Review of applications. -- (1) The state energy office shall review applications for compliance with the provisions of this chapter.

The state energy office shall act on a completed application within sixty (60) days after it is received. The state energy office may require more details within thirty (30) days of receipt of an initial application. An additional sixty (60) day review period may be allowed at the director's discretion. If so, the state energy office will explain to the applicant why more time is needed.

44-57-10. Rules and regulations. -- (1) Renewable energy systems shall comply with all state, federal and local laws that apply.

(2) The policy of the state energy office shall be:

(a) To accept the findings of local, state and federal agencies which license or permit renewable energy systems;

(b) To avoid influencing any of those agencies to approve or deny a license or a permit;

(c) To provide facts from tax credit files to such agencies when asked.

(3) Each applicant:

(a) Shall obtain each local and or state permit that applies to the renewable energy system project;

(b) Shall agree to comply with the express terms and conditions of each permit;

(c) Shall agree to comply with all state rules and laws that apply to the renewable energy system project.

(4) System certifications and contractor certifications shall be based on the applicant's promise that each needed local and state permit has been or will be obtained. Failure to obtain those approvals shall cause the state energy office approval to be revoked.

(5) Renewable energy system contractors shall install all systems to comply with manufacturers' published specifications.

(6) The director is hereby authorized to promulgate rules and regulations in further support of the provisions of this chapter.

44-57-11. Enforcement. -- (1) Applicant's actions are cause for revocation of solar tax credit:

(a) A system certification may be revoked if the director finds that:

(A) The applicant obtained the system certification by fraud or misrepresentation; or

(B) The verification form was fraudulent or misrepresented by the taxpayer; or

(C) The renewable energy system has not been installed or operated in substantial compliance with the plans, specifications or procedures specified in the application or certification, such as:

(i) Failure to comply with required codes or obtain required permits or inspections; or

(ii) Return of the renewable energy system to the seller or installer for a refund; or

(iii) Sale or removal of the device so that it no longer operates on the property of the applicant.

(D) The applicant refuses to allow the state energy office to inspect the renewable energy system after a reasonable written request by the state energy office. A reasonable request shall allow applicant to choose a day within three (3) weeks of the request from the state energy office.

(b) Following revocation, the applicant shall forfeit the tax credit, and the division of taxation shall proceed to collect any taxes due from the taxpayer because of this forfeiture.

(2) Contractor's actions which are cause for revocation of contractor's certification:

(a) A contractor certification may be revoked if the director finds that the system certification or the contractor certification was obtained by fraud or misrepresentation by the contractor. The director may find that fraud or misrepresentation occurred if the director finds false statements were made regarding the contractor's licenses held, products or warranties carried, range of product cost, personnel employed in the business, or any other statement made in application for contractor certification.

(b) A contractor certification may be revoked if the director finds that the contractor's performance regarding sales or installation of the renewable energy system for which the contractor is issued a certificate does not meet industry standards. The director may find that the contractor's performance does not meet industry standards under the following conditions:

(A) The contractor is not registered with the contractors' registration board or does not carry the required level of insurance; or

(B) The contractor fails to obtain the required state or local permits required to install the renewable energy system; or

(C) The contractor fails to install the renewable energy system in compliance with standards adopted under this chapter; or

(D) The contractor fails to install the renewable energy system in a workmanlike manner; or

(E) The contractor fails to install the renewable energy system to comply with manufacturers' published specifications; or

(F) The contractor fails to honor contract provisions when there is no legitimate excuse for nonperformance of the obligation; or

(G) The contractor fails to honor a warranty which the contractor is contractually obligated to perform; and

(H) The contractor fails to make corrections to remedy failure to comply with paragraphs (A) through (G) of this subsection requested by the state energy office within thirty (30) days of written notification from the state energy office of the problem, unless a time extension is granted by the state energy office.

(I) A tax credit for a renewable energy system sold or installed under the contractor certification is ordered revoked under this section; or

(J) New information indicates that the renewable energy system installed under the contractor certification does not meet eligibility requirements.

(c) A contractor certificate may be revoked if the director finds that the contractor misrepresented to the customer either the tax credit program or the nature of the renewable energy system. The director may find that the contractor has misrepresented the tax credit program or the renewable energy system under the following conditions:

(A) The contractor has provided false or misleading information to the customer regarding the availability of the tax credit, amount and nature of the tax credit, procedures for tax credit application, eligibility standards for credit, or any other misleading information about the program; or

(B) The contractor has misrepresented the nature of the performance of the renewable energy system; or

(C) The contractor has misrepresented the cost of the system. For example, the contractor omits costs in the contract for features necessary for basic installation and/or operation of the system and/or to comply with the renewable energy system eligibility; or

(D) The contractor has misrepresented a competitor's product or service; and

(E) The contractor fails to make corrections requested in writing by the state energy office to remedy violations of paragraphs (A) - (D) of this subsection within thirty (30) days unless more time is allowed by the state energy office, or the contractor fails to remedy the construction and/or warranty claim as directed by order of the contractors' registration board.

44-57-12. Administrative process for review and revocation of contractor certification. -- The state energy office will rely on the contractors' registration board for monitoring and enforcement of contractor certificates.

If the state energy office receives a complaint, it shall notify the contractors' registration board who will then act upon this complaint as they would any other complaint they receive against a registered builder.

If the contractors' registration board finds that the contractor is in violation of the provisions of this chapter, the contractors' registration board shall take whatever action they deem necessary including but not limited to revoking the contractor's registration card away from the contractor and/or any other action that the contractors' registration board takes that is under its authority.

SECTION 2. This act shall take effect on January 1, 2001.

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