Federal incentives

Most federal programs to support renewable energy have tended to focus on solar and wind rather than hydro. There are however some federal incentives that do still apply to using microhydro power.

Public Utilities Regulatory Policy Act of 1978 (PURPA ).  PURPA was enacted as part of the National Energy Act of 1978, during a time of unprecedented energy supply instability in the United States. The law requires utilities to purchase energy from non-utility generators or small renewable energy producers that can produce electricity for less than what it would have cost for the utility to generate the power, or the "avoided cost." Although once considered a key incentive for renewable energy, PURPA is less helpful for renewables today due to lower fossil energy prices.

Clean Renewable Energy Bonds (CREBs). Clean Renewable Energy Bonds are tax credit bonds with an interest-free finance rate for governmental bodies (including tribal governments), municipal utilities, and rural electric cooperatives included in the 2005 energy bill. Visit our CREBs Fact Sheet for more information. More information also available at the Public Renewable Partnership website, including a presentation on Public Power and the CREBs program. New Markets Tax Credits (NMTCs)

The New Markets Tax Credit Program.  This program provides a credit against Federal income taxes in exchange for making qualified equity investments in designated Community Development Entities (CDEs). The CDE may then invest in renewable energy projects. For more information visit our NMTC Fact Sheet.