Kentucky
Financial Incentives
Tax Benefits: Certain energy efficiency measures and renewable energy installations allow
residential and commercial owners to take a 30 percent state income tax credit.1 Kentucky also
provides companies a tax credit of up to 100 percent of the Kentucky income tax for building or
renovating certain facilities that utilize renewable energy,2 as well as a sales tax exemption for
equipment purchased for such projects.3 Biodiesel and ethanol producers can receive a $1 per
gallon tax credit.4 Liquefied petroleum gas is exempt from the state excise tax when used to
operate motor vehicles on public highways.5
Loan Programs: Kentucky offers loans for residential energy efficiency improvements through
the KY Home Performance program.6 The state also provides, through the Green Bank of
Kentucky, loans to state agencies for energy efficiency improvements.7
Grants: Kentucky provides On-Farm Energy Efficiency and Production grants to farmers for a
wide range of energy efficiency and renewable energy technologies.8 Funding is also available
to companies for research and development in the areas of alternative fuels and renewable
energy.9
Rebates: Kentucky also offers rebates for residential energy efficiency improvements through
the KY Home Performance program.10
Rules and Regulations
Facility Siting and Permitting: Solar easements may be obtained to provide access to direct
sunlight.11
Building Codes, Appliance, and Equipment Standards: Kentucky's residential building code
is based on the 2006 IECC and the 2006 International Residential Code (IRC).12 Kentucky’s
commercial building code is based on the 2006 IECC and the 2006 International Building Code
(IBC).13 New construction and major renovations of public buildings must meet LEED
certification and must incorporate Energy Star appliances if cost-effective.14 Moreover, public
schools in Kentucky are required to implement an energy efficiency management program.15
Electricity Transmission, Interconnection and Storage: Utilities are required to offer net
metering for certain renewable energy systems up to 30 kW. Kentucky has also instituted a twotiered interconnection standard, with level one applicable to inverter based systems, and level
two applicable to non-inverter based systems.16
Fuel Standards and Transportation: Service rates, terms, and conditions for natural gas for
use as a motor vehicle fuel are exempt from Kentucky Public Service Commission regulation.17
Government Procurement: At least 50 percent of state-owned light-duty vehicles must be
replaced with energy efficient vehicles.18 Vehicles in the Kentucky Transportation Cabinet’s
fleet must use fuel blended with either ethanol or biodiesel.19
Policies, Plans, and Governmental Affiliations
Policies and Plans: Kentucky has established the Kentucky Climate Action Plan Council
(KCAPC) to develop a climate action plan to reduce the state’s GHG emissions. KCAPC
submitted its interim report in July 2010.20 The Kentucky Department for Energy Development
and Independence (DEDI) (formerly the Governor’s Office of Energy Policy) has been tasked
with developing and implementing a strategy for the production of alternative transportation
fuels and synthetic natural gas from fossil energy and biomass resources.21 DEDI is also
responsible for implementing Governor Steve Beshear’s 7-point strategic energy action plan,
Intelligent Energy Choices for Kentucky’s Future.22
Government Entities: Governor’s Office of Agricultural Policy,23 Kentucky Climate Action
Plan Council,24 Kentucky Department for Energy Development and Independence,25 Kentucky
Department for Environmental Protection,26 Kentucky Department for Natural Resources,27
Kentucky Environmental Quality Commission,28 Kentucky Public Service Commission.29
Regional Memberships: Kentucky is a member of the SGA.
1
KRS § 141.435 et seq.
KRS § 154.27-010 et seq.; 307 KAR 1:040.
3
KRS § 139.518; 103 KAR 31:200.
4
KRS §§ 141.422 through 141.424, 141.4244 through 141.4248.
5
KRS § 234.321.
6
http://www.kyhomeperformance.org/Default.aspx.
7
http://finance.ky.gov/greenbank/.
8
http://agpolicy.ky.gov/funds/energy.shtml.
9
KRS § 154.20-410; KRS § 154.20-415.
10
http://www.kyhomeperformance.org/Default.aspx.
11
KRS § 381.200.
12
http://dhbc.ky.gov/bce/KY+RC.htm.
13
http://dhbc.ky.gov/bce/KY+BC.htm.
14
KRS § 56.770 et seq.
15
KRS §160.325; https://louisville.edu/kppc/keeps.
16
KRS § 278.465 et seq.; Guidelines; http://www.psc.ky.gov/Home/Utilities#Electric; http://kysolar.org/netmetering.
17
KRS § 278.508.
18
KRS § 45A.625.
19
Executive Order 2005-124.
20
http://www.kyclimatechange.us/documents.cfm.
21
KRS § 152.720.
22
http://energy.ky.gov/resources/Pages/EnergyPlan.aspx.
23
http://agpolicy.ky.gov/.
24
http://www.kyclimatechange.us/.
25
http://energy.ky.gov/Pages/default.aspx.
26
http://www.dep.ky.gov/.
27
http://www.dnr.ky.gov/.
28
http://www.eqc.ky.gov/.
29
http://psc.ky.gov.
2