In the closing days of 2020, the federal government approved one of the largest renewable energy spending bills in over a decade. This time around, it included an uncapped investment tax credit of 26% on “qualified” biomass boilers fueled by cordwood, wood pellets or chips.
The criteria used for establishing “qualified” technology, at the time of this writing, is somewhat non-specific. The qualifying number for efficiency is simple — 75%. Exactly how that efficiency metric is defined is another matter. For example, is it based on the higher heating value (HHV) or lower heating value (LHV) of the fuel? Is it based on a prescribed testing procedure administered by an approved testing laboratory, or solely on information supplied by the boiler manufacturer? The IRS and other federal agencies such as the EPA will ultimately pin down the specifics that determine what equipment can claim the tax credit. My expectation is that the bar will be set high, and that only state-of-the art biomass combustion technology will make the cut. Still, these credits will be a short-term shot in the arm for the biomass boiler industry, putting it on a somewhat equal incentive footing with the solar and geothermal heat pump industries.