RALEIGH – North Carolina’s renewable energy investment tax credit’s days may be numbered, according to sources on Jones Street. House Speaker Tim Moore (R-Kings Mountain) has told the House GOP caucus that House budget negotiators likely will accede to the Senate position on letting the state’s 35 percent investment tax credit for renewable energy production end on Dec. 31, Jones & Blount has learned from multiple sources. Allowing the tax credit to expire in full would mean a $183.5 million boon to state coffers in fiscal years 2017-2020, according to General Assembly fiscal research staff.
The House had included an extension of the credit in its budget proposal, and lobbyists for the various renewable energy interests had been working furiously to forge a compromise that would extend the credit in some form. One likely scenario was that solar projects would receive less under the credit than wind, hog waste and other energy forms.
North Carolina is third in the nation in installed solar capacity thanks to the tax credit, the state’s renewable energy portfolio standard and the declining cost of solar energy production. According to the N.C. Department of Revenue, the investment tax credit cost the state $281 million from 2010-2012.
Although the tax credit officially expires Dec. 31, the General Assembly passed a bill earlier this year that allows projects already under way to claim the credit for 2016. The fiscal note to that bill scored the credit as costing $36.7 million per year, or roughly the equivalent of funding 2,100 teacher assistant positions during those years. In his budget proposal, Gov. Pat McCrory called for extending the credit for non-solar projects only, which his budget writers scored as a $7 million gain for the state in fiscal year 2017, rising to $15 million by fiscal year 2019.
Currently, investors in renewable projects can claim a credit on up to half of the taxes they owe over 10 years, but only 20 percent of the credit can apply to one year’s tax liability.