Nearly $1B in applications for North Carolina renewable tax credits under Safe Harbor amendment

Dive Brief:

The North Carolina General Assembly did not extend the state’s 35% renewable energy investment tax credit (REITC) in the 2015 session so it expired January 1, 2016. But lawmakers did add a Safe Harbor amendment allowing renewables developers to obtain the tax benefit if they meet certain requirements.
Applications for the extended benefit had to be submitted by October 1, 2015. The Safe Harbor amendment required investors in projects of over 65 MW to show over 50% of the project was complete. Those with smaller projects had to show they were over 80% complete.
North Carolina’s Department of Revenue (NCDOR) reportedly received 201 applications for $938 million in tax credits, though some projects are unlikely to be completed and some developers could take 10 years to use the credits. The NCDOR reported that $127 million in credits were processed in 2014.

Dive Insight:

If all the 201 proposed projects become eligible and are completed in 2016, they would add $3 billion in private sector investments for the state, primarily in rural, low income areas, according to the North Carolina Sustainable Energy Association (NCSEA).

NCDOR has already collected almost $2 million dollars in application fees, NCSEA Communications Manager Allison Eckley said in a statement last month.

NCSEA research found that North Carolina’s $2.6 billion investment through the tax credit in over 20 different renewables technologies since 2007 had an economic impact more than $4.7 billion.

The Safe Harbor amendment is not a cost to taxpayers because it simply allows North Carolina business and private renewables investors to reduce their state tax liability, according to Eckley.

"In fact, a study of the return on investment by RTI International of the state investment tax credit shows that for every $1 of state tax credit used, $1.54 of state and local tax revenues are created over the life of the project," she said.

Republican leaders in the state senate declined to include a fuller extension of the renewable energy tax credits in a budget deal brokered last September, and Duke Energy, the state's dominant electric utility, kept its distance from the debate despite calls from clean energy supporters for it to intervene in support of the incentives.

Renewable energy backers credit the North Carolina tax breaks for bringing solar capacity in the state from virtually nothing to more than 1,100 MW in four years time, giving the state the third largest installed solar capacity of any state, behind only California and Arizona.