Regarding the Oct. 1 Point of View “ In N.C., solar power becoming more about finances than energy”: The writer completely misses the point about tax credits.
A tax credit uses public funds to incentivize specific economic activity. The renewable energy tax credits in North Carolina encourage investment in renewable energy, and the private sector determines who makes that investment and where and what form that investment will be. Some of it will work well, and some won’t. It’s the essence of the free-market economy we strive to maintain.
In the end, it is more efficient than direct governmental investment. The economics of renewable energy are such that, absent the governmental incentives (tax credits), the long-term rates or returns on these investments are low to mid-single digits. Low single-digits returns will not attract capital for investments.
There are numerous potential developers of renewable energy projects throughout North Carolina who are unable to get the requisite financing and investor support until they can find taxpayer interest in acquiring their prospective tax credits. Absent these buyers making a commitment to acquire the credits, the projects simply don’t happen.
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North Carolina State Tax Credit Exchange