Despite skepticism among some lawmakers, North Carolina’s tax break for solar farms and other renewable energy projects continues gaining in popularity.
In 2014, the state’s residents and businesses claimed $126.7 million in the tax credit, which is another way of saying that amount wasn’t paid in taxes by those who installed solar panels or any of 17 other renewable technologies.
Also in 2014, the tax credit generated $717.6 million in spending, according to data from the N.C. Department of Revenue.
Compare that to the previous year’s figures: $53.4 million in tax breaks and $387 million in spending. This exponential growth has held up since North Carolina adopted an energy policy in 2007 requiring power companies to use renewable energy.
The year the energy policy was enacted, but before it went into effect, the total amount claimed in the renewable energy tax credit was just $440,137.
Yet the fate of North Carolina’s popular tax credit is unclear. A proposed budget in the state Senate would reduce the credit to 20 percent and then let it expire at the end of 2017. The state House on Thursday defeated an amendment to eliminate the tax break altogether, a proposal favored by those who consider the tax credit a boondoggle and a drain on the state budget.
The 35 percent state tax credit is an effective promoter of clean energy technologies because it can be paired with a federal tax credit of 30 percent to cut the cost of equipment and installation by more than half. It applies to solar farms, solar pool heaters, solar space heaters, biomass, landfill gas, geothermal heat pumps, wind turbines and anaerobic digestors.
One reason the tax credit keeps growing every year is because corporations carry it over for five years, so that the total amount taken accumulates. Even if it were eliminated today, it would be claimed for four years because of the carry-over effect.
In 2014, the single largest claim for the renewable energy tax credit was made by Duke Energy Corp., for $62.9 million. The Charlotte utility company also spent $279.3 million on the renewable projects, state records show.
The smallest claims were for just $1, made by Susan K. Laney and by Matthew D. Shelton.
Others who claimed the tax credit for renewable energy projects included Blue Cross and Blue Shield of North Carolina, Chubb Indemnity Insurance, First Citizens BancShares, Little River Trails Aquaculture and Piedmont Biofuels.