Rory McIlmoil: Numerous benefits of solar tax credits

In his Aug. 7 Point of View, Dr. Herbert Eckerlin tried to cast a shadow over the state’s renewable energy tax credit by claiming that the credit is having numerous “unintended negative consequences.” Most notably, Eckerlin bemoans the “loss” of $124 million in tax revenue for 2014. Additionally, he seems to suggest that Senate Bill 3, which created the Renewable Energy Portfolio standard (REPS), is forcing utilities to buy power from solar facilities and that those facilities are causing the state’s electric utilities (read: Duke Energy) to “shut down some of their boilers” when the sun is shining.

Eckerlin neglects quite a bit of context surrounding the tax credit. The credit, as well as the REPS law, were created specifically to incentivize investment in renewable energy for North Carolina. That was the goal – as it also has been the goal for every other such tax credit or law that aims to support a growing industry in North Carolina, not only to generate jobs and economic output, but also to increase state income, sales and business tax revenue in the long run. Claiming that any revenue losses associated with the solar tax credit were “unintended” suggests a lack of understanding of the very purpose of tax credits.

To put the revenue impact of the tax credit in perspective, according to the N.C. Department of Revenue, the $124 million (actually $126.6 million) in tax credits supporting solar in 2014 represented less than 2 percent of all tax expenditures provided by the state. Of the credits and exemptions specifically categorized as “economic incentives,” the solar tax credit accounted for only 25 percent of the total value of economic incentives – which support everything from low-income housing to manufacturing. In other words, the solar tax credit is not an unexpected cost that negatively affects the state’s budget or economy.

In fact, the economic output generated by solar projects that received the tax credit amounted to $718 million in new spending on solar energy projects in 2014, while adding to the thousands of solar industry jobs created since the passage of the REPS law. Even more, the largest beneficiary of the solar tax credit was Duke Energy, which claimed $62.9 million in solar tax credits – accounting for half of the total credit value.

While this fact, in limited fashion, supports Eckerlin’s claim that the solar “program” provides prosperity for the few at the top, it also undermines a large part of his argument against the REPS law, which was that forcing Duke Energy to purchase solar output from others would cause Duke to shut down some of its boilers. The fact is, no solar energy has caused boilers to shut down when the sun is shining (they might merely ramp down a bit). If this were truly a concern for Duke, why would it be the single largest investor in solar energy in the state?

The length limit was waived to permit a fuller response to the Point of View.

This story was originally published August 13, 2015 at 5:09 PM with the headline "Rory McIlmoil: Numerous benefits of solar tax credits."