Federal Incentives
Federal Tax Breaks & ITC Extension
On October 3, 2008, legislation extended the 30% solar energy investment tax credit for homeowners and businesses through the end of 2013 and removes the cap for residential systems completed after January 1, 2009. The ITC includes a variety of power systems, energy efficiency incentives, and bonds for state and local governments, all designed to reduce greenhouse emissions.
Qualified Energy Conservation Bonds creates a new category of tax
credit bonds, (QECBs), to finance State
and local government initiatives designed to reduce greenhouse emissions.
QECBs can be issued to finance capital expenditures incurred for: (1) reducing
energy consumption by at least 20%; (2) implementing green community
programs; and (3) rural development involving the production of electricity from
renewable resources. The bonds can also be used to finance research facilities
and provide research grants for, among other things, technologies to reduce
peak use of electricity. There is a national limitation of $800 million, allocated to
States, municipalities and tribal governments.
Energy-Efficient Buildings Deduction allows taxpayers
to deduct the cost of energy-efficient property installed in commercial buildings.
The amount deductible is up to $1.80 per square foot of building floor area for
property installed in commercial buildings as part of: (i) interior lighting systems,
(ii) heating, cooling, ventilation, and hot water systems, or (iii) the building
envelope. Expenditures must be certified as being installed as part of a plan
designed to reduce the total annual energy and power costs with respect to the
interior lighting systems, heating, cooling, ventilation, and hot water systems of
the building by 50 percent or more in comparison to certain established
standards. This bill extends the energy efficient commercial buildings deduction
for five years, through December 31, 2013.
Research and Development Tax Credit bill extends the R&D tax credit equal to 20 percent of the amount by which a taxpayer’s qualified research expenditures for a taxable year exceed its base amount. The R&D tax credit expired December 31, 2007. The provision would be extended retroactively to January 1, 2008 and through the end of 2009. In addition, the proposal would increase the alternative simplified credit from 12% to 14% for the 2009 tax year. Research expenditures incurred by the solar energy industry would qualify for the credit.
North Carolina Incentives
Residential Solar Tax Credit includes the purchase of residential solar water heating, photovoltaic equipment, and fuel cells up to $2,000 for solar-electric and water-heating systems; $500 per 0.5 kW for fuel cells Business Solar Tax Credit includes the purchase of fuel cells, solar energy, geothermal, microturbines, process heat reclamation, and fiber-optic lighting; $500 per 0.5 kW for fuel cells; $200 per kW for microturbines; no maximum specified for other technologies. |
The NC Tax credit is subject to various ceilings depending on sector and the type of renewable-energy system.
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Businesses may deduct 35% per installation up to $2,500,000.00, from: income tax, franchise tax, or if the taxpayer is an insurance company, against the gross premiums tax. Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Renewable Transportation Fuels, Spent pulping liquor, Solar Pool Heating, Daylighting, Anaerobic Digestion, Ethanol, Methanol, and Biodiesel are also included. A maximum of 50 kWh battery storage capacity per kW of hydro generator capacity (DC rated); maximum of 35 kWh battery storage capacity per kW for other technologies. |
Low interest loans for: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Wind, Biomass, Hydroelectric Systems are available from 1% to 3%. Lighting, Lighting Controls/Sensors, Chillers, Furnaces, Boilers, Heat pumps, Air conditioners, Heat recovery, Caulking/Weather-stripping, Duct/Air sealing, Building Insulation, Windows, Doors, Siding, Roofs, Motor-ASDs/VSDs upgrades are also covered. The Energy Improvement Loan Program (EILP) is available to North Carolina businesses, local governments, public schools, community colleges and nonprofit organizations for projects that include energy efficiency improvements and renewable energy systems. Loans with an interest rate of 1% are available for certain renewable-energy and energy-recycling projects. Eligible renewable-energy projects generally include solar, wind, small hydropower (less than 20 megawatts) and biomass. Loans with a rate of 3% are available for projects that demonstrate energy efficiency, energy cost savings or reduced energy demand. Energy conservation projects usually include improvements to HVAC systems, energy management controls, high efficiency lighting and building envelope improvements. Loans are secured by bank letter-of-credit (non-applicable for local governments and school systems). In order to qualify for the EILP, a project must (1) be located in North Carolina; (2) demonstrate energy efficiency, use of renewable-energy resources, energy cost savings or reduced energy demand; (3) use existing, reliable, commercially-available technologies; (4) meet federal and state air and water-quality standards; and (5) be able to recover capital costs within the loan's maximum term of 10 years through energy cost savings. Note that letter-of-credit fees do not apply to government agencies and public schools. |
