Solar energy is an economic boom for North Carolina. Only California installed more solar in 2014, pushing the Tar Heel State to fourth overall in America with 953 megawatts installed capacity – roughly the electricity demand of 90,500 homes.
Jobs and investment have followed. Duke University reports 450 solar companies employ 4,300 workers statewide and have invested $2 billion across 55 counties, with every dollar spent on state incentives returning $1.93 in benefits.
But this sunny forecast could quickly cloud over. Two of the most critical policies to North Carolina’s solar growth are in immediate jeopardy, a third faces long-term uncertainty, and a fourth is stuck in legislative limbo.
Governor McCrory improved solar’s situation by extending the 35 percent North Carolina Renewable Energy Investment Tax Credit for projects “significantly complete” by the end of 2015. Projects can now start construction later in this calendar year, providing certainty for investors and ensuring more capacity comes online, but it’s not a permanent solution.
From an investor’s perspective, the extension only pushes the existing market forward one or two quarters – the tax credit will still expire at the end of 2015. Legislation to extend the credit through 2019 has been introduced in the state legislature, but it has stagnated so far.
However even with the tax credit extension, the Regulatory Reform Act of 2015 could shut the solar industry out of North Carolina. HB 760, which passed the House and is pending in the Senate, contains two last-minute poison pill amendments.
HB 760 would reduce the state’s Renewable Energy Portfolio Standard (REPS) to 6 percent from the existing 12.5 percent by 2020 goal. REPS has been critical to solar in North Carolina since it became law in 2007, and has fended off attacks with bipartisan support several times, most recently this April.
A REPS rollback would hamstring the market’s forward velocity and overall potential, and is counter-intuitive considering solar’s statewide economic contributions and other states increasing their renewable energy targets.
A second change-of-course amendment in HB 760 would eliminate North Carolina’s existing property tax exemption for solar projects already in operation. The exemption has been on the books for years and would suddenly change the economics of utilities and businesses.
These entities installed solar assuming one economic equation, and imposing a new tax effectively devalues their investment. Imagine if a new property tax was suddenly imposed on homeowners – how many residents could still make mortgage payments? Retroactive tax changes like this are rare in America, and would significantly harm many companies.
The outlook isn’t all bad. HB 245, the Energy Freedom Act, could unlock the solar potential of North Carolina businesses through third-party ownership (TPO). With TPO, businesses can take control over their own energy future by hosting solar or other renewable sources on their own facilities. Whether they own an array or finance it through a power-purchase agreement, solar panels would spring up on available rooftops and acreage, and businesses could directly use the electricity generated on their property.
Ten of North Carolina’s biggest employers including Wal-Mart, Cargill, and Volvo have lobbied for TPO as a red, white, and blue energy independence issue. TPO is an established principal across many states, and an economic opportunity for North Carolina businesses.
Best of all, TPO can work for Duke Energy. Duke has supported solar, investing $4 billion across 1,800 megawatts of projects since 2007. The utility has traditionally purchased electricity from solar farms and facilitated grid connections for new arrays but can look to California or New Jersey where utilities benefit from TPO by investing in new solar assets or purchasing aggregated renewable energy credits and electricity from TPO facilities.
Solar energy is shining upon North Carolina. 13 times more solar was installed statewide in 2014 as in 2010, and project costs are falling faster here than in many comparable states. By one estimate, the state could add 2.3 gigawatts additional capacity by 2023 – if just one gigawatt created these existing economic benefits, how many more jobs and investment will come from twice that growth?
Smart government policy has powered the state’s solar growth so far. Let’s keep the momentum going through stable continued policy moving forward.