Incentive Programs For Commercial Solar PV Projects in North Carolina
Installing a solar PV array takes effort on the front end. You must determine if your rooftop or land will support a cost-effective system, establish what method of procurement is best, install the project and interconnect to the utility.
Sounds like a lot of work – so what’s the payoff? Not only are you generating electricity from a clean energy source, but your business is also effectively paying for 30 years of electricity upfront, helping to stabilize operating expenses.
There are many other benefits to ‘going solar’ that will serve your business in the long run; financial incentives are also available through federal, state, and local agencies that help offset the more immediate cost of installing a solar PV array. Using the Database of State Incentives for Renewables & Efficiency (DSIRE) as our source, we’ve compiled many of the cost-saving measures available for commercial and local government solar PV projects in North Carolina.
Let’s dive in!
Federal Business Energy Investment Tax Credit (ITC)
The Federal Business Energy Investment Tax Credit (ITC) is available in all 50 states and is administered by the US Internal Revenue Service. The ITC has been amended several times, most recently by the Inflation Reduction Act of 2022. Along with increasing the full credit to 30%, the IRA significantly altered this tax credit by expanding the eligible technologies, extending the expiration date, modifying the scheduled step-down in value, adding new bonus credits, inlcuding a direct pay option for non-taxable entities and setting new criteria to qualify for the full credit. The Treasury Secretary is expected to issue guidance for the new provisions in this tax credit in late 2022 or 2023.
Eligible Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Solar Photovoltaics (PV), Wind Turbines, Geothermal Systems, Combined Heat & Power, Fuel Cells, Microturbines, Offshore Wind, Waste Energy Recovery, Energy Storage Systems (paired with generation and stand-alone systems), Thermal Energy Storage Systems, Qualified Biogas Property, Microgrid Controllers, Interconnection Property.
Applicable Sectors: Commercial, Industrial, Investor-Owned Utility, Cooperative Utilities, Agricultural
Incentive Amount: Base Credit: 6%-30% (depending on project status and labor factors), Domestic Content Bonus: 10% additional, Energy Community Bonus: 10% additional, Low-Income Community Bonus: 10% additional, Low-Income Residential Building or Low-Income Economic Benefit Bonus: 20% additional
For a full break down of incentive details, click here: https://programs.dsireusa.org/system/program/detail/658/business-energy-investment-tax-credit-itc
Renewable Electricity Production Tax Credit (PTC)
The Federal Renewable Electricity Production Tax Credit (PTC) is available in all 50 states and is administered by the US Internal Revenue Service. It is an inflation-adjusted per-kilowatt-hour (kWh) tax credit for electricity generated by qualified energy sources. The PTC was established in 1992, and was renewed and expanded by the Inflation Reduction Act of 2022. The IRA set the full value of the tax credit at 1.3 or 2.6 cents/kWh depending on facility type. The Treasury Secretary is expected to issue guidance for the new provisions in this tax credit in late 2022 or 2023.
Eligible Technologies: Geothermal Electric, Solar Thermal Electric, Solar Photovoltaics (PV), Wind Turbines, Biomass, Hydroelectric, Municipal Solid Waste, Landfill Gas, Tidal, Wave, Ocean Thermal, Offshore Wind
Applicable Sectors: Commercial, Industrial
Incentive Amount: Base Credit: Wind, Closed-Loop Biomass, Geothermal: $0.025/kWh, Other eligible technologies: $0.013/kWh These amounts apply to the first 10 years of operation.
For a full break down of incentive details, click here: https://programs.dsireusa.org/system/program/detail/734/renewable-electricity-production-tax-credit-ptc
Modified Accelerated Cost-Recovery System (MACRS) Depreciation
Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses can recover investments in certain properties through depreciation deductions. Solar PV property is in the ‘five-year’ class and can be depreciated over that timeframe. The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. After that, first-year bonus depreciation goes down as follows:
- 80% for property placed in service after December 31, 2022 and before January 1, 2024.
- 60% for property placed in service after December 31, 2023 and before January 1, 2025.
- 40% for property placed in service after December 31, 2024 and before January 1, 2026.
- 20% for property placed in service after December 31, 2025 and before January 1, 2027.
Eligible Technologies: Solar Water Heat, Solar Space Heat, Geothermal Electric, Solar Thermal Electric, Solar Thermal Process Heat, Solar Photovoltaics (PV), Wind (All), Biomass, Geothermal Heat Pumps, Municipal Solid Waste, Combined Heat & Power, Fuel Cells using Non-Renewable Fuels, Landfill Gas, Tidal, Wave, Ocean Thermal, Wind (Small), Geothermal Direct-Use, Anaerobic Digestion, Fuel Cells using Renewable Fuels, Microturbines.
Applicable Sectors: Commercial, Industrial, Agricultural.
USDA Rural Energy for America Program (REAP) Grants
The Rural Energy for America Program (REAP) provides financial assistance to agricultural producers and rural small businesses to purchase, install, and construct renewable energy systems, make energy efficiency improvements, use renewable technologies that reduce energy consumption, and participate in energy audits and renewable energy development assistance. To be eligible, small businesses must be located in rural areas.
These grants are limited to 25% of a proposed project’s cost, and a loan guarantee may not exceed $25 million. The combined amount of a grant and loan guarantee must be at least $5,000 (with the grant portion at least $1,500) and may not exceed 75% of the project’s cost.
Eligible Technologies: Solar Water Heat, Solar Space Heat, Geothermal Electric, Solar Thermal Electric, Solar Photovoltaics (PV), Wind (All), Biomass, Hydroelectric, Hydrogen, Geothermal Heat Pumps, Combined Heat & Power, Tidal, Wave, Ocean Thermal, Wind (Small), Hydroelectric (Small), Geothermal Direct-Use, Anaerobic Digestion, Fuel Cells using Renewable Fuels, Microturbines
Applicable Sectors: Commercial, Agricultural
Application due dates are published annually in the Notice of Funding Availability. Regional rural energy coordinators provide loan and grant applications upon request.
Learn more here: https://programs.dsireusa.org/system/program/detail/917/usda-rural-energy-for-america-program-reap-grants
State, Local & Utility Incentive Programs
State
Property Tax Abatement for Solar Electric Systems
Administered by the NC Department of Revenue, this program exempts 80% of the appraised value of a non-residential “solar energy electric system” (aka a photovoltaic, or PV, system) from property tax.
Eligible Technologies: Solar Thermal Electric, Solar Photovoltaics (PV)
Applicable Sectors: Commercial, Industrial, Residential, Agricultural
Learn more here: https://programs.dsireusa.org/system/program/detail/3036/property-tax-abatement-for-solar-electric-systems
Local
The Town of Carrboro: Worthwhile Investments Save Energy (Wise) Homes and Buildings Program
This program was included because PV installations and solar hot water are eligible for financing, however, these technologies must be combined with energy efficiency improvements that are anticipated to yield 15% energy savings.
Carrboro’s WISE Homes & Buildings Programs provides businesses and non-profits with fewer than 50 employees to increase their energy efficiency. The current interest rate is 3% with a maximum loan term of 10 years. The minimum loan amount is $1500.
Participants must have an energy evaluation conducted by a program-qualified assessor/contractor prior to submitting their loan application. The energy evaluation identifies the highest priority improvements, and the cost of the evaluation can be included in the loan amount.
Eligible Technologies: Solar Water Heat, Solar Photovoltaics (PV), Water Heaters, Lighting, Lighting Controls/Sensors, Heat pumps, Air conditioners, Programmable Thermostats, Building Insulation, Motors, Motor VFDs, Custom/Others pending approval, Food Service Equipment, Vending Machine Controls, Commercial Refrigeration Equipment
Applicable Sectors: Commercial, Nonprofit
PV installations are eligible for financing; however, they must be combined with energy efficiency improvements that are anticipated to yield 15% energy savings.
Learn more here: https://programs.dsireusa.org/system/program/detail/4567/town-of-carrboro-worthwhile-investments-save-energy-wise-homes-and-buildings-program
Catawba County – Green Construction Permitting Incentive Program
To encourage the construction of sustainable homes and commercial buildings, Catawba County provides rebates on permit fees and plan reviews for certain qualifying structures and renewable energy projects.
Eligible Technologies: Solar Water Heat, Solar Photovoltaics (PV), Geothermal Heat Pumps, Energy Efficiency – Comprehensive Measures/Whole Building
Applicable Sectors: Commercial, Construction, Residential
Waivers / Reductions:
- New structures earning an approved green building certification: 25% rebate of blanket permit fees, up to $500
- Existing structures installing geothermal heat pumps, solar PV, solar water heating, or gray/rainwater collection: 50% rebate
- Plan review for commercial buildings seeking LEED certification, Energy Star, and/or NC HealthyBuilt Homes: 50% rebate
Learn more here: https://programs.dsireusa.org/system/program/detail/4121/catawba-county-green-construction-permitting-incentive-program
Utility
PROGRAM NO LONGER AVAILABLE (Updated 9.19.2023): Duke Energy Carolinas / Progress Energy – Carolinas: Nc Solar Rebate Program
Participation cannot exceed 10,000 kW-AC per year of installed capacity. Nonresidential installations are capped at 5,000 kW in a calendar year and 2,500 kW of that capacity is set aside for use by nonprofit organizations.
Starting in 2021, Duke evenly allocated the available annual capacity between two application periods. For 2022, the remaining application period opens on July 6, 2022. Currently, applications are accepted and selected through a lottery system.
This rebate program expires on December 31st 2022, with one application lottery remaining in July. Any remaining capacity will be available to all sectors – residential, commercial and non-profit for distribution in 2023. There is currently no new program set to replace Duke’s NC Solar Rebate Program.
Eligible Technologies: Solar Technologies
Applicable Sectors: Commercial, Industrial, Local Government, Nonprofit, Residential, Schools, State Government, Federal Government
Non-residential Customer Solar Rebate Payment: $0.30 per watt
Non-Profit Customer Solar Rebate Payment: $0.75 per watt times the AC nameplate rating of the Customer’s solar PV electric generating system.
For the most current information, visit Duke’s website here: https://www.duke-energy.com/home/products/renewable-energy/nc-solar-rebates
Wrap Up
The purpose of this blog is to highlight financial incentive programs available specifically for solar PV projects in North Carolina; however, DSIRE also lists financial incentives available for energy efficiency, building performance and other renewable energy sources for all 50 states. Plenty of programs to explore – so get going!
Not sure which incentives to pursue? We’re here to help!
