News & Events

Tax Credits 

North Carolina’s public policy has for more than 10 years included the allowance of tax credits for investing in renewable energy property, and the General Assembly in the past legislative session (2009) extended the credit and added to the definitions of “renewable energy property” to include geothermal heat pumps and other geothermal equipment. 

The General Assembly extended the sunset provision that would have permitted the renewable energy tax credit to have expired on January 1, 2011.  The new sunset date is January 1, 2016, and the 2009 changes also added the geothermal equipment to the definition of renewable energy property in House Bill 512 (Session Law 2009-548), amending Sections 105-129.15, 105-129.16A, and 105-129.17  of the North Carolina General Statutes.

        Renewable energy property eligible for the credit is “machinery, equipment or real property” including biomass equipment and “related devices for converting, conditioning and storing the liquid fuels, gas, and electricity produced with biomass equipment,” hydroelectric generators and related devices solar energy equipment and related devices, solar energy equipment and related devices, wind equipment and related devices, geothermal heat pumps and other geothermal equipment that uses the internal heat of the earth as a substitute for traditional energy for water heating or active space heating and cooling.”

         The tax credit is available to the North Carolina taxpayers that construct, purchase, or lease renewable energy property placed in service in this State during the taxable year.  The credit is 35% of the cost of the property.  For renewable energy property serving a single-family dwelling, the credit must be taken in the year in which the property is placed in service.  For all other renewable energy property, the entire tax credit may not be taken in the placed in service year, but must be taken in five equal installments beginning with the taxable year in which the property is placed in service.

            The tax credit is subject to expiration if the non-residential property with respect to which the credit is claimed is no longer owned and is disposed of by the taxpayer, or if the property is taken out of service during any of the remaining credit period years. In these events, the credit expires, and the taxpayer may not take any remaining installment, except that a portion of an installment that accrued in a previous year and was carried forward may be taken to the extent permitted under Section 105-129.17. 

State tax credits are subject to certain ceilings in the tax law.  Federal tax credits are also available.  We’ll discuss federal credits in a separate article.

Laws

The General Assembly enacted 27 laws in the 2009 session touching on multiple aspects of renewable energy.  One law  (House Bill 464, Session Law 2009-149) conferred authority on the City of Raleigh to “sole source” land leases for a term of up to 20 years for the siting and operation of renewable energy facilities, when the prior law required the City to send lease offerings out for bids for any lease period longer than 10 years.  This was necessitated in part by Progress Energy’s requirements for 20-year contracts.   

The City of Raleigh commenced operation of its 250 kW photovoltaic (“PV”) project in collaboration with Carolina Solar Energy at the City’s E.M. Johnson Water Treatment Plant, the first project in the Southeast to use the First Solar thin film PV solar panels. The City has been operating a methane gas recovery plant for over 20 years to make steam power at Ajinomoto, and has been negotiating a contract to lease land at the City’s wastewater treatment facility, and evaluating other solar power projects. 

The Studies Act (Session Law 2009-145) directed and authorized studies by the Environmental Review Commission on expanding alternative energy use by State Government and State vehicles, green school construction, on City and County ordinances banning the installation of clotheslines, and studies by the Joint Legislative Utility review Committee on “feed-in rates” to be paid to renewable energy electricity producers for each kilowatt-hour of electricity produced, on siting of wind energy facilities, and energy efficiency studies. 

The State Energy Office was transferred from the Department of Administration to the Department of Commerce under Session Law 2009-446, and the Energy Policy Council also was transferred to the Department of Commerce, and the Council’s membership and duties were changed to increase the State’s focus on energy policy, alternative fuels and biofuels, energy efficient building design and construction, and renewable energy. 

Loans 

A revolving energy loan fund or funds were established for loans of up to $1 million per entity to install energy-efficient or renewable energy improvements, under the supervision of the State Energy Office, as part of legislation to facilitate expedited use and expenditure of federal funds provided under the American Recovery and Reinvestment Act (Session Law 2009-475, section 13).  In this same law, the NCUC was directed to “develop, implement and maintain an Internet Web site for the online tracking of renewable energy certificates in order to verify the compliance of electric power suppliers with the REPS requirements of this section [62-133.8] and to facilitate the establishment of a market for the purchase and sale of renewable energy certificates.”   The NCUC must set up this website tracking system by July 1, 2010. (Session Law 2009-475, section 14(a)).

       Cities and counties also were empowered to establish revolving loan funds and programs, using Energy Efficiency and Conservation Block Grant Funds and any unrestricted revenues to establish their own revolving loan funds “to finance the purchase and installation of distributed generation renewable energy sources or energy efficiency improvements that are permanently fixed to residential, commercial or other real property.”  Loans may be made subject to an 8% interest rate cap and a loan term of 15 years.  A “renewable energy source” has the same meaning as “renewable energy resource” in the Portfolio Standard law, at N.C. Gen. Stat. §62-133.8.  Session Law 2009-522. 

 . . . Clotheslines

        And, speaking of clotheslines, the General Assembly empowered the Town of Carrboro to adopt ordinances for the orderly installation of energy-saving and water-saving devices, including clotheslines, solar collectors, rain barrels, garden fences, “or any further technology designed specifically to generate or conserve energy through the use of renewable resources or to capture, store, or reuse water, so long as such installation is done by or on behalf of a person who otherwise has a property right to install such device.”  The ordinance authority also empowers the Town aldermen to review, approve and deny homeowners association documents, including restrictive covenants, in connection with subdivision approvals.  The Town’s authority cannot prohibit reasonable “screening” regulations for the “screening” of such devices in the restrictive covenants and HOA rules and regulations so long as these rules do not “have the effect of preventing the reasonable use of such device.”  Session Law 2009-427.  This law took effect in October 1, 2009, and “applies to deed restrictions, covenants, or similar binding requirements that run with the land recorded on or after that date.”

Catch the Wind, Follow the Sun - February 24 - NC Bar Center, Cary, NC. Live and Webcast Program. A comprehensive discussion of renewable energy efficiency, and the prospect for investments, and economic development in response to the challenges and potential calamity of global climate change. Steve Carr will be a featured speaker. To view the brochure2 for this event or for more details go to www.ncbar.org/CLE.

An Update on the Legal Issues Facing Housing Authorities and their Instrumentalities - March 6 - Kingston Plantation - Myrtle Beach, SC. Topics will be recent changes in federal and state law and trends that affect executive directors, senior management, and housing authorities legal counsel in fulfilling the mission of the housing authorities and their affiliated legal entities. Susan Ellinger and Steve Carr will be presenters and speakers.

The Brownleigh Building, at 8208 Brownleigh Drive, in Raleigh (near Umstead State Park) is the home of BBH Design, an award-winning, sustainable architectural design firm with expertise in Higher Education and Healthcare facilities, and the Umstead Park United Church of Christ.  In addition to receiving the LEED Gold Certification Standard for New Construction by the US Green Building Council, the Brownleigh Building also was recognized by Raleigh Mayor Charles Meeker and the City of Raleigh’s Appearance Commission and received its inaugural Sustainable Design Award of the Sir Walter Raleigh Awards for Community Appearance, in award ceremonies held on October 7, 2009.  Steven Carr served as legal counsel for both BBH Design and Umstead Park UCC in the organization of a new condominium for joint ownership of the building, and advised on development and financing for the project as the building was acquired and rehabilitated by the new owners.  Click here http://www.raleighnc.gov/portal/server.pt/gateway/PTARGS_0_2_306_210_0_43/http%3B/pt03/DIG_Web_Content/news/public/News-PubAff-City_Announces_2009_Sir_-20091001-12550799.html to see the City of Raleigh announcement and here to view images www.bbh-design.com/building/building-detail.php?id=19&back=cultural