Renewable energy developers received good news this spring when Senate Bill 372, the Renewable Energy Safe Harbor Act, became the law of the land in North Carolina. The legislation changed the expiration date of the state tax credit for renewable energy projects from Jan. 1, 2016, to Jan. 1, 2017, for projects that are fairly advanced in their development. Projects qualify for the credit if they can satisfy the following conditions:
- By October 1, 2015, the taxpayer must apply for the credit and pay an application fee of $1,000 per megawatt of capacity to be installed;
- By January 1, 2016, the project must be at least 80% complete (80% of costs must have been incurred and 80% of the physical construction is complete. These percentages drop to 50% if the project will have 65 MW or more of capacity);
- By March 1, 2016, the taxpayer must submit a written certification stating that the 80% (or 50%) thresholds for costs incurred and physical construction have been met. The taxpayer must also submit a notarized report from an independent licensed engineer confirming completion-of-construction and a notarized report from a certified public accountant confirming cost-incurred thresholds have been met; and
- By December 31, 2016, the project must be placed into service.
If all of these conditions are satisfied, the taxpayer is eligible to take the credit. Otherwise, the December 31, 2015, expiration date will apply. The State of NC estimates that about $180 million in additional tax credits over a 5 year period will be granted due to the extension. It’s exciting news for those with projects already underway.
Proponents, namely Gov. McCrory, claim the extension will bring new renewable projects to the state. North Carolina has become a significant state in renewable energy, especially solar, and debate exists over what to do about that growth. NC’s expiring renewable energy tax credit is worth 35% of qualified expenses, with a cap of $5 million for eco-industrial parks and $2.5 million for any other location. This Renewable Energy Safe Harbor Act designed to create a “soft landing” for ending the state’s tax credits, and calm the concerns of investors in these projects.
If you have a project in the works and think this credit could be applied to your business taxes, please reach out for assistance.
