This post was authored by former SACE staffer, Glenn Mauney.
On August 2nd, North Carolina Governor Beverly Perdue signed into law HB 1829, an expanded Combined Heat and Power (CHP) and renewable energy tax credit. For the first time, investments in CHP systems are now eligible for North Carolina’s 35% renewable energy tax credit. This new incentive sponsored by Representative Paul Luebke and supported by the North Carolina Sustainable Energy Association will help North Carolina citizens and businesses invest in more efficient and sustainable energy sources while creating jobs and reducing the state’s carbon footprint.
CHP developers who install a system can now receive a tax credit from the state equal to 35% of the cost of the equipment, construction, and installation, up to $2.5 million dollars. The new law makes North Carolina only the third state to offer businesses a CHP tax credit, along with Oregon and South Carolina’s Biomass Resource Credit. The North Carolina General Assembly’s inclusion of CHP in the state’s incentive package will accelerate the adoption of CHP technologies that can produce electricity and heat far more efficiently than traditional sources.
CHP: Good for North Carolina
Expansion of CHP will mean jobs, investment and cleaner air here in North Carolina. An American Council for an Energy Efficient Economy report shows there is excellent growth potential for CHP in North Carolina from current installed capacity of 1,504 MW to over 7,700 MW by 2030.
CHP is a key clean energy technology having a fuel efficiency that can reach 90%, much greater than the 35% often achieved by electricity-only generation systems. Less fuel used means fewer dollars spent generating that energy and drastically reduced emissions. As compared to operating separate power and heat generating systems, a CHP system can cut CO2 emissions by over half, while also reducing criteria pollutants like NOx and SOx.
This bill is a step towards national leadership on an issue of critical importance to our clean energy future. According to Oak Ridge National Lab, doubling CHP use nationwide by 2030 would create 1 million new jobs and reduce carbon emissions equivalent to taking 154 million cars off the road.
In addition to CHP, the new law extended the 35% tax credit for investments in renewable energy; and, reinstated and expanded a 25% tax credit for investment in a facility for the manufacture of renewable energy equipment and certain equipment sub-assemblies. Eligible renewable technologies for the 35% tax credit are: solar – either photovoltaic or thermal; wind energy; geothermal heat pump and hydroelectric installations. The 25% manufacturer’s tax credit applies to newly constructed facilities or the costs to convert an existing facility to manufacture the applicable technologies.