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Any commercial or industrial business in North Carolina that owns the site where energy conservation activities will be undertaken or renewable energy sources are tapped is eligible for the loan program.

North Carolina

• Energy Improvement Loan Program
• Golden LEAF Foundation
• NC GreenPower Production Incentive
• Renewable Energy Tax Credits

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Energy Improvement Loan Program

Encouraging a strong business climate to enhance economic development is a strategy pursued by nearly every state. Increasingly, states also are supporting energy conservation and renewable energy initiatives, intended not only to encourage alternative sources of energy, but also to promote economic development. In 2001, the General Assembly expanded the Business Energy Improvement Program into the Energy Improvement Loan Program to encourage businesses and other types of organizations to reduce energy costs.

The North Carolina State Energy Office administers this program, which provides low-interest loans for onsite renewable energy electricity generation. The loans, which can be for amounts up to $500,000, can be used to support capital improvement projects that utilize reliable and commercially available technologies. The interest rate on the loans is three percent, with an interest rate of one percent for some renewable and energy recycling projects. The time period of the loan will be the average payback time of the project so the loan can be repaid from the energy savings the improvements generate. Payback periods are calculated based on avoided energy costs and are limited to a 10-year maximum.

Any business, school, community college, local government, and nonprofit located within the state can apply for a loan. The North Carolina State Energy Office processes loans on a first come, first served basis.

Golden LEAF Foundation

North Carolina’s Golden LEAF Foundation provides grants to governmental entities and 501(c)(3) nonprofit organizations in North Carolina for activities that will improve social and economic conditions in economically distressed or tobacco-dependent regions of the state. North Carolina established the Foundation in 1999 to distribute a portion of the funds the state receives as a result of the master settlement agreement with cigarette manufacturers.

The Golden LEAF Foundation supports programs that promote or sustain economic development. Its priority projects are in the areas of agriculture, job creation and retention, workforce preparedness. education and community assistance. Details of the Foundation’s priority areas, a list of prior grants, and information about how to apply for funding are available on its website. The Foundation does not provide grants directly to individuals or for-profit entities. Any recipient of funds from the Foundation must agree to use the funds exclusively for charitable, scientific, educational, or other tax exempt public purposes.

To date, the Foundation has provided funds for several gas utilization projects, including funding the EnergyXchange in Burnsville for projects to use landfill gas to heat greenhouses and an incubator for craftspeople who are in the glass blowing and pottery businesses. In addition, the Foundation has funded the Appalachian State University Energy Center to assist small towns as they explore uses for landfill gas for their communities.

NC GreenPower Production Incentive

NC GreenPower, a statewide green power program designed to encourage the use of renewable energy in North Carolina, offers production payments for grid-tied electricity generated by solar, wind, small hydro (10 MW or less), and biomass resources, including landfill gas. NC GreenPower is an independent, nonprofit organization composed of a coalition of state-government officials, electric utilities, nonprofit organizations, consumers, renewable energy advocates, and other stakeholders.

Generators are required to enter into power-purchase agreements with their utilities and with NC GreenPower. However, because premiums paid to NC GreenPower are funded exclusively by voluntary contributions from North Carolina electric customers, NC GreenPower cannot provide guaranteed contracts to generators. Production payments are based on the estimated payment that is needed to make the installation of renewable energy systems approach economic feasibility; production payments include payments from utility power-purchase agreements. Payments are made on a per-kWh basis and vary by technology.

Renewable Energy Tax Credits

North Carolina offers a tax credit for the construction of new renewable energy systems. The credit is up to 35 percent of the cost of construction. Ceilings vary depending on sector and technology, with a maximum tax credit of:

• $10,500 for residential photovoltaic systems
• $3,500 for residential solar space heating systems
• $1,400 for solar water heating systems
• $2.50 million for solar, wind, hydro, and biomass (including landfill gas) applications on commercial and industrial facilities

Equipment, design, construction, and installation costs associated with the system are eligible for the credit, less any discounts, rebates, advertising, installation assistance credits, name referral allowances, or similar reductions.

Under North Carolina’s tax code, the allowable credit may not exceed 50 percent of a taxpayer's liability for the year, reduced by the sum of all other credits. Single-family homeowners must take the maximum credit allowable for the tax year in which the system was installed. If the credit is not used entirely during the first year, the remaining amount may be carried over for the next five years.

All other taxpayers take the credit in five equal installments, beginning with the year in which the property is placed in service. If the credit is not used entirely during these five years, the remaining amount may be carried over for the next five years. The credit can be taken against franchise tax or income tax. If the taxpayer is an insurance company the credit may be taken against the gross premiums tax.