North Carolina Tax Credits & Financial Incentives for Building a Green Home

Unfortunately, it’s easy to get confused with so many options for green financial assistance. 

In fact, Matt Siegel, green building director of the Western North Carolina Green Building Council (WNCGBC), often receives phones calls from unaware consumers wondering what’s offered.  “Most people say, ‘Hey, I’m renovating my house — what’s available?’ ” says Mr. Siegel.  And then, the education process begins.

North Carolina offers a broad, statewide renewable energy incentive.  Mr. Siegel says it’s “a 35 percent state tax credit on top of the federal credit,” (we will discuss the 30 percent federal credit later).  This personal tax credit applies to “the cost of eligible renewable energy property constructed, purchased or leased by a taxpayer and placed into service in North Carolina during the taxable year,” says the Database of State Incentives for Renewables and Efficiency (DSIRE) Website.  It’s a comprehensive databank assembled by the North Carolina Solar Center and the Interstate Renewable Energy Council (IREC) of the available incentives across the country.  Eligible technologies for the North Carolina tax credit include solar heating and electrical systems as well as wind systems, among others.  Each credit is capped depending on the eligible items installed, but you can still get between $1,400 and $10,500.  The North Carolina tax credit expires on December 31, 2009.
 

North Carolina also offers two major tax incentives that focus on solar energy.  First is the active solar heating and cooling systems exemption, which applies to solar water heating and solar space heating/cooling systems installed in your home.  The system is assessed for its value, which cannot be “more than the value of a conventional system for property tax purposes,” according to the DSIRE Website.  “That means,” explains Mr. Siegel, “if you have a solar heating system that costs $20,000, but a similar heat pump costs $5,000, the extra $15,000 wouldn’t be added” to the value of your system.  Then, your system’s appraised value is exempt from property taxes.  The second incentive is the property tax abatement for solar electric systems.  Your system is, again, appraised for its value, of which 80 percent is exempted from your property taxes.
 

In 2008, North Carolina also instituted a sales tax holiday for people buying Energy Star-certified appliances.  This sales tax holiday occurs each year throughout the first weekend in November, beginning Friday morning and ending Sunday night.  As long as your appliance will not be used for business purposes, you will not have to pay any sales tax on the appliance you purchase during this time frame.  So, if you’re buying an Energy Star dishwasher that costs $750, you will save around $50 on sales tax if you buy it during the tax holiday weekend.
 

Your local government might also contribute to the green in your pocket as you green your home.  Asheville waives the fee for building permits for new homes being built to include renewable energy sources, such as wind or geothermal heating systems, as well as for homes that will become certified through the Energy Star, HealthyBuilt Home, or LEED certification programs.  If you live in Mecklenburg County, you can get a percentage of your building permit fee waived when your home becomes LEED or Energy Star-certified.  The level of your home’s certification will determine what percentage of the fee will be rebated.  North Carolina makes the process of obtaining building permit fee reductions and rebates easy between its counties.  According to state law, all counties and cities can offer their residents a building permit reduction or rebate under the local option green building incentive.  Once your home is certified through a nationally-recognized program, you will get your money back!  Also, you might get rebates of your system's purchase costs from your local government.  For example, the city of Statesville offers $150 rebates for the purchase of water heaters and $450 for buying heat pumps that are upgrades to new, more energy efficient technologies that pass city inspection.
 

Green incentives are available through your utility companies, too.  They often offer loans, discounts and rebates for taking various energy-saving measures.  For example, the South River Electric Membership Corporation (EMC) in southeastern North Carolina provides a $1,000 rebate if you get a solar heating system installed by a valid N.C. contractor certified by the Solar Rating and Certification Corporation, or SRCC.  You have 90 days from the date of installation to apply, and your system will be inspected before you get the money.
 

Piedmont EMC in central-northern North Carolina gives its residential members up to $200 per energy efficient heat pump system with a Seasonal Energy Efficiency Ratio (SEER) of 13 or higher.  Four-County EMC gives its customers a $150 rebate after purchasing eligible Energy Star appliances.   
 

For those who participate in their Energy Efficient Rate Program, Randolph EMC, based in Asheboro, discounts electric bills two percent in the summer and six percent in the winter.  Homeowners who want to get these discounts must live in a home that meets Randolph EMC’s energy efficiency requirements.  Similarly, Progress Energy Carolinas gives a five percent discount to its customers who live in an Energy Star-certified home. 
 

Many utilities, including Tideland EMC based in Pantego and Lumbee River EMC in Red Springs, will give customers low-interest loans for purchasing and/or installing specified energy efficient technologies such as heat pumps.  Most of these loans are subject to your credit history, and many require payoff in five years or less.
 

Another type of enticement to be aware of is the payback by utility companies for your production of green electricity.  If you install green electric systems and generate power for public consumption, you can receive a rebate or credit on your utility bills.  Currently, Tennessee Valley Authority (TVA) and N.C. GreenPower offer such production incentives.  Participation in TVA’s “Green Power Switch Generation Partners” program means that TVA or a partner utility company buys the entire output of a solar system for 12 cents more than retail value.  The output of other qualifying systems is bought for three cents more than retail value.  The utility company can then allow its other customers to purchase the power you supply, and you’ll be paid through credit on your monthly utility bill.  If your system uses less energy than it generates, you will be paid for the extra power either each month or each year, depending on the utility company.  And to help you pay for the initial cost of your system, the program will issue you $1,000.  To qualify for participation, your system must meet specific requirements, which include a minimum output (500 watts) a maximum output (999 kilowatts) and the installation of an external disconnect switch, among others.  If you’d like to sign up, you’ll have to sign a contract with the utility company that lasts at least 10 years.
 

N.C. GreenPower (NCGP) is a statewide non-profit association that seeks to institute the use of green power throughout North Carolina.  Every electric utility company in the state, including progressive green-proponent Duke Power (also a major sponsor of NCGP) participates in the NCGP program.  This production incentive program offers a variety of options to fit your project plans for green power generation.  You can choose one of the two net metering options, which means that your production will offset the cost of your own utility bill and the utility company will pay you for the excess electricity.  Or, you can choose one of the two sell-all options, which means that you’ll sell the entire generation capacity of your system to the utility company to be used as it sees fit.  Your system will basically be rented by the utility company for a small fee, which becomes your profit.  To participate in an NCGP program, you must submit an application.  If selected, you will sign a power-purchase agreement with your utility company and NCGP.  The payments you will receive will be based on the type of green electric system you have and the amount of kilowatts it produces.  Not surprisingly, these production incentives can be difficult to understand and vary by company, so you should contact your utility company for thorough information before making the switch to energy production.

Explore additional financial incentives and important reminders:
Federal Incentives
South Carolina Incentives
Important Reminders



 

About the Author

Resources

·        DSIRE

·        Matt Siegel, Green Building Director
Western North Carolina Green Building Council

·        Trish Jerman, Manager of Policies and Programs
South Carolina Energy Office

·        N.C. Solar Center
Fact Sheet on Residential Tax Credits, Federal and State of N.C        

·        N.C. GreenPower