News: CJ Exclusives

House Sends Solar Tax Credit To Governor

In commitee, skeptics questioned drain on tax revenues, job claims

The House on Tuesday approved a Senate bill that would extend the state’s 35 percent renewable energy tax credit — set to expire at the end of 2015 — by one year to allow several major solar farms to hook up to the power grid. Over five years, the solar companies could collect as much as $183 million in tax credits. Senate Bill 372 now heads to Gov. Pat McCrory.

While the measure passed the lower chamber by an 87-28 vote with little debate, the measure got a rocky review that morning in the House Finance Committee. Members questioned the bill sponsors’ jobs claims and the budget implications. After voting to refer S.B. 472 to the House Public Utilities Committee, it wound up on the House calendar Tuesday afternoon.

In committee, Speaker Pro Tem Paul “Skip” Stam, R-Wake, raised concerns that the bill would reduce the House’s spending authority before the chamber has passed its budget.

S.B. 372 provides $36.7 million in renewable energy tax credits annually for five years. Along with $36 million for several different tax credit incentives the House already has passed and sent to the Senate, House budget writers could have less money available to craft their spending plan, Stam said.

“It’s the cumulative total that’s the problem. … If the Senate would go ahead and defeat them or withdraw them or something” it would help in finalizing a House budget, Stam said. If not, “It just means it’s going to be a very painful House budget.”

Rep. Jonathan Jordan, R-Ashe, said the Senate should act quickly on House-passed incentives such as the historic preservation tax credit. “Otherwise we should probably wait for this tax credit until we finish our budget, and deal with that at a later time.”

“We would ask why shouldn’t we pass this?” Sen. Jerry Tillman, R-Randolph, one of the bill sponsors, said in response. “If it’s important you pass your House bills — and we’re certainly going to look favorably upon all of those that we can — I’m just asking for the same courtesy in this one.”

Rep. John Szoka, R-Cumberland, supported the bill, and its timely passage.

“We all know these projects take an incredibly large amount of planning and time to come to completion,” Szoka said. “Sometimes because of things like the weather, problems with the hookup with utilities, whatever, there’s things that extend the completion time.” That makes the promise of funding stability essential, he said.

Tillman touted the jobs creation and economic impact aspects of the bill in the same manner he pitched those items when the bill was working its way through the Senate.

“These are large projects, 1,000-acre projects with many megawatts. About 3,000 to 5,000 construction jobs, and 300 to 500 total that would be permanent,” Tillman said. “These things would need to be monitored. There are transmission lines that must be kept up, and maintained. There are people that would have to be there on site.”

To be eligible for the tax credit, a project must already have begun and be substantially completed by the end of the year. Tillman said there are “about four projects out there currently that are very viable, that have infrastructure in the ground, and a lot of money and time already expended.”

He said he is unaware of any others, and that between application and other up-front fees, as well as the enormous amount of paperwork, planning, regulatory approvals and construction required, it is unlikely any other project would be able to qualify by the end of the year.

Rep. Jeff Collins, R-Nash, was skeptical of the full-time job numbers.

“These things are out in my area a lot too, and I’ve never seen a single person watching the sun bake these things once they get put up,” Collins said.

“Also, it was mentioned that the land that these solar farms was sitting on wasn’t producing anything before they were put in place. In my area they were producing a lot of crops before these Martian-looking colonies invaded,” Collins said.

“I guess I’m kind of like Rep. Collins. I am suspect on that job count,” said House Majority Leader Mike Hager, R-Rutherford. “If we give these folks a tax credit, are these 300 to 500 jobs guaranteed?”

“I don’t know that,” Tillman responded. “I don’t think we have a guarantee of it, no sir.”

James Taylor, senior fellow at the Heartland Institute, said it would be difficult to validate the job creation claims without looking at the specific details and supporting information, “but they certainly look inflated to me.” He said the renewable energy industry “habitually inflates their jobs claims [resulting from] bogus ‘job multipliers’ for generic spending,” said Taylor.

Paul Bachman, director of research at the Boston-based Beacon Hill Institute of Suffolk University, has studied North Carolina renewable jobs claims. He said the temporary, and particularly permanent, jobs claims for the pending projects seem high.

“A power plant should not require that much labor to operate. This relatively high use of labor in these projects speak to the inefficiency of this type of energy production,” Bachman said. It is important to remember, he said, that jobs are a cost of production. The more labor used, the less efficient and more costly it is.

“For example, digging holes with spoons would require much more labor than digging holes with a backhoe. Likewise, producing electricity using stationary bicycles would require lots of peddlers, and thus create jobs, but no one (almost) would advocate this as a method of producing electricity,” Bachman said.

“Essentially,” he said, “these folks are advocating digging holes with spoons.”

N.C. State University professor Herb Eckerlin, who designed and built the NCSU Solar House on the N.C. State campus, and is a former treasurer of the North Carolina Sustainable Energy Association, raised concerns about solar job creation claims during a September 2014 presentation to the state Energy Policy Council.

During the presentation he said the jobs numbers are “bogus” but difficult to refute because the industry does not provide individual project data allowing accurate calculations.

According to Eckerlin, construction jobs last only the few months it takes to build a solar farm. The sites aren’t staffed like a traditional power plant. Most of the maintenance and transmission line checks are done by utility companies that are required by law to provide backup power to the solar farms.

Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.