Investments in Combined Heat and Power (CHP) systems are now eligible for North Carolina’s 35 percent renewable energy tax credit for the first time, thanks to House Bill 1829 which was signed into law this month. This new incentive will help North Carolina citizens and businesses invest in more efficient and sustainable energy sources.
In the United States, most electricity is generated at a central utility power plant, and separate heating and cooling equipment is used on-site in homes and buildings. In contrast, CHP (also known as cogeneration) systems generate electricity and thermal energy in a single, integrated system. Heat that would be otherwise be rejected in traditional separate generation of electric energy, is captured with CHP and used for heating or cooling processes in industry or buildings.
The total fuel efficiency of these integrated systems can reach 80 percent, much greater than the 35 percent average from separate systems. A CHP system can reduce the carbon emissions from power and heat generation over 50 percent, with significant NOx and SOx emission reductions as well.
CHP is a flexible technology that can be utilized in commercial, industrial, municipal, institutional, or residential facilities to lower costs and provide reliable heating, cooling, and power. CHP systems can run on cleaner conventional fossil fuels such as natural gas or renewable fuels, including landfill gas, biogas and biomass.
Businesses that install a CHP system can now receive a tax credit from the state equal to 35 percent of the cost of the equipment, construction, and installation, up to $2.5 million dollars. CHP systems for non-business use are eligible for a tax credit of up to $10,500. This credit was previously available only for solar, wind and other renewable technologies. North Carolina is the third state to offer a CHP tax credit to businesses, and the first to offer it to individuals. CHP is also eligible for a 10 percent federal business energy investment tax credit.
The United States currently supplies about 10 percent of our electricity using CHP. According to Oak Ridge National Lab, doubling this by 2030 would create one million new jobs and reduce carbon emissions equivalent to taking 154 million cars off the road.
“This tax credit was adopted thanks to the hard work of many groups, and the General Assembly’s recognition of the value that CHP can bring to our economy and environment,” says Keith McAllister, Director of the US DOE’s Southeast Clean Energy Application Center. Mr. McAllister anticipates the new incentive will significantly boost CHP installations in the state.“ People are looking for cleaner energy alternatives and policies such as this help our state move in that direction.”