CEOs fear spending bill will kill clean energy jobs
As a group of Republican lawmakers look to kill federal tax credits for clean energy firms, some North Carolina companies are hitting pause on investments, waiting to see how it shakes out in Washington.
The fear that there will be a "big bubble" of projects trying to get in before some of the tax credits disappear is creating staffing issues and eventual layoffs.
"Come Jan. 1, that credit doesn't exist, the demand for those jobs are going to be drastically reduced," said Will Etheridge, CEO of Southern Energy
Management, equating the death of the tax cuts to "pulling the rug out." "I think it sends a chilling, very confusing message to investors," he said.
At issue are a group of tax breaks tied to clean energy that would be repealed at the end of the year under President Donald Trump's spending bill, which narrowly passed the House early Thursday and now goes to the Senate. The tax breaks were created or enhanced in the Biden administration’s Inflation Reduction Act and were supposed to last another seven years. They include the 25D credit, a residential clean energy credit worth 30 percent of qualifying project costs.
That's of particular interest to Southern Energy Management, a Raleigh company with 190 employees that's been in business for 23 years. It performs rooftop solar installation for homeowners and businesses. It has a business line that works with builders, developers and architects on energy certifications and code compliance.
The company was budgeted for $30 million in business this year. But instead of bulking up, it’s bracing for pain, Etheridge said.
Should the residential clean energy tax credit end, the strategy changes from “planning for job growth and expansion to job preservation and protection.”
“We had a quarterly plan to hire folks and we put that on pause,” Etheridge said. “It’s now, how are we going to prevent the loss of jobs?”
Likewise Durham-based solar investor Leyline Renewable Capital has completely halted the funding of new projects, CEO Erik Lensch said.
To date, Leyline has raised about $300 million and deployed about $350 million to projects. It was working on about 95 projects, with about 25 to 30 new developments coming in a year prior to the pause.
At issue for Leyline is a subtle shift in how projects qualify for tax credits. Historically, in order to qualify a project would need to start construction and show substantial progress. Under the proposed bill, projects would have to be complete and "in service" to qualify.
“There are so many things that are out of the control of a developer of a project that could influence when a project’s construction is completed and placed in service,” Lensch said. “Investors like Leyline do not like uncertainty. It’s very challenging to plan and commit capital to projects … no investor is going to want to finance our construction based on a lack of clarity around tax incentives.”
Last week about 50 businesses from across North Carolina sent a letter calling on the state’s congressional delegation to vote to preserve federal clean energy tax credits.
“Without these critical incentives, our businesses will face significant challenges — hindering expansion, slowing job creation, and jeopardizing North Carolina’s leadership in the future of energy and cleantech,” the letter says.
Top executives from Southern Energy Management and Leyline signed the letter, as did other Triangle firms such as SJF Ventures, Strata Clean Energy and Kempower.
Since the clean energy tax credits were passed in 2022, North Carolina has made nearly $22 billion in new investments for large-scale clean energy projects.