North Carolina Solar Power: Check Your Savings, Costs, Tax Breaks, Incentives and Rebates
Installing a Solar photo-voltaic system in North Carolina is a great investment thanks to the five daily peak sun-hours received in the state, along with various rebates and performance payments for solar power.
There is also a property tax exemption and a favorable net metering policy to complete the list of benefits.
[yel]This article will provide you the general outlook for solar power in North Carolina, but remember every home is different. You can contact a solar contractor we trust for a detailed evaluation.[/yel[
Return on Investment for Residential Solar Power in North Carolina
All households have different energy consumption habits, and they also vary in terms of available rooftop area. This means that there is no magical number when sizing a PV system: it all depends on the site conditions.
However, most homes can get good results with a 5kW solar system, so we will break down the project financials for that system capacity.
- In North Carolina, you can install a 5-kW solar PV system for around $20,000
- You can get a $1250 rebate from Duke Energy, the largest utility in North Carolina, bringing down the cost to $18,750.
- Then, you can deduct the 30% federal tax credit, equivalent to $5,625, further reducing the cost of the PV system to $13,125.
- You can expect first-year of solar savings of around $700, and on top of that Duke Energy gives you an incentive of $22.5/month during five years, raising first-year savings to around $970. This means that the net cash out of your pocket during year one is only around $12,155.
- You can expect a payback period of 14 years and a net profit of around $15,000. Assuming a 25-year warranty for your solar panels, you are guaranteed to get 11 years of free power.
- The value of your home also increases by around $14,000, and 80% of that value is exempt from property taxes.
- Your solar PV system has the same environmental benefit as planting 110 trees per year, which means the planet also wins from your investment!
Remember this scenario is for a 5-kilowatt solar PV system, assuming the average sunlight availability in North Carolina.
- A large area of rooftop facing south, the direction from which most sunlight is received in the northern hemisphere. - No obstacles such as trees or buildings blocking the sunlight that reaches the roof. - A location far to the south of North Carolina, where there is slightly more sunshine.
- A large area of rooftop facing south, the direction from which most sunlight is received in the northern hemisphere.
- No obstacles such as trees or buildings blocking the sunlight that reaches the roof.
- A location far to the south of North Carolina, where there is slightly more sunshine.
The NASA Atmospheric Science Data Center website is a great resource if you want to learn more about the exact sunlight availability at your location. You just have to input your coordinates and will be granted access to a wealth of meteorological information, including tables that break down the available solar radiation by month and by the tilt angle of solar panels.
North Carolina Solar Power Incentives, Tax Breaks and Rebates
The main incentives for homeowners who go solar in North Carolina are the rebates available from local utilities, and the 80% property tax exemption on the increase on property value after installing a PV system.
Also, don’t forget the 30% federal tax credit, which is available throughout the USA.
There used to be another great incentive from the state government: an extra 35% tax credit on top of the ITC, bringing the total tax credit to an impressive value of 65%. This incentive allowed you to get back your investment in as little as eight years,but unfortunately the state tax credit expired on December 2015.
North Carolina RPS
The Renewable Portfolio Standard (RPS) in North Carolina requires all utilities to get at least 12.5% of their energy from renewable sources by the year 2021.
Although it’s a low percentage compared to other states, it has been effective in driving some utilities to offer rebates and feed-in tariffs.
An RPS is an effective way to boost the solar industry because residential PV systems count toward the goals of utility companies. For them, it is cheaper to incentive homeowners to go solar rather than to develop all of the required solar PV capacity with their own funds.
North Carolina Tax Credit
North Carolina used to have one of the best tax credits in the nation: an extra 35% on top of the 30% federal tax credit. However, the benefit expired in December 2015.
Nevertheless, the 30% ITC still applies and it allows you to deduct a huge portion of your investment as soon as you file your next tax declaration. You are even allowed to split the tax credit if you don’t owe the IRS enough money to make use of the full benefit in one year.
North Carolina Tax Exemptions
There is an 80% property tax exemption for solar power in North Carolina. Although 100% would have been better, 80% is still a decent incentive. For a 5-kW solar PV system, which raises your home value by around $14,000, this means that your taxes will only rise based on a $2,800 increase.
Are There Any Rebates for Solar Power in North Carolina?
There is no statewide rebate program in North Carolina, but two of the largest utilities offer them:
- Duke Energy gives you $250/kW upfront, and then $4.50/kW per month during a 5-year period. For a 5-kW PV system, the total benefit is $2600, equal to 13% of the price!
- Tennessee Valley Authority (TVA) offers an upfront rebate of $1000, and you can then enroll in their performance payments program.
If you are a customer of Duke Energy, there is only one catch: you must apply before installing your solar PV system; existing installations are not eligible!
North Carolina Electricity Rates
North Carolina has cheap electricity: At $0.11/kWh, the retail price of energy is below the national average. Higher energy rates increase the financial attractiveness of solar power, because you save more money per kWh produced.
- The opportunity to save money with solar power is considerable anyway: you can make a net profit of around $15,000 over 25 years.
- Cheap energy is possible thanks to fossil fuels. Regulations for high-carbon energy sources could get tougher in the near future, driving up prices. Of course, this only means more savings if you had the foresight to go solar!
Is There Net Metering in North Carolina?
The net metering framework in North Carolina requires the main electric utilities in the state to give you full credit for any surplus kilowatt-hour production.
The only drawback is that credits expire at the start of summer, so you won’t get any cash from an accumulated yearly surplus.
This means that you can’t oversize your PV system with the intent of billing your utility company; you can size your PV system to fully meet your yearly energy needs with solar power, but anything above that capacity is a waste of money.
The only utility who actually purchases your surplus production is TVA.
The interconnection requirements in North Carolina are left to the discretion of your respective utility company. Maybe you get lucky and no extra requirements are imposed on you, but on the other hand you may be required to install an external disconnect switch or to pay extra insurance.
Is there a Feed-in Tariff in North Carolina?
If you are customer of the Tennessee Valley Authority, you can sign up for their Green Power Providers program, where you agree to sell the entire output of your PV system at the retail price plus $0.02/kWh.
In this scenario, you continue to purchase all of the energy you use from the utility, but at the normal retail price. From the financial standpoint, it is actually better than net metering because you are saving 18 percent more and get paid in cash if you accumulate a surplus.
Are There $0 Down Payment Financing Options in North Carolina?
There is no legal framework for third-party ownership of PV system in North Carolina, so there are no solar leases and Power Purchase Agreements (PPAs) available.
This means that he only option for going solar with $0 down is a loan, but not any loan; in order for the purchase to be feasible, it has to be through a low-interest loan such as a HELOC (home equity line of credit).
Purchasing a solar PV system through a low-interest loan is a very smart move from the financial standpoint.
- You get a HELOC for the entire cost of the PV system, after rebates of course. With the adequate home equity, you can get interest rates of 5% or less and repayment periods of up to 15 years.
- The loan lets you install the PV system for $0 down, but you can immediately start saving money while claiming tax credits and other benefits.
- Basically, the incentives and savings will start to pay the loan for you. Only the difference will have to come out of your pocket, but it is much more manageable than paying the full price of the PV system upfront.
You can expect to save around $7,000 over a 25-year period if you use a HELOC to purchase a PV system in North Carolina.
Cash Purchase VS Loan: What’s Best for North Carolina Homeowners?
This question has no straightforward answer, since each option has its pros and cons. However, the following guidelines can help you choose what is best for you:
Purchasing a PV system in North Carolina in cash
Purchasing a PV system in North Carolina in cash gives you the highest total savings over the project lifetime, for a total value of around $15,000.
The two main hurdles are that you must have the cash to pay upfront and must then assume a 14-year payback period.
Purchasing a PV system in North Carolina through loans
Purchasing a PV system in North Carolina through a loan allows you to go solar for $0 upfront, but achieving only $7000 in lifetime savings.
This option is great if you have the home equity required for the loan. Even with the cash availability, this is a smart move because it allows you to use the cash for another investment.
What is the Solar Power Installation Process in North Carolina?
Solar PV system interconnection in North Carolina can be a complex process, given that utilities set the requirements for every single case.
The best thing you can do is hire solar power installers who are familiarized with the process and avoid unnecessary complications.
1. Fill our solar installation form, providing basic information about your property.
2. Talk with trusted solar contractors near you to get detailed quotes.
3. Compare quotes and choose the best option for you. We recommend you get at least three.
4. Have your contractor install the PV system, and enjoy clean power while helping the planet.
The solar PV system installation time is only three to four days after you sign the agreement.
Again, remember this entire guide assumes a 5-kW photo-voltaic system under the average sunlight conditions of North Carolina.
You will know an exact price and savings projection after you get a proposal from one of our trusted contractors.
North Carolina offers several conditions that are favorable for solar power: there is an 80% property tax exemption, net metering is available, and there are utility companies that offer incentives in the form or rebates and performance payments.
In addition to the local benefits, don’t forget about the 30% federal tax credit.
The conditions used to be better with the 35% state tax credit, which expired in 2015. With that benefit, it was possible to get payback periods as low as 8 years on a cash purchase, or to fully cover a solar loan with the combination of yearly savings and tax credits.
Solar power is still a good investment, however, capable of saving several thousand dollars over a 25-year period.