Solar energy is booming in North Carolina. In 2022, the Tar Heel State ranked 4th in the nation for installed solar capacity, with over 8.4 gigawatts powering more than 1 million homes. Solar accounts for nearly 8% of the state‘s electricity generation, and experts predict this share will continue to grow in the coming years.
If you‘re a North Carolina homeowner considering going solar, cost is likely one of your top concerns. The good news is that while a typical residential solar installation can run $10,000 or more, there are many ways to significantly reduce that upfront investment. In this article, we‘ll dive into all the financial incentives, smart shopping strategies, and savvy financing options you can use to make your solar dream an affordable reality.
Understanding Solar Costs in North Carolina
As of early 2023, the average cost of a residential solar panel system in North Carolina is $2.49 per watt. For a typical 6-kilowatt system, that translates to a total cost of $14,940 before incentives. Several factors can influence this price, such as:
- The type and efficiency of the solar panels
- The complexity of the installation (roof type, shading, etc.)
- The solar company you choose
- Your location within the state
While that five-figure price tag may induce some sticker shock, it‘s important to put it in perspective. Over its 25-year lifetime, a 6-kW solar system in North Carolina can save you over $22,000 on electricity bills. Plus, there are numerous incentives available to shrink your out-of-pocket costs.
Federal Solar Tax Credit
The federal solar investment tax credit (ITC) is one of the most lucrative incentives for going solar. Established in 2006, the ITC allows you to deduct 30% of your solar installation costs, including equipment, labor, and sales tax, from your federal income taxes.
For example, if your 6-kW system costs $15,000, you‘d be eligible for a $4,500 tax credit. Keep in mind that you must own the system, either through a cash purchase or solar loan, to claim the credit. Leases and power purchase agreements don‘t qualify.
It‘s also important to note that the 30% credit is only available through 2032. In 2033 it drops to 26%, then 22% in 2034. After that, the residential credit expires completely unless Congress renews it. So if you‘ve been contemplating solar, now is an ideal time to take advantage of this generous subsidy.
North Carolina Solar Rebates & Incentives
While North Carolina doesn‘t offer a statewide solar tax credit, Duke Energy, the largest utility in the state, provides a generous rebate to its customers who go solar. Through the NC Solar Rebate Program, Duke Energy will pay you $600 per kilowatt of installed solar capacity, up to a maximum of $4,800 for residential systems.
There are a few important stipulations to be aware of. First, you must be a Duke Energy customer in North Carolina with a qualifying solar photovoltaic system of 10 kilowatts or less. Second, funding for the rebate program is limited and available on a first-come, first-served basis each year. Lastly, you can only receive the rebate once per property.
To further sweeten the deal, North Carolina exempts the value of a solar installation from property tax assessments for 20 years. So even though solar panels typically increase home value, your property taxes won‘t go up as a result. The state also has a net metering policy (more on that below) which helps solar homeowners maximize their savings.
Net Metering in North Carolina
Net metering is a billing arrangement that allows solar homeowners to send their excess electricity back to the grid and receive credit on their utility bills. In North Carolina, investor-owned utilities like Duke Energy are required to offer net metering to their solar customers.
Here‘s how it works: when your panels produce more electricity than your home is using, the surplus power flows back to the grid and your meter literally spins backward. Then, when you need to draw power from the grid (like at night), you use up those banked credits.
At the end of the billing cycle, if you‘ve produced more electricity than you‘ve used, the extra net metering credits roll over indefinitely. However, the utility doesn‘t cut you a check for those excess credits at the end of the year like they do in some states. To maximize your savings, it‘s wise to size your system to match your annual electricity needs as closely as possible.
Solar Renewable Energy Certificates in North Carolina
Another way North Carolina solar homeowners can recoup their investment is by selling solar renewable energy certificates (SRECs). For every megawatt-hour of electricity your solar panels generate, you earn one SREC which can then be sold to utilities that must meet state renewable energy targets.
Prices for SRECs in North Carolina currently range from $5-15, depending on market conditions. While this isn‘t as lucrative as SREC markets in some other states, it‘s still a nice perk that puts money back in your pocket.
To be eligible to sell SRECs in North Carolina, your solar system must be between 5 and 10 kilowatts in size. You‘ll also need to register with the North Carolina Renewables Registry and work with an aggregator or broker to handle the sales transactions.
Community Solar in North Carolina
What if you like the idea of going solar but can‘t install panels on your roof? Perhaps you rent your home, have too much shade, or your HOA doesn‘t allow it. The good news is you can still save with solar, thanks to North Carolina‘s new community solar program.
Launched in 2022, the law allows electricity customers to subscribe to an off-site "community solar" farm and receive credit on their power bills. At least five customers must participate in each community solar project, and individual subscriptions are capped at 100% of the customer‘s historic annual usage.
Community solar offers renters and others a convenient way to support clean energy and save money on their electric bills without a long-term commitment. However, it may not be quite as lucrative as rooftop solar since you won‘t own the RECs or be eligible for some incentives like the Duke Energy rebate.
Leasing vs. Buying Solar Panels
If you don‘t have the upfront cash to buy solar panels outright, you may be considering a lease. With a solar lease or power purchase agreement (PPA), a third-party company owns and maintains the panels on your roof. You simply pay them a fixed monthly rate for the electricity.
The main advantage of leasing is that it requires little to no money down. You start saving on your energy costs right away, and maintenance is the solar company‘s responsibility. However, there are several big disadvantages to consider:
- You won‘t own the solar panels or the renewable energy credits
- You won‘t be eligible for the federal tax credit or Duke Energy rebate
- Leases typically last 20-25 years, during which time you‘ll miss out on the increasing value of electricity
- Leases can make it harder to sell your home, since the new owner must agree to take over the contract
For these reasons, most experts agree that buying solar panels is a better long-term investment than leasing if you can swing it. Between the federal tax credit, Duke Energy rebate, and energy savings, a 6-kW system in North Carolina has an average payback period of just 8-10 years. After that, the electricity your panels generate is purely profit.
How to Get the Best Deal on Solar
The solar industry is booming in North Carolina, with over 100 installation companies to choose from. While more competition is great for consumers, it can also make the shopping process feel overwhelming. Here are a few tips for finding a reputable installer and getting the best possible price:
- Get quotes from at least 3 different solar companies
- Ask for references and read reviews on sites like EnergySage and SolarReviews
- Make sure the company has all necessary licenses and insurance
- Ask about the types of panels, inverters, and warranties they offer
- See if they have experience helping customers apply for incentives like the Duke Energy rebate
- Consider getting an energy audit to identify efficiency upgrades that can help you get by with a smaller, cheaper solar system
With these strategies, you‘ll be well on your way to getting a great deal on a high-quality solar installation that will provide clean energy and utility savings for decades to come.
