North Carolina is one of the leading solar energy producers in the Southern United States. With over 8.4 gigawatts (GW) generated in 2022 alone, there is tremendous growth in solar infrastructure across the state. However, the upfront cost of installing a home solar panel system can be prohibitively expensive for many homeowners without financial incentives or cost-saving programs.
Fortunately, between federal tax credits, state rebates, net metering policies, and other solar regulations, there are numerous ways for North Carolina residents to reduce the bottom line price of going solar. This guide will provide a thorough breakdown of all the current incentives, analyze example cost scenarios, and offer additional money-saving tips to unlock tremendous long-term solar savings.
Federal Solar Tax Credit
The most impactful solar incentive available to North Carolina homeowners is the federal solar tax credit. This program allows you to recoup 30% of the total cost of your solar installation through a credit on your taxes. This includes the costs of solar panels, inverters, racking equipment, installation labor, permitting fees, and sales taxes.
For a 6 kilowatt (kW) solar array at roughly $3 per watt installed, you could pay around $18,000 for the full system. But claiming the 30% federal tax credit would lower your net cost down to $12,600—saving you $5,400 right off the bat. This incentive alone often provides the most substantial reduction in solar costs.
The federal solar tax credit is currently set at 30% through the end of 2032. It will then stepdown incrementally over the next few years—26% in 2033, then 22% in 2034—before expiring completely unless extended by Congress. So time is of the essence to capitalize on the full 30% credit.
North Carolina State Tax Credits and Rebates
While North Carolina does not have a statewide solar tax credit, some utility companies like Duke Energy offer solar rebates that further reduce costs. Duke currently offers a $600 per kW rebate, so on a 6 kW system you could save around $3,600. Combined with the federal credit, that’s nearly $9,000 in potential savings—cutting the original system cost almost in half.
North Carolina is also one of 40 states with a net metering program. This policy requires utility companies to provide bill credits at the retail electric rate for any excess solar power fed back to the grid. While NC does not offer Net Metering compensation for leftover credits at the end of the yearly billing cycle, the value of solar energy offsets your consumption directly.
North Carolina Property Tax and Sales Tax Exemptions
Under North Carolina state law, the added value of a solar energy system installation cannot be included in property tax assessments for 15 years after installation. So you‘ll avoid any increase in property taxes stemming from the system cost. However, many local jurisdictions have not aligned policies with the statewide exemption—so verify if it has been adopted in your specific area first.
Additionally, while North Carolina does not currently exempt solar equipment purchases from state sales tax, several pending legislative bills aim to enact a full or partial exemption. Combined with the federal tax credit, even a partial state sales tax break would further slash solar costs for NC residents.
Cost Analysis of 6 kW Solar System
To demonstrate the real-world savings after incentives, let‘s break down a cost example for getting solar panels installed on a typical North Carolina home. We‘ll assume a 6 kW system size, which could fully offset the annual energy usage of many homes in the state.
Key Assumptions:
- System Size: 6 kW
- Installation Cost: $3.00 per watt
- Total Initial System Cost: $18,000
Cost Reductions:
- Federal Tax Credit (30% of $18,000): -$5,400
- Duke Rebate ($600 per kW x 6 kW): -$3,600
- Potential Partial NC Sales Tax Exemption (4% of $18,000): -$720
Total Out-of-Pocket Cost: $8,280
As shown above, a homeowner could bring their net expenditure down to just over $8,000 for a complete 6 kW solar panel system after leveraging all available incentives—amounting to massive 54% cost savings.
And over the 25+ year lifespan of a solar system, your average annual savings add up thanks to slashing high NC utility bills. Properly sized to match your energy needs, solar panels can eliminate 70-100% of your annual power costs.
How To Size Your Solar System Properly
Sizing your solar system appropriately to fit your home‘s energy consumption is critical for maximizing savings. Solar panels have a natural process of production decline as they age. So accurate system design prevents overpaying for excess capacity upfront or coming up short later.
Here are some best practices for optimal solar sizing:
Evaluate your historical energy bills – Analyze your monthly power consumption over the past year. This provides a baseline for your typical usage, accounting for seasonal changes. Identify which month has the highest average daily usage to dimension your solar system to meet that peak demand.
Account for future energy plans – Consider any plans for large energy draws you may add in the coming years (electric vehicle, home expansion, etc.) when figuring required solar capacity. Design in a buffer to support increased usage.
Perform a home energy audit – Assess the current efficiency of your home and identify any upgrades needed (LED bulb replacement, attic insulation, etc.) before solar installation. Reducing your base energy load allows you to right-size a smaller, less expensive solar system.
Correct sizing is crucial because overproduction from the solar arrays does not offer added financial value. Any excess power simply feeds to the grid. That‘s why an accurate load analysis and projection of your home‘s energy needs is so important early in the solar planning process.
Additional Tips for Maximizing Solar Savings
Here are a few other handy ways North Carolina homeowners looking to go solar can minimize costs:
Shop equipment packages & installation quotes – Compare package offerings from solar providers that include panels, inverters, and hardware needed. And get 3-5 installation quotes detailing labor expenses. Even minor rate variations add up significantly on full system pricing.
Explore solar loans and financing – Long-term solar loans and financing can provide more flexibility than buying a system outright. And with interest rates below projected system savings, you can finance at a net positive cash flow.
Sign up for renewable energy programs – Some North Carolina electricity providers allow you to pay a small premium on your utility bill to put money towards community solar farms that also help offset your electricity usage via solar.
Monitor upcoming state solar legislation – As momentum around renewable energy continues building in North Carolina, new incentives and solar policies are constantly being examined. So stay updated on state bill initiatives that can further reduce future solar costs.
Solar in North Carolina: Frequently Asked Questions
How long does it take for solar panels to pay themselves off in North Carolina?
For a properly sized 6 kW solar system costing $14,940 before incentives, the average payback period is roughly 9-10 years in North Carolina. This accounts for 30% federal tax savings plus NC rebates and financing options that greatly accelerate ROI.
Can I use a solar lease or solar loan to afford panels in North Carolina?
Yes, solar leases and solar loans allow NC homeowners to go solar for $0 down or low monthly payments. While incentives like the federal tax credit have stipulations requiring equipment purchase, alternative financing tools can ease affordability constraints of owning panels.
What happens if I produce excess solar energy in North Carolina?
Due to net metering policies, any extra solar energy produced gets fed back into the North Carolina grid to earn you credits on your utility bill. However, unlike some states there is no compensation for leftover kWh credits after 12 months—so proper system sizing is key.
How much can I save on electric bills per year with solar power?
By offsetting 75-100% of your annual electric consumption with a solar array perfectly matched to your energy usage, you could save roughly $1,100 to $1,500 per year on utility bills. After the system payback period, those savings are pure profit over the 25+ year equipment lifespan.
Conclusion
With the right combination of federal and North Carolina state solar incentives—plus proper system sizing and financing strategies—many homeowners can reduce their out-of-pocket costs to go solar by 50% or more. This can drop the price of installation low enough to leverage positive ROI inside 10 years. And with over $22,000 in cumulative power bill savings over the system lifetime, solar energy offers a phenomenal long-term investment for NC residents.
