Solar Tax Incentives in North Carolina

By Daniel Ketyer

Residential solar is now affordable. Seriously. In 2008, the median cost of installing a typical 5kW residential system in the US was over $43,000. Today, installing a system of that size in North Carolina would cost about $7,500 after tax incentives. Investing in residential solar is proving to have economic benefits for those who install systems.

Residents of North Carolina have strong incentives to invest in solar. The state tax credit for residential solar in North Carolina is 35%, while the federal tax credit is 30%. For our standard 5kW system, that can mean over $10,000 in cost savings.

But there’s a problem. These tax credits won’t last forever. In North Carolina, the credit is scheduled to expire at the end of 2015 – and few expect the credit to be renewed. The federal tax credit is scheduled to expire at the end of 2016. Given the current state of politics in Washington and recent experience with similar renewable energy tax credits (the wind PTC, for example), the credits are unlikely to be extended long-term. Without credits, the cost of installing solar would rise from around $7,500 to nearly $20,000.

Some fear this could make solar inaccessible for homeowners – and thus, there is a strong push for residential solar installations before the tax credits expire. It is clear that if the credits expire, the cost to homeowners to install will significantly increase. For solar to make economic sense, policymakers and business will need to find new ways to cut costs.

In the private sector, group purchasing of residential solar is an emerging concept that has taken off in the past several months. The idea is simple – solar installers gain access to a selected pool of high-potential customers, and these customers receive discounts on installation cost. Several corporations, including 3M and Cisco, have been leaders in the group purchasing movement, offering residential solar to over 100,000 combined employees. We can’t be certain that residential solar will look like in 5 years, but we do know that with historically low installation costs, state and federal tax credits, and low-interest financing, as well as emerging opportunities to join group purchasing, there has never been a better time to install residential solar in North Carolina.