2022 North Carolina Solar Tax Credits, Incentives & More
We break down solar incentives available in the Tar Heel State.
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North Carolina consistently ranks among the top states for solar energy, but what kinds of incentives are residents able to take advantage of to lower the cost of going solar? In this article, we’ll provide an overview of all North Carolina solar tax credit, rebate and other incentive opportunities available to homeowners, which have contributed to the local growth of clean energy.
The SEIA gathers detailed information about the solar industry in each state, and the outlook for North Carolina is very promising. According to the latest SEIA data, the state has over 7,200 megawatts of solar capacity, which is enough to power more than 846,000 homes. The accumulated investment in North Carolina’s solar industry now exceeds $9.8 billion, with more than 6,100 jobs created so far.
North Carolina has enacted favorable legislation for solar power. There is a net metering policy, which ensures you get full credit when exporting surplus solar energy to the grid. There is also a law that enables low-interest green energy loans from county and city governments. Let’s dig in.
Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.
North Carolina Solar Incentives
Although there are sunnier regions in the U.S., the Global Solar Atlas shows North Carolina gets decent sunshine. The state also offers several incentive programs that improve your return on investment when going solar.
North Carolina Solar Incentive
North Carolina does not tax you for the increase in property value after installing solar panels.
Surplus electricity from your home solar system is credited at retail price on your next power bill.
Duke Energy customers can qualify for a cash incentive when installing a solar panel system.
North Carolina has a law that enables revolving loan programs from cities and counties, with a maximum interest rate of 8% and a maximum term of 20 years.
Additional incentives may be available from your county, city or utility company.
We’ll go into detail about each North Carolina solar incentive below, but if you haven’t already, we recommend getting a free quote from a certified installer in your area to see exactly how much these tax credits and rebates could save you. To get started, you can use this tool or fill out the following form:
All EcoWatch solar companies are pre-vetted for your convenience.
North Carolina Solar Tax Incentives
North Carolina has offered a property tax exemption for solar panels and solar thermal electric systems since 2008. These systems increase the value of your property, like any other home upgrade, but NC does not tax you for that increase. For example, if solar panels increase the value of a home from $270,000 to $300,000, the owner will still be taxed for a $270,000 home.
This benefit is also available for solar power systems owned by commercial, industrial and agricultural energy users. However, in these cases, the property tax exemption applies for 80% of the system’s value, instead of the 100% exemption available for homeowners.
Net Metering in North Carolina
North Carolina offers net metering for solar power systems up to 1,000 kW of capacity, which covers all residential systems and many industrial and commercial solar systems. However, leased solar systems have a much lower limit for net metering: 20 kW or 100% of estimated demand, whichever is less.
Surplus electricity from your solar panels is credited on your next bill, which means you save the full value of the kilowatt-hours that get exported to the grid. However, your accumulated balance expires at the start of the summer billing period. Having an optimally sized solar power system is recommended, since an oversized system generates electricity that you can never subtract from your bills.
Duke Energy Solar Rebate
If you’re a Duke Energy customer who plans to install solar panels, you may qualify for the utility company’s North Carolina Solar Rebate Program. The available funding for 2021 ran out very quickly, but you can join a waiting list for when the program reopens in 2022. The incentive per kilowatt changes depending on the type of customer, but the program website lists the following rates as of November 2021:
- Residential customer: $400 per kW, maximum system size of 10 kW ($4,000)
- Non-residential customer: $300 per kW, maximum system size of 100 kW ($30,000)
- Nonprofit organization: $750 per kW, maximum system size of 100 kW ($75,000)
Keep in mind that incentive programs managed by energy companies tend to change frequently, and their funding per year is limited. If you’re interested in the Duke Energy rebate, check the company’s website regularly so you don’t miss any updates.
NC Financing Program for Renewable Energy and Energy Efficiency
In North Carolina, city and county governments are legally authorized to offer low-interest loans for solar PV systems in homes and businesses. The loan program also covers other renewable energy technologies like geothermal heat pumps, wind turbines and biomass power.
The maximum interest rate of these revolving loans is 8%, and the maximum term is 20 years. This gives you the option of installing a solar panel system with loaned capital, then using your electricity savings to pay it back over time. This means your out-of-pocket cost is reduced to zero, and your solar power system can cover its own cost with the savings achieved.
We have listed the main solar incentives available in North Carolina, but keep in mind that additional benefits may be available depending on where you live.
For example, the City of Asheville offers building permit rebates for homeowners and businesses who use solar panels and other green energy technologies. This North Carolina solar rebate changes depending on the technology used; in the case of solar panels, there is a $50 rebate on your building permit application.
Federal Solar Tax Credit
The federal solar tax credit is not a North Carolina incentive, strictly speaking, since you can claim it anywhere in the U.S. However, we mention this benefit here because you can combine it with local incentives.
- If you install a solar power system before the end of 2022, you can claim 26% of its value as a federal tax credit.
- The benefit will remain available in 2023, but it will be reduced to 22%.
- After the start of 2024, there will only be a 10% federal solar tax credit for businesses and 0% for homes.
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FAQ: North Carolina Solar Incentives
Does North Carolina have a solar tax credit?
No, there is no specific North Carolina solar tax credit. However, you can still claim the 26% federal tax credit.
Is it worth going solar in North Carolina?
It depends on your unique situation, but in general, it’s worth going solar in North Carolina. The state offers a combination of incentives that reduce your ownership costs and decent sunshine that makes solar panels productive. Solar panels last for more than 25 years if they’re of high quality, and you can achieve a payback period of less than 10 years in North Carolina.
Does solar increase property taxes in North Carolina?
No, there is a 100% property tax exemption for residential solar systems. Your home becomes more valuable, but your property taxes are not raised. Solar power systems owned by businesses get an 80% property tax exemption.
What is the 26% tax credit for solar?
In a few words, for every dollar invested in a solar power system, you can claim 26 cents on your next tax declaration. For example, if you purchase a 6-kW home solar system for $18,000, you can claim a tax credit of $4,680 (26% of $18,000).
Leonardo David is an electromechanical engineer, MBA, energy consultant and technical writer. His energy-efficiency and solar consulting experience covers sectors including banking, textile manufacturing, plastics processing, pharmaceutics, education, food processing, fast food, real estate and retail. He has also been writing articles about energy and engineering topics since 2015.