North Carolina Solar Incentives (Rebates, Tax Credits & More in 2022)
In this North Carolina solar incentives guide, we will answer:
- What solar incentives are available for North Carolinians in 2022?
- How much can solar incentives and rebates save when I go solar in North Carolina?
- How do I apply for each solar incentive in North Carolina?
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.
Do North Carolina Solar Incentives Make It Affordable for Homeowners to Go Solar?
In North Carolina, the average cost of a residential solar system is $2.54 per watt — significantly lower than the national average of $2.94 per watt.
However, North Carolina’s solar incentives can help you save even more when you go solar. For starters, all North Carolina residents are eligible for the 30% federal solar tax credit on their tax returns.
NC homeowners can also benefit from statewide property tax exemptions, renewable energy financing programs and net metering.
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Here are some of the top solar incentives available to North Carolinians:
|Solar Incentives in North Carolina||Incentive Type||Description||Occurrence||Estimated Amount You Can Receive|
|Federal Solar Investment Tax Credit (ITC)||Federal||U.S. homeowners can receive 30% of the cost of their solar panel systems as a credit on their federal tax returns||Applies to your federal tax returns, and will roll over for up to 5 years||On average, $8,458 in NC|
|Property Tax Abatement for Solar Electric Systems||State||North Carolina does not tax you for the increase in property value realized by installing photovoltaic (PV) solar panels||Exempted annually on tax returns||N/A|
|Duke Energy Solar Rebate||Company||Duke Energy customers can qualify for a cash incentive when installing a solar panel system. Expires at the end of 2022||One-time rebate upon installation||$400 per kilowatt (kW) — up to $4,000 for residential customers|
|Financing Program for Renewable Energy and Energy Efficiency||State||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||Applies to monthly payments for up to 20 years||Depends on your interest rate|
|North Carolina Net Metering Policy||State||Surplus electricity from your home solar system is credited at the retail price on your next electric bill||Monthly on your electric bill||Up to the full cost of your electric bill each month (not including fixed customer charges or the Renewable Energy Portfolio Standard charge)|
|Local Incentives||Local||Additional incentives may be available from your county, city or utility company, so be sure to consult your local city and county government and utility websites||Varies||Varies|
What Do North Carolinians Need to Know About the Federal Solar Tax Credit?
The federal solar tax credit (ITC) 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.
The average cost of a solar panel system in North Carolina is $28,194 before the federal solar tax credit, and $19,736 after the tax credit is applied. That’s a potential savings of $8,458!
- If you install a solar power system before the end of 2032, you can claim 30% of the total cost of installation as a federal tax credit
- The benefit will remain available in 2033, but it will be reduced to 26%
- The credit will decrease again to 22% in 2034
- The tax credit will be phased out in 2035 unless it is renewed by Congress
How to Claim the Federal ITC in North Carolina
You will claim your Federal ITC credit on your annual federal tax return. If you are filing your taxes yourself, here’s how to do it:
- Download and fill out IRS Form 5695. You’ll write in the cost of your applicable solar installation on line one and calculate your credit on lines 6a and 6b. If you need help, a CPA or your solar installer should be able to help you.
- Fill out your Schedule 3 on IRS Form 1040 using the information calculated on line 15 of your 5695 form.
For more detailed information on how to apply for the Federal ITC, visit the IRS.gov website. We highly recommend consulting with a tax expert and your solar panel company when applying for the solar tax credit.
EcoWatch’s Opinion on the Federal ITC in North Carolina
The Federal ITC is easily the largest solar incentive available to North Carolinians, at 30% of the total cost of your solar system.
However, you will only realize the full benefits of the ITC if you expect to owe several thousand dollars in federal taxes over the next five years. After five years, the tax credit will no longer roll over.
Property Tax Abatement for Solar Electric Systems in North Carolina
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 tax incentive 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.
How to Claim Property Tax Abatement for Solar Electric Systems in North Carolina
Non-business personal properties do not require an application to claim an exemption or exclusion on property taxes in North Carolina. This also applies to government-owned properties and burial properties.1
If your property does not fall under these categories, you will still need to file for a property tax exemption on your solar panel system in North Carolina. You can do this by filling out and submitting the AV-10 form through the North Carolina Department of Revenue (NCDOR).
EcoWatch’s Opinion on Property Tax Abatement for Solar Electric Systems in NC
North Carolina’s 100% property tax exemption on residential solar panel systems is great news for homeowners.
However, any solar panel systems connected to a business or used to generate income are only eligible for an 80% property tax exemption.2
Duke Energy Solar Rebate in North Carolina
Duke Energy’s Solar Rebate program was created to provide 20 megawatts of solar energy each year from 2018 to 2022.3
Unfortunately, at the time of publication, Duke Energy was no longer accepting new applications for residential customers. The program is set to expire at the end of 2022, and the participation limit for the year was already reached.4
The good news is that the North Carolina Utilities Commission is considering a plan to offer Duke Energy customers up-front incentives when they install rooftop solar. This would replace the existing Duke Energy Solar Rebate program.5
As of November 2022, no agreement has been made concerning the future of this program.
How to Claim Duke Energy’s Solar Rebate in North Carolina
Duke Energy is no longer accepting applications from residential customers for its Solar Rebate Program. Nonprofit customers may apply for the rebate from January 11, 2023, to January 18th, 2023, for solar systems installed before October 13, 2022.
Check back on Duke Energy’s NC Solar Rebate Program website regularly for updates and to check the waiting list.
EcoWatch’s Opinion on Duke Energy’s Solar Rebate in NC
Duke Energy’s Solar Rebate program is great for homeowners that got the opportunity to use it, but due to limited funding, only about one in four customers who applied for the program were accepted.6
We hope to see this program, or one like it, extended beyond the end of 2022.
Financing Program for Renewable Energy and Energy Efficiency in North Carolina
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 energy 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.7
How to Take Advantage of North Carolina’s Financing Program for Renewable Energy and Energy Efficiency
The North Carolina Clean Energy Technology Center advises NC residents to contact their local government to learn about renewable energy and energy efficiency financing in your county or city.8
EcoWatch’s Opinion on North Carolina’s Financing Program for Renewable Energy and Energy Efficiency
Guaranteed lower interest rates on solar loans can financially assist homeowners who cannot afford a solar panel system upfront.
Unfortunately, the North Carolina law is enacted through local governments, and is not a singular statewide program. Therefore, in order to learn more about your financing options, you may have to jump through some hoops when contacting your local government.
Net Metering in North Carolina
North Carolina offers net metering for solar power systems of up to 1,000 kW 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 electric 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 get credit for on your power bills.
How to Enroll in Net Metering in North Carolina
Your solar installer can help you fill out paperwork and enroll in North Carolina’s net metering program. You apply for net metering in North Carolina by:
- Requesting an interconnection service form from your utility company for your renewable energy equipment. This will allow your utility company to see how much renewable energy you are generating and determine your credit each month.
- Completing the application form and submitting it for your utility company to review and approve.
- Connecting your system to your utility company’s system. This is the last step of the process after the utility company has approved your application. Your solar installer and the electric company will guide you through next steps.
Learn more about North Carolina’s net metering program at publicstaff.nc.gov.
EcoWatch’s Opinion on Net Metering in North Carolina
North Carolina has an excellent net metering program that credits the full value of surplus energy your system generates to your next electric bill. Just be aware that any accumulated credits that go unused will expire on June 1 of each year so they won’t be available to address higher energy demand through the summer months.
Overall, North Carolina’s net metering program is generous and easy to apply for as long as your utility company and solar installer are helpful and communicative.
Local Solar Incentives in North Carolina
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.
What Do North Carolina Residents Need to Know About SRECs?
An SREC is a Solar Renewable Energy Certificate. SRECs are an instrument that allows residents in a state to make money off the electricity that their solar panels generate.
Many states (including North Carolina) have renewable portfolio standards (RPS) that require utility companies to generate a certain percentage of their electricity from renewable energy sources.
These utility companies can either meet these goals by generating their own renewable energy (like building their own solar farms), or by purchasing renewable energy credits (SRECs).
As a homeowner with solar, you can sell SRECs to utility companies to help them meet RPS goals. The amount of SRECs you can earn depends on how much energy your solar panels generate each year.
North Carolina’s version of SRECs is called NC-RETS, or The North Carolina Renewable Energy Tracking System. It distributes and keeps track of renewable energy and energy efficiency certificates to comply with NC’s RPS.9
Are SRECs Worth it in North Carolina?
Talk with your solar provider about whether or not SRECs are a good option for you. North Carolina does not have an ambitious renewable portfolio standard, and a large nationwide supply of SRECs may mean that the value of SRECs is low.
North Carolina accepts SREC registrations from any state, meaning that solar panel systems in any state can help fulfill NC’s RPS requirements. This further lowers the value of SRECs in North Carolina.10
What’s the Near-Term Outlook for More Incentives in North Carolina?
The North Carolina government used to offer a 35% state tax credit on solar panel installations (in addition to the federal solar tax credit). That incentive expired in December 2015, but new legislation in 2022 proposed a renewal.11
A 2016 report from Raleigh-based nonprofit RTI International concluded that $1.64 of revenue was generated for state and local governments for every $1 of the tax credit claimed.12 This suggests that bringing the NC solar tax credit back could be good for the local economy of North Carolina.
As of November 2022, the NC solar tax credit has not been renewed.
FAQs: North Carolina Solar Incentives
Legislation proposed in May 2022 aimed to renew the 35% solar credit program in North Carolina that expired in 2015. However, as of November 2022, this program has not been brought back.13
North Carolina residents can still take advantage of the 30% federal solar tax credit. The credit was extended through at least 2032 with the passing of the inflation reduction act in August 2022.14
The Duke Energy Solar Rebate program is currently set to expire at the end of 2022. However, North Carolinians can still take advantage of the federal solar tax credit, statewide net metering, the statewide financing program for renewable energy and any available local incentives.
No, there is a 100% property tax exemption for residential solar systems. Your home becomes more valuable, but your property taxes are not raised. Nonresidential buildings with solar panels get an 80% property tax exemption.
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 fewer than 10 years in North Carolina.