North Carolina Solar Incentives (Rebates, Tax Credits & More in 2023)

Here are some of the top solar incentives available to North Carolinians:

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:

1. 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.
2. 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.

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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

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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:

1. 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.
2. Completing the application form and submitting it for your utility company to review and approve.
3. 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.

See also: Calculate the costs and savings you can get from installing solar panels

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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.