Thanks to 215 sunny days a year and solar-friendly regulations and tax credits, North Carolina is a great place for those who want to convert solar rays into electricity.
Currently, North Carolina is ranked fourth in the country when it comes to total solar capacity, according to the Solar Energy Industries Association (SEIA). Only California, Arizona and New Jersey have more. That means in North Carolina there is enough solar energy to power the lights, TVs, computers and other electricity-hungry portions of 104,000 homes, according to the SEIA.
Thanks to continued tax credits and dropping prices for sun-collecting solar panels, those numbers are expected to keep rising in both residential and commercial areas. “I really don’t see a slowdown in the near future,” says Lukas Brun, senior research analyst at Duke University’s Center on Globalization, Governance & Competitiveness. “It continues to become more cost-effective, and there are economic benefits and environmental benefits. Solar is becoming the best bet for many.”
Solar power has long been known to be more environmentally friendly than traditional ways of generating electricity. It is also renewable, unlike the finite amounts of fossil fuels that we have heavily relied on for decades.
But while sunshine is free, in the past the initial costs of getting set up to collect the sun’s rays and convert them to energy was prohibitive for many. Fortunately, the cost of adding solar panels to a home is now in line with home projects such as remodeling a bathroom or kitchen.
Brun, the lead author of a 2015 report that looked at the solar industry in North Carolina, said the cost has dropped due to lower material costs, improved manufacturing processes and economies of scale.
The price of installation has followed suit.
The SEIA reports the cost of installed solar photovoltaic systems nationwide has dropped by 49% since 2010. Add a 30% federal tax credit—which is set to expire in 2016—plus state incentives, and solar proponents say now is a great time to invest.
Solar photovoltaic (PV) devices are typically housed in panels and installed on roofs, awnings and other places that have unfiltered access to sunlight. PV devices generate electricity via an electronic process that occurs naturally in the semiconductors that are housed in the panels.
Steve Nicolas, president of Raleigh-based solar energy installer NC Solar Now, says adding solar power to the average home costs about $23,500. That includes installation, equipment, permits, etc., for a system that has a capacity of about 5.5 kilowatts—which on a sunny day can generate enough to supply more than half of the power a typical home needs.
Homeowners can expect to recoup the cost of a system in 6 to 9 years, depending of the tax credits they receive, Nicolas says. The average life of a solar system is more than 25 years.
Another bonus is that in some cases a homeowner can sell any excess power they collect from the sun back to their utility company, a deal known as net metering. As an example of the savings, Nicolas shared his Duke Energy bills. They showed his previously $150 dollar monthly bill had dropped to just over $10 after savings from solar power and a credit for selling power back to the utility.
Nicolas says his enthusiasm about the savings has prompted a new, albeit unusual, pastime. “I love to turn everything off and go watch the power meter spinning backwards,” adding with a laugh that his wife is a bit baffled by this hobby.
In 2014, South Carolina was ranked 31st in installed solar capacity and Virginia was ranked 30th, according to SEIA numbers.
Why is North Carolina’s solar industry growing so much faster? Brun explains that it is primarily due to the state’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS). The standard requires the state’s utility companies to generate 12.5% of their power from renewable sources by 2021.
In addition to the federal tax credit, North Carolina also currently offers residents an additional 35% tax credit. At the time of this writing, that credit is set to expire at the end of the year, but there’s a push in the state legislature to extend it.
In South Carolina and Virginia, some tax credits are also available. South Carolina offers residents a tax credit of 25% of eligible costs—with a maximum of $3,500 or 50% of their tax liability, whichever is less—for installing a renewable solar power system, according to the Clean Energy Authority.
In Virginia, depending on the city or county of residency, homes using solar energy systems can be deemed exempt or partially exempt from local property taxes, according to the Clean Energy Authority.
The idea of homeowners relying solely on solar power has become more feasible in recent years, Brun says. Solar power alone is not yet set to meet the higher demands of business, however.
The holdup is because solar power storage options to date have been limited, he explains. Solar energy batteries can only store so much reserve power, and extra batteries are clunky and expensive with limited capacity. This means in many cases valuable sunshine isn’t being stored for use later, when the sun goes down. However, a new battery—developed by carmaker Tesla and currently being tested—is wowing those in the solar industry with its storage capacity.
It could at some point mean larger commercial structures can unplug from the traditional electricity grid. “It is quite feasible on a household level right now to rely completely on solar power under certain circumstances,” says Brun. “Once you get above the household level—in commercial and industrial areas—it’s a different story. We are not there yet.”
First Bank and its representatives do not provide tax advice. Each individual’s tax and financial situation is unique. Individuals should consult their tax advisor for advice and information concerning their particular situation.