At Solar Power Rocks, our dream is to turn your thoughts of solar power for your home into reality
Note: The numbers above are just estimates for a 5kW solar system, and your home is unique. The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. A friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.
South Carolina is home to waterfalls, lakes, and the Blue Ridge mountains as well as amazing beaches and coastal resorts. The Palmetto State is also filled with historical sites dating back to the Civil War and the Revolution. Using clean energy will keep the waters clear and the skies blue. Read on to see what the state legislature has done to promote solar and other renewable power sources.
Important South Carolina solar news
As of early April, 2018, the state House of Representatives is on the cusp of approving H4421, a critical new net metering bill. This bill is vitally important to home solar owners in South Carolina, because it mandates that the utility companies credit excess solar generation at the full retail rate. At a time where South Carolinians pay some of the highest electricity bills of any state in the country, getting full credit for your solar energy is extremely important.
Within a very short time, the bill will likely be sent to the senate, where it must also meet approval before becoming law. Contact your state senator today to tell them to vote for H4421!
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the South Carolina solar incentives you see below.
Your guide to going solar in South Carolina
We've designed this page to be a complete guide to the complicated and sometimes confusing process of installing solar panels on a home in South Carolina. Since there's a lot of important information to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
The Solar Strategy section is all about the various financial options you have in South Carolina. We've created a tool that asks you a few questions about what you hope to get out of a solar purchase and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we give you a detailed picture of how each could work for you.
The Policy Information section contains all of our latest research on the rules set by the state legislature and public utilities commission that determines how easy it is to go solar in South Carolina. These policies and rules govern everything from renewable energy mandates to whether you get paid retail or wholesale rates for the extra energy your system produces, and can have a huge effect on the viability of solar.
Finally, the Solar Incentives section lists all of the available financial benefits available to homeowners who go solar. This section includes information about money-back rebates and grants, tax credits, and tax exemptions. If you're looking for what South Carolina is doing to make solar more affordable for its citizens, you'll find it here.
We hope you find our work useful. If so, please help us keep our research and advocacy as strong as possible by sharing it with someone who might also find it interesting, contributing any amount you can, and by getting yourself personalized savings estimates from our trusted partner network.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your South Carolina Solar Strategy|
|South Carolina Solar Policy Information|
|South Carolina Solar Incentives|
|Your South Carolina Solar Strategy|
|Comparing Solar Investment Options|
|Solar PPAs in South Carolina|
|Solar Loans in South Carolina|
|Buying Solar in South Carolina|
|Solar Purchase Payback Time in South Carolina|
|South Carolina Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in South Carolina
Figuring out the best way to go solar in South Carolina can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
Compare the Return of Different Solar Investments in South Carolina
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, the purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a solar loan or HELOC (the orange bars) and paying for the system over time means you'll actually spend $0 of your own money over time, while reaping a big financial benefit in year 1.
That's because you take a loan for the system, but you still get all the benefits of paying up front. In South Carolina, that means a state tax credit equal to 25% of the total cost of your system—on top of a separate 30% federal tax credit. With those huge tax credits, you'll actually make money in the first year. And even though you'll be making loan payments over 15 years, the total cost will never exceed that first-year windfall, making this investment essentially free money for having home equity.
Lastly, take a look at the blue bars. They represent a solar Power-Purchase Agreement (PPA), which is also called third-party ownership. With a lease or PPA, you put $0 down on a rooftop solar system and purchase the energy generated by the system at a rate lower than what you had been paying the utility company. You accumulate savings greater savings each year because the PPA cost will rise by less than the electric company's annual rate hikes. Third-party ownership is an excellent option if you don't have any equity or cash to put down, and it still saves you money!
Read more below about each of three very good options for solar in South Carolina.
Net Present Value of Solar in South Carolina
“Net Present What?!” Don’t panic, this isn’t an economics test. NPV is just a tool used to compare investments. Basically, it asks, “if you had X dollars to invest, which investment would get you the best return?” It relies on the idea that getting a return on your investment sooner is better than later, because you can reinvest your early profits and keep the gain train going.
We compare an investment in solar to a “what-if” investment in a Standard & Poor’s (S&P) 500 stock index fund, which has seen growth of about 7% per year over the past 25 years. We use the cost of solar in South Carolina and ask “how much better or worse (in 2018 dollars) is an investment in solar than stocks?” Here's what we found for the three different ways of going solar in South Carolina:
Look at all that green! When they tell you solar is a good deal in South Carolina, this is what they're talking about. A solar investment in South Carolina should provide a better return than the stock market whether you choose a PPA, a loan, or pay up front. Here's some more about how we got these numbers:
Solar PPA NPV: $1,735
Saving money without having to put anything down is always going to have a positive NPV. In South Carolina, A PPA will save you a little bit each month, adding up to $3,648 over 20 years. That's like having an extra $1,735 to invest today, but it can't even come close to the return of a solar loan. Read more about PPAs in South Carolina below.
Solar Loan NPV: $7,441
As we’re fond of saying, taking a loan for solar is a no-brainer, because it’s like agreeing to pay over time for something that is also making you money. In South Carolina, the money you make comes from electricity savings, and if you're a Duke Energy Progress customer, your initial loan amount is reduced by a huge rebate. Add to that the money you'll get back from excellent state and federal tax credits, and solar in South Carolina is a no-brainer.
All that helps push the NPV of a solar loan to $7,441 better than a similar investment in the stock market. That's a mind-boggling value for any investment, and it's insane for something that requires no money down. Read more about solar loans below
Solar Purchase NPV: $4,883
If you're paying for solar up front, you're gonna need a few thousand dollars to do it. But when all is said and done, the NPV of an outright solar purchase in South Carolina is outrageous. The two biggest reasons a solar purchase in South Carolina has a positive NPV are the state and federal tax credits and DEP rebate. On top of that, the money you save on electricity is also available for future investment. But you can see above what happens to NPV if you choose a solar loan instead. Unless you need to put cash into an asset, a loan is a much smarter way to pay for solar panels. Read more about solar purchases below.
Solar Power-Purchase Agreements in South Carolina
A PPA is a great way to go solar if you haven't got stacks of cash or oodles of equity in your home. It's possible to get solar panels for $0-down and see big savings over 20 years!
As for PPAs in South Carolina: the electricity costs here are pretty high—right around the national average. That means a PPA saves you money starting on day 1! For now, the electrciity you'll buy from a PPA will be around $617 per year, but the energy the panels make will save you $725 per year. That's $108 you get to keep in your pocket, just for saying yes to solar!
That might not sound like a huge amount of money right now, but as the utility company raises rates, you will start to see greater annual savings. Over 20 years, our estimate shows a total savings of $3,648. And the panels will be owned and maintained by the installation company, so all you have to do is brag to the Joneses down the street about your green habits!
Here's more about how a solar PPA works:
Example savings in South Carolina
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payments
Average Annual Savings
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payments
Average Annual Savings
Power-Purchase Agreements (PPAs) are the most popular form of what's called "third-party solar." A PPA just means your solar company owns the panels on your roof, and you pay for the electricity they produce. The numbers above show the savings with a solar PPA for an average home in South Carolina. The typical electric bill before solar power is super expensive, but with a PPA, your monthly expenses will be lower. You'll be saving money and saving the planet all at the same time!
Here's an estimate of the monthly savings for a solar PPA in South Carolina:
With a PPA, your solar company essentially becomes a second utility provider, only the solar electricity is sold to you at a lower rate than the fossil fuel electricity you've been buying from the electric company! Note: your PPA won't eliminate your power bill from your regular electric provider, because you'll still need energy from the grid when the sun isn't shining. But it will save you money!
The less-popular cousin of the third-party solar family is the solar lease. It's basically like renting your panels for a set monthly payment, and getting all the energy they produce—however much it is. Don't get spooked by that language, though. A typical solar lease comes with energy production guarantees that will make sure you're getting what you paid for. In fact, if you're not offered a production guarantee with a solar lease, walk away.
Here's the best part of third-party solar: whether you end up with a lease or a PPA, the installation company owns the panels and will do all the maintenance for you. Usually that means just a good cleaning every year, but if any part of that system fails, you're off the hook! That can be a great benefit to homeowners who are risk averse.
Keep in mind, the numbers above are based on an average home in South Carolina. If you're ready for a custom quote for a solar lease or PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Home Solar Power: PPA vs. Purchasing
To PPA, or not to PPA? Willsolar Shakespanels would be proud we're discussing this. Here's the basic deal. If you choose to lease your panels, you benefit from no out of pocket costs and an immediately reduced total electricity payment. Because of this, many regard this option as a no-brainer, since there isn't any downside to think of. The only hiccup you'll start to experience is when you consider the long term financial benefit of owning the solar panel system yourself.
In many situations, if you can afford the outlay or can easily secure financing, the cost of the install becomes an investment with a return outpacing even the strongest performing mutual funds. In addition, there's significantly less principal risk, since the energy credits you will be producing are tied to the sun coming up in the morning instead of our financial markets!
Additionally, if you go the PPA route, you must forfeit all the credits and performance payments you would receive by owning the system yourself to the solar PPA company (after all, that's how they can afford to give you such a no-brainer proposition in the first place).
Solar Loans in South Carolina
You don't need $15,000 sitting around to pay for solar. As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.
That’s because, in South Carolina, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a tax break. Wait... TWO tax breaks!. You'll come out thousands ahead this year, and you'll still see a handsome profit over the 25-year life of your system.
For our example, we've focused on people who are served by Duke Energy Progress, which offers a really nice rebate of $1/watt, based on the size of your system. Sorry SCE&G customers. There's no rebate program for you, but there are some decent performance payments! And no rebates doesn't mean solar isn't a good deal! It just means it'll cost you a little more...
A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can qualify for a solar loan or home-equity line of credit (HELOC) for $11,650, with a fixed rate of 4.5% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
- You love making money without much risk.
Here’s how the numbers pencil out for a South Carolina homeowner who makes a solar purchase with a loan:
- Installing a typical 5-kW solar system should start at about $11,650 after that Duke Energy Progress rebate we discussed above. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $725, but your annual loan payments will be $1,034, meaning you would spend $309 on solar this year, but...
- You'll also see two huge tax breaks! The Feds give you 30% of the cost of your system back as an income tax credit, which in this case means $3,495. South Carolina also offers a rebate of 25%, but the state's tax rate is lower, so you'll likely have to take the credit over a longer term. That's another $500 off this year, and for the next 4 years, too.
- All those incentives mean you'll come out $3,686 ahead after year 1. Your loan payments will be about $26/month more than your energy bill savings, but that difference will get smaller as the utility company raises rates every year. And considering that big windfall in year 1, you'll never actually spend any of your own money on solar.
- By the time you've paid off your loan in 2031, you'll be seeing yearly savings of about $1,100. After 25 years, your total profit will be $17,165!
- On top of the green that will stay in your pocket, your system will mean green for the environment, too—101 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in South Carolina. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Buying Solar in South Carolina
An outright purchase used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true—with rebates and tax credits, solar costs less than ever before, and the electricity savings in South Carolina are so good that a solar installation pays itself off in just a few short years. But if you're interested in solar as an investment, taking a loan to pay for the system is a better option.
With a loan, you can monthly payments instead of putting $11,650 down on a solar system, which means you save money on electricity as you pay down the cost of your panels. If you have equity in your home or can get a large loan with an interest rate of 4.5% or less, a loan is the option to go with. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.
If you've got cash and you prefer to pay up front, you'll have to plunk down $11,650, but tax breaks and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced over $21,000 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you $725 in year 1—and it just goes up from there. As the electric company raises rates, you save more and more, and more...
For our example, we've focused on South Carolinians who are served by Duke Energy Progress. That's because DEP offers rebates of $1 per kilowatt (kW) of solar panels. That's a sweet rebate, and it reduces your initial cost for a 5-kW system from $16,650 to just $11,650.
If you get service through South Carolina Electric & Gas instead of Duke, you don't get a rebate, but you do get performance payments, which will save you about $1,500 over the first 10 years!
Here’s how the numbers work for a 5-kW rooftop solar system in South Carolina:
- Installing a typical 5-kW solar system should start at about $11,650 after the Duke Energy rebate. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
- The Federal government offers a great income tax credit of 30% of system costs. That's $3,495 you won't be paying to Uncle Sam this year, and it brings your first-year investment down to $8,155.
- Next, South Carolina offers its own amazing personal tax credit, that can get you up to 25% of the cost of your system back. The credit can be taken over 10 years, and it has a maximum of $3,500 or 50% of your tax burden in a year. Considering South Carolina's low income tax rate, we'll be conservative, and estimate a tax credit of $500 each year for 7 years. That brings you down to $7,455!
- After the tax credit we subtract your first year’s energy savings, which we estimate to be $725. That reduces your cost after the first year to only $6,930. That's almost 60% off the price before rebate! Wow!
- Those electricity savings and state tax credits will quickly make your money back, and your system will pay for itself in just 7 years. You'll see a total net profit of $21,027 by the end of your panels' 25-year warranty. The internal rate of return for this investment is an amazing 16.6%. That beats the stock market's traditional returns by a good 5%, and it's more reliable, too!
- And here's a nice bonus to consider: your home's value just increased by more than $16,000, too (your expected electricity savings over 20 years).
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 113 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in South Carolina. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
South Carolina Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Florida—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in South Carolina:
2% by 2021
A Renewables Portfolio Standard (RPS) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels.
South Carolina’s RPS, passed just earlier this year, requires all utilities to produce a measly 2% of their aggregate capacity using renewable energy by 2021. The RPS divides the requirement into two sections: 1% of the capacity will be generated by facilities sized between 1 MW and 100 MW, while the remaining 1% will be generated by any facility below 1 MW. That ain’t much, but a mandate is a mandate.
We don’t want to knock South Carolina’s RPS too much, because we’ve seen some states with no RPS at all, but to be honest 2% really isn’t much of a number. Other states are aiming twenty times higher within the same timeframe. Additionally, the program lacks a solar carve out. More on that next.
South Carolina’s RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state.
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.
RPS solar carve out
As mentioned above, South Carolina’s RPS lacks a solar carve out, or specified targets for solar production. If the RPS contained specific carve-outs for clean and efficient technologies like solar panels, or mandates for the environmentally necessary increases in distributed generation, you’d see even stronger incentives for residential solar power.
What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
South Carolina Electricity Prices
South Carolina homeowners pay an average of 13 cents per kilowatt-hour (kWh) of electricity. That’s actually a little lower than the national average of 13.6 cents, but here's the kicker: South Carolinians have some of the nation's highest electric bills, because we've gotta use so much AC in the summare and heat in the winter! But the good news is, though you're paying more now, you could be saving more soon, with solar panels!
And the vast majority ofl the electricity that currently (no pun intended) runs your house is produced by burning fossil fuels -- tons and tons of earth-killing fossil fuels. When the astronomical environmental costs start to mount, monthly electricity bills are inevitably going to rise as well. When that happens you’re going to feel pretty darn smart for making the early switch to producing your own clean, efficient solar power.
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
South Carolina Net Metering
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus.
In April of 2014, South Carolina’s legislature mandated the development of new statewide net metering rules. These new rules state that residential net metering customers can install systems up to 20 kW in capacity and that these systems must be installed to meet all interconnection and safety standards. In turn, the utility is responsible for monitoring your production and crediting your surplus generation to you. In South Carolina, utilities must roll over your monthly excess generation to the next month and pay you for your annual excess at the end of the year.
That’s a pretty standard net metering program, but is lacking some important details. The committee is still working on generic rate and service charge policies for distributed generation customers. For the latest information, check out the Public Service Commission’s Docket 2014-246 E.
What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
South Carolina Interconnection Rules
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
Solar Incentives in South Carolina
South Carolina Solar Power Rebates
$1,000/kW Duke Energy Progress, $1,600/kW Santee Cooper
Only one South Carolina utility has their own rebate program: Santee Cooper. If your house is in their servcie area, you can get a rebate of $1,300 per kW, which is just under half off the average cost of installation! The Santee Cooper Home Solar Rebate can earn you up to $7,800 off the cost of a solar system (rebate applied up to 6-kW of solar panels).
Just to be clear, the "C" grade listed above is reflective of the relative lack of rebate progrtams in the state. If we were to award the Santee Cooper program with a grade, it would be "A+"! If your home is served by Santee Cooper, get a solar estimate today and find out how much you could save.
How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
South Carolina Solar Power Tax Credits
25% of costs, max of $3,500 or 50% of tax liability per year
While the state legislature has dropped the ball on the RPS, they’ve scored a slam dunk with South Carolina’s Solar Energy Tax Credit. When you install a residential solar power system here, you’re entitled to claim a state tax credit of 25% of the purchase and installation costs. That’s a whole lot of taxes you won’t be paying in April. The maximum credit that can be applied in a single tax year is $3,500 or 50% of your state tax liability, whichever is less. Unused credit may be carried forward for 10 years. Score for South Carolina!
Here's an example of how the South Carolina tax credit works: Say you're a married couple making $75,000/yr. Your income tax for 2018 will be $3,271, and half of that is $1,636. Your 5-kW solar system costs $16,250, meaning you're eligible for a state tax credit of $4,063 (25% of the cost). You take the max in year 1, $1,636, and assuming your income is roughly the same in year 2, another $1,636 in year 2. That leaves you with an unused tax credit of $791 that you can take in year 3.
Don't forget: All solar installations are eligible for a 30% tax credit from the Feds as well. There's no cap on the federal tax credit and fortunately for South Carolina, having no state rebate to deduct means a larger tax credit coming your way. The two tax credits combined can wipe out 55% of the costs to install solar in just a few short years. Combined with electric bill savings, South Carolinians can see a payback time of just 7 years for a standard 5-kW solar system. Wow!
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
Solar Power Performance Payments
$0.04/kwh - SCE&G only
Despite the lack of an RPS, there happens to be a pretty nice performance payment plan here—if you live in South Carolina Electric & Gas territory, that is...
Performance payments are a way to reward solar panel owners for producing clean energy. They are small payments made directly to you based on the number of kilowatt-hours (kWh) your system produces. In the case of the SCE&G Customer Scale Solar Program, that means 4 cents/kWh, or about $250 per year for a typical 5-kW solar system.
That's good money! Trouble is... we don't know how long it'll last. The incentive amount is scheduled to drop by a penny each time the state see a couple new megawatts (MW) of energy capacity installed. That could be a year, two years, or three years. Here's how the payment amounts change based on the total installed capacity:
- 0 to 2.5 MW cumulative capacity: 4 cents per kilowatt hour
- 2.5 to 5 MW cumulative capacity: 3 cents per kilowatt hour
- 5 to 7 MW cumulative capacity: 2 cents per kilowatt hour
- 7 to 9 MW cumulative capacity: 1 cent per kilowatt hour
Again, no one knows when those levels will be hit, but we've conservatively estimated it'll two or three years for each level. Over a time horizon of 9 years, we estimate the performance payments will put around $1,500 into the pocket of our example 5-kW system owner.
Now that's if you're served by SCE&G. If, instead, you're a Duke Energy Customer, you get a really sweet rebate program that'll reduce your up-front solar costs to the tune of $1,000/kW! Look above to find out more about it!
Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
If you don’t know what an SREC is, or how they work, check out this great SREC video
Property Tax Exemption
Unfortunately the lawmakers down in Columbia didn’t follow up that excellent tax credit with tax exemptions. Property tax exemptions have the potential to save you a lot of cash. When you install a solar power system, your home goes up in value. We’ll go over just how much in a minute, but we’re talking thousands, and usually double digits at that. Not paying property taxes on that value is like a gift that keeps on giving, and passing a statewide exemption for assessed home value from solar power systems would help you make the switch without ever taking a dime out of the state’s bank account. Sounds like a win-win to us.
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Many argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing. Leasing still has a positive impact on the ability to sell your home though, in our opinion).
For many average-sized solar power systems on a house, that can mean $20,000 to your home value. (Edit April, 2014: Some companies, like Solar Mosaic, are starting to offer traditional style equity-based home loans for such a thing). An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was also sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade.
Sales Tax Exemption
In addition to ongoing property tax exemptions, the sales taxes exemptions that we’ve seen in lots of other states would save you 6% on the cost of a solar power system here. Unfortunately, the equivalent sales taxes exemption that many states have passed is a big fat 0% of the way there. As in, there is no sales tax exemption for the purchase and installation of solar power systems here. That’s a real shame. Sales tax exemptions help the local solar industry in addition to the customer, so they’re a double win.
What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
The consensus on South Carolina solar power rebates and incentives
Solar policy is a bit stop and go here. The remarkably low RPS continues to be a tremendous worry, as it can be blamed for the lack of state solar rebates and utility-based performance payments. In addition, the net metering policy (though improved) remains up in the air and the interconnection standards leave something to be desired. Despite the cracks in the foundation however, the combination of the PACE performance payments, a hearty state tax credit, and average energy prices drive initial costs to adequate levels, and payback timeframes to a good place. Given that 8 year payback timeframe, we would love to give The Palmetto State a solid “B.” Careful though; we can’t rest on those laurels here. With the remaining cracks in the foundation, one slip and solar policy can go backwards fast.
The not-so-hidden message is: “jump on those incentives quick!” The payback timeframe could soon be looking a lot more like that of a state that deserves that “D.”