It’s ironic that the Southern part of the United States has a great deal of average daily sunlight, making it prime for solar power, yet most Southern states have been pretty stingy when it comes to solar incentives. But that may be changing.
As mentioned in an earlier post, North Carolina based utility, Duke Energy recently launched a program to rent the sunny roofs of homes and businesses in order to install solar panels. Today, Progress Energy, another North Carolina, South Carolina, and Florida utility, announced that it would be giving a decent subsidy to encourage solar.
According this Reuters news report, Progress will be giving homeowners $1.50 to $2.00 per watt, or about 25% of the cost of solar, the report says. What’s that mean? Let’s do the math for a system in South Carolina.
- For an average size 4000 watt (4KW) system, that’s 4000 watts x $2 (best case) = $8000 off your system! But wait, Solar Fred. How much is my solar system going to cost?
- Well, installed prices seem to be around $8/watt these days. So that 4KW system costs $32,000 bucks before the rebate. After the rebate, it’s $24,000. But wait, there’s more:
- In South Carolina, you also get a 25% state tax credit. So assuming you can calculate the credit off the top, $32,000 x .25= $8,000. (However, that credit is capped at $3500/year for up to 10 years). So eventually, knock another 8 grand off, and you’re down to $16,000 for your solar. (If it’s off the 24G rebate price, knock $6,000 off) But Solar Fred isn’t done yet.
- The Feds also give you another 30% tax credit! Assuming you can take that off the top, that’s $32,000 x .30= $9,600 tax credit dollars from Uncle Sam!!
- Grand total, including all rebates, SC State and Federal tax credits:
= $6,400! Holy Kudzu!
- Solar Fred Caution: I’m not a tax attorney. I can read about these tax credits, but tax codes are confusing and …bendable. You’ll also have to consider that tax credits are sometimes counted as income, so the credits might be taxed. Then again, you can write off the interest of the home equity loan. And….ugh. Ouch. Solar Fred brain hurt now; but me hope this right. You call tax dude to confirm, yes? Me assume yes.
- Solar Fred Explanation: In the best case tax assumptions, that’s solar system is $6,400 after the various state and federal tax credits. Tax credits are only used to pay taxes. So if you owe $5,000 to the Feds in taxes on April 15th, and you get a $9,600 solar tax credit, you’ll owe nothing in Federal taxes, but you WON’T get a tax refund for of the remaining $4600. You WILL have $4600 to use towards the following year’s Federal taxes. As for the SC state tax credit, every State treats their tax credits differently. In Louisiana, for example, you DO get a cash equivalent tax refund if you have left over state solar tax credits…I think. Bottom line, please, please, please, confirm all of this with a wise and experienced tax person. Brain hurting again.
- Solar Fred Reality Check #1: Again, due to all of these tax credits, you will have to pay your installer MORE upfront. In fact, eliminating all of the tax credits, you’ll be paying the installer $24,000, assuming he fronts you and collects the initial rebate from the utility. (That’s what most installers do in California.) That means you’ll have to finance 24 large out of home equity or cold cash. Then next April…or perhaps a few Aprils, you’ll reap the solar savings when you don’t have to pay the Fed and State tax man. Plus, there are those huge utility bill savings. But what if you don’t owe so much in taxes? Well….
- Solar Fred Reality Check#2: You need to have a fairly high household income to realistically benefit from these solar tax credits within a reasonable amount of time. So, if you’re looking at the above tax credits and thinkin‘ ’bout having a Big Mac for lunch tomorrow, you’re probably not one of those people. On the other hand, if you’re looking at those tax credits and thinking about having a lunch & golf date at the Club with your tax attorney buddy, have a scotch and call a local installer now.
Last modified: May 16, 2019