The Rise and Potential Fall of Solar Energy in South Carolina
by Ryan Davis, on Jul 25, 2017 2:44:41 PM
When it comes to solar energy in South Carolina there’s good news and bad news. The good news is the incentives are better than ever for homeowners to put solar on their roof. The bad news is the incentives are going away and residential solar may not make financial sense in the not too distant future.
Over the last two years you have probably seen solar systems popping up on homes all over the Upstate. This is the result of a combination of federal tax incentives, South Carolina state tax incentives, utility rebates, and solar equipment costs at an all time low.
The combination of these incentives has created the perfect storm for homeowners to take advantage of getting solar put on their homes without paying a dime upfront and enjoying less expensive, clean power for years to come.
In the past, solar was considered a product for environmentalists or the rich. The incentives have paved the way for everyone, regardless of political beliefs, environmental views or income level, to get a solar system for less of a monthly payment than their current monthly electric company bill. There has never been a better time to go solar!
This storm is passing and the solar incentives are likely to fade quickly.
The first metric that is talked about the most is the falling cost of materials. While it’s true the price of solar products have fallen rapidly during recent years, prices have now leveled off; however with new tariff increases possibly going into effect, it is likely that materials will be harder to obtain and costs will have a floor much higher than what we are currently seeing.
The next major change in store is the 30% federal tax credit, which is set to decrease to 26% in 2020, 22% in 2021, and be gone altogether by 2022. No end date has been announced by South Carolina for their 25% state solar tax credit.
The third issue the solar industry faces in South Carolina is the 2% net metering cap is approximately half full. A net metering agreement was passed in 2014 that allows homeowners to earn full retail value bill credit for each kilowatt-hour produced from their solar system that goes back onto the grid. Once the 2% cap is met, customers will no longer receive net metering credits on their bill, making the return time on their investment much longer than before.
Once all of the incentives are gone, going solar in South Carolina will only make financial sense if equipment costs somehow fall lower than where they currently are and utility rates rise faster than what they are today.
What does this mean for us today?
Solar has never been easier or cheaper to attain than it is today.
Local programs offer solar ownership to homeowners for no money out of pocket and a bill that is less than what they pay today. Homeowners in South Carolina can currently take advantage of a 30% federal tax credit, 25% state tax credit, and local programs that allow the homeowner to pay no money out of pocket for the system and simply pay the balance over 10,15, or 20 years.
The average solar system in South Carolina would typically cost around $30,000. A homeowner would get back $9,000 (30%) on their federal taxes and $7,500 (25%) on their state taxes. That means the homeowners net cost of the solar system would only be $13,500! Instead of writing a check, the program allows you to pay the system off over the next 10,15, or 20 years with no money out of pocket and a payment much cheaper than what it currently is. Keep in mind; these tax incentives are credits, and not deductions. Therefore, you would get back the 30% and 25% on your tax bill.
Don't wait to long to switch because as the program incentives come to an end over these next few years, the backlog of customers is going to grow quickly. The best thing for you to do is take the first step and get a free solar estimate to determine if your house is a good fit for solar and what your financial benefits will be.