Pricing, Tax and Financing Information
Your installer will recommend the appropriate-size system for your needs based on your annual electricity usage and your suitable roof space. More on pricing.
Tax credits can significantly reduce the net cost and payback period of a rooftop solar system. There is an additional incentive available if you own a rural small business (read more).
Your installer can also tell you about a variety of loan options, some of which are specifically tailored for solar. We have partnered with Self-Help Credit Union to offer a new solar loan that makes it easy to lower the upfront costs. More on the Self-Help loan.
Other financing options are discussed here.
Tax Credits Explained
A tax credit is even better than a tax deduction. You don’t just subtract it from your income – you subtract it from the amount of taxes you owe. Every dollar of tax credit is a dollar you don’t pay in taxes.
Unfortunately, the North Carolina solar tax credit (which paid back 35% of the installed cost of your system), expired on December 31, 2015, so it is too late to take advantage of that tax credit. (For those whose solar was installed before Dec. 31, 2015, your state credit can be used over five years, but can only account for 50% of your tax bill in any one year.)
The Federal solar tax credit, which was scheduled to expire December 31, 2016, has now been extended through 2021 as part of the spending bill passed on Dec. 18, 2015. From now through 2019, it pays back 30% of the installed cost of your system (assuming you pay enough tax to use it up). The credit drops to 26% in 2020 and 22% in 2021. After Dec. 31, 2021, the Federal tax credit expires for residential customers and drops to 10% for commercial installations.
Click the image at right to enlarge this imaginary tax return for a homeowner who spent $17,000 on a solar system. This is page 2 of form 1040. You can see that the credit is subtracted from the total tax owed. If some of that tax has already been paid in the form of payroll withholding, you may get some of your withholding back as a refund. If you can’t use up the entire 30% the first year, you can claim the remainder in the second year.
You will claim the tax credits when you file your taxes, but you may be able to receive some of the benefit right away by having your employer reduce the amount of tax withheld from your paycheck based on your new estimate of how much tax you will owe.
For businesses, payback is further accelerated by taking advantage of the bonus depreciation offered on the Federal tax return.
Reminder: Individual circumstances vary and not everyone is able to take full advantage of the tax credits. Please consult a tax professional to learn if the solar tax credits apply in your situation.
Prices for solar systems have come down drastically in recent years. Your price will depend on the size and shape of your roof, your electric usage and other factors.
The cost of solarizing an average-sized home in the 2016 Solarize the Triangle program was in the $15,000-$20,000 range.
Add-on costs: There are additional charges for: web monitoring, steep roofs, buildings of 3 stories or more, vent-moving, and any optional equipment.
Businesses & Ground-Mounts: Anyone can sign up for a Solarize program, but the discount pricing is usually for residential rooftop systems only. Commercial properties vary widely, so they are priced individually (prices may be less than Solarize prices because commercial systems are often larger). Ground-mounted systems are also eligible but priced individually. In past Solarize programs, the first 25 kilowatts of commercial and ground-mounted systems counted toward the tier pricing totals, thus helping the rooftop residential participants get a lower price.
We have partnered with Self-Help Credit Union to create a novel loan that makes it easier for homeowners to lower their upfront costs. Here is how it works.
Consider an average 5-kilowatt solar system costing $17,500. [Or probably less. Prices are dropping all the time and this is a 2016 pricing example.] You can get started with a 20% down payment, which is about $3,500 for this example. You can borrow the remainder using home equity.
At tax time, you receive tax credits worth 30% of the installation cost. You can use these funds to pay down a portion of the loan.
This typical example provides $700 per year in electricity savings. Also, interest on your loan can be deducted from your taxes. These savings offset your loan payment.
As electricity prices go up, your savings increase. Over the 25-year lifetime of the panels, the total benefits (sum of savings minus all loan payments) is expected to exceed $10,000. Not a bad return on your $3,500 initial investment.
If you decide to sell your home, it is easy to recoup your down payment and any remaining loan balance. Solar homes sell more quickly for more money.
When you are buying all of your electricity from the grid, each month you spend money and never see any return. When you own a home solar power plant, each month you are saving money on your electric bill and using the savings to improve the value of your home.
Many other lenders offer loans as well. If you need to take out a loan, your installer will help you find the best deal for you.
In addition, the North Carolina energy bill passed in 2017 (HB589) provides for solar leasing, which is expected to be in place in 2018. Ask your installer what leasing options are available to you.