For such a beautiful, progressive state, South Carolina has certainly been behind the times in solar panels. For years, the state had no real renewable energy policy in place. Recent changes to the state solar policies, along with dramatically lower solar costs (see the below Swanson chart) are now making solar a smart and affordable energy choice for South Carolina.
Let’s take a look at some of the great solar options available in South Carolina.
The chart below gives you an idea of the costs and returns for each solar option available to South Carolina residents – purchase, purchase with credit, and solar leasing. One important thing to note from the chart below: solar panels in South Carolina now makes you money. Unlike states with weaker solar programs and lower energy costs, South Carolina actually makes you money right away.
A cash purchase always delivers the most immediate, largest savings. With no loan payments, you realize 100% of the energy savings immediately, along with the Federal 30% tax credit.
We are going to focus on a $20,000, 5 kW system connected to Duke Energy, because they have a terrific new rebate program of $1000 per kW!
Considering an average purchase price of $15,000 for a 5kW system after rebate, you will receive a Federal tax credit of $4500 (30% on the net cost), your first-year investment is only around $10,500!
Next, there is a state tax credit that can be taken over 10 years, of up to 25% of the cost of your system! At an estimated $375 personal tax credit the first year, this brings your first year cost down to $10,125!
Your energy savings the first year should be around $811. Taking into account energy cost inflation, your system should pay for itself in around 9 years, and by year 25, you should see a net profit of around $24,800!
Not a bad return, and remember that you are helping to provide good-paying, local jobs and save the environment.
For most people, paying for solar with a home equity loan makes the most sense. Because you are using a home equity loan, you not only get the 30% Federal credit and state personal tax credit, but you can deduct the interest on the loan as well. You get all of the benefits and incentives without any cash out of pocket.
Let’s assume a home equity loan of 5% for a $15,000 net cost system. While there will be a few years in the beginning where the loan payments are greater than the savings in energy costs, energy inflation will quickly outpace your loan payment.
With an average $17,500 installation price, a purchase on credit makes perfect financial sense. Year one, you should have about $811 in energy costs, and have loan payments totaling about $1423. This means around $51 per month out of pocket your first year, but remember, you got $4875 in tax credits. That tax credit means you are $4263 ahead the first year!
By year 15, when the loan is paid off, you will be realizing about $1350 per year in savings, and by year 25 your total net savings are around $18,400, even after paying off the system!
If you would like a custom quote based on your energy use, click here for a quote.
Solar leasing is a great way to go solar if you are short of cash or if you don’t have the ability to take a loan. As you can see above, the immediate returns are not as impressive, but due to the relatively high Arizona energy costs and the normal energy cost inflation, your savings multiply year after year!
In South Carolina, you will start out with a relatively small savings of $10 per month, which multiplies over time, but you save this money with no money out of your pocket.
With solar leasing, you generally have two distinct options.
With standard leasing, you basically pay a rental payment for a solar roof system. The solar panel system is installed and maintained by the solar company on your roof. Depending on the amount of sun you get, the lease payment plus the new, lower electric bill should be less than what you are currently paying.
With a Power Purchase Agreement (PPA), you agree to allow a company to install home solar on your roof. You then purchase the energy your panels produce at a substantial discount to your current residential electric rates. As with a lease, the company maintains the system and assumes all risk. You just collect the savings.
Keep in mind that with a lease, you do not get the residual value of the system to your property, as you do not own it. You also do not receive any of the tax credits or other benefits of home solar ownership, other than lower energy costs.
A state’s Renewable Portfolio Standard (RPS) is a plan, based on legislation or regulation, that outlines goals and targets for production of renewable energy in the state. The RPS is the tool that encourages power companies to supply renewable energy rather than using fossil fuels.
South Carolina has a horribly weak RPS, passed in 2015. The standards and requirements are some of the weakest in the nation, but they are at least a starting point for a more robust program in the future.
South Carolina has no “solar carve-out’. A solar carve-out is a guarantee that at least some portion of the energy generated will come from solar panels. With an RPS in place, there is no mechanism to enforce or plan a solar carve-out.
South Carolina has a weak “net metering” policy, passed in 2014. Net metering basically sets out a statewide policy for monitoring and crediting the excess amount of power your solar system provides.
South Carolina has no standard “interconnection” rules, governing how home systems hook up to the power grid. A lack of interconnection rules greatly increases the cost of plugging in and sending power back to utilities.
South Carolina has no property tax exemption for the value of home solar systems. You are taxed for the increased property value of adding solar to your home. Not exempting solar discourages participation.
South Carolina has no sales tax exemption for solar. Many states exempt home solar from state sales tax, further reducing the actual cost of the system. Mississippi charges state tax on solar. This is a very easy, inexpensive change that would greatly increase participation.
South Carolina (Duke Energy) has some pretty fantastic rebate programs. At $1000 per kW, residential solar panels are almost free after all of the state and federal tax credits! Now, let’s see if we can make this mandatory for all state utilities.
State solar tax credits of 25% are some of the best in the nation. For all of the weaknesses of the South Carolina RPS, this is a great sign of good things to come.
There are some pretty good solar performance payments in effect right now, but they are not statewide, they are not permanent, and they amount fluctuates.
For a state with such an erratic and weak solar policy in place, there are some true bright spots that give us hope for the future. Keeping the great rebates and tax credits while strengthening the net metering and interconnectivity standards would give South Carolina one of the strongest renewable energy policies in the South.