Solar Incentives

It might surprise you to find out that North Carolina is the number 2 solar state in the nation for 2017. But in North Carolina solar energy represents a bountiful crop and the enterprising folks of the Tar Heel State are great at harvesting sunshine.

The following article offers an in-depth exploration of current data, policies, incentives, and trends related to North Carolina solar energy. Please feel free to provide additional contributions in the comments section, below.

North Carolina ranks number 2 in SEIA’s top 10 states for total installed solar capacity. Credit: SEIA.org

North Carolina is #2 in the Top Ten Solar States for 2017

Rising from last year’s 4th position to the number 2 state for solar capacity installed, over 994 MW was installed in 2016. The Solar Energy Industries Association (SEIA) reports that North Carolina solar energy capacity rose to a total of 3,287.5 MW installed to date.
According to the latest data for North Carolina solar energy, SEIA states that this stunning solar capacity is equivalent to powering over 371,000 homes, or more than 297 watts per person. SEIA is also predicting that North Carolina solar energy capacity will increase to more than 3,560 MW installed over the next 5 years.

Tracking closely the price declines for the US, which has seen a 70% drop in solar costs since 2010, costs for North Carolina solar energy projects have likewise fallen by 64% over the past 5 years.

And, as solar costs have declined, North Carolina’s economy has benefited strongly from rising investments in solar power projects. Leading the South, and 4th in the nation, this past year witnessed more than $1,174 million invested in solar, bringing the current total for solar investments in North Carolina to over $5,236 million.

With rising investments in solar power projects, North Carolina’s solar jobs market has also improved. SEIA reports that 7,112 positions are now filled in the state’s solar industry, spread across 248 businesses.

North Carolina solar energy-related companies include 108 installers/project developers, 43 manufacturers, and 90 other solar-related firms, such as architectural/engineering firms, financial service providers, equipment distributors, not-for-profit solar promoters, project consultants, solar power service providers, etc.

Forecasting North Carolina Solar Energy Trends

While the trend for North Carolina solar energy capacity is mostly positive for the foreseeable future, there are some major concerns in the market. SEIA reports that the 31 December 2015 expiration of the state’s renewable energy tax credit, in place since 1977, and the 31 December 2016 expiration of the Renewable Energy Production Tax Credit (PTC) are negatively impacting North Carolina’s future solar market growth.

Also problematic, SEIA notes, is North Carolina’s backlog of interconnection agreement assessments, impacting the timely completion of current solar power projects.

On the positive side, SEIA applauds North Carolina solar energy capacity growth due to strong state policy and regulatory support, especially the state’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS), which calls for 12.5% of investor-owned utilities’ electricity coming from renewable sources by 2021.

In addition, a new law authorizing solar leasing was recently signed by Governor Roy Cooper and is widely expected to boost residential solar installations across the state.

North Carolina is also privileged to host major players in all fields of the solar value chain. Major investors include such big names as Bank of America in Charlotte and Blue Cross & Blue Shield of Durham. Major developers include O2 Energies of Cornelius; construction contractors such as Horne Brothers of Fayetteville; solar panel manufacturers such as DuPont of Fayetteville; and component manufacturers such as ABB of Raleigh for inverters, Schletter of Shelby for racking, and Torpedo Specialty Wire of Rocky Mount for electrical wiring.

Historically struggling to increase jobs and businesses, rural areas of North Carolina are now witnessing record-breaking growth as utility-scale solar installations are rising all across the state. As of March 2016, utility-scale solar installations in North Carolina owned by Duke Energy and other companies total over 2,087 MW of solar capacity. Duke Energy alone has around 450 MW of solar capacity in the state, enough solar power to plug in about 85,000 homes.

Bringing much-needed growth in jobs and economic development opportunities, SEIA reports that some of the highest levels of investment are in rural counties, with Catawba, Robeson, and Wayne leading in utility-scale solar investments.

North Carolina Solar Energy Incentives & Programs

Federal Incentives

The federal solar investment tax credit (ITC) is available across the United States. The ITC offers a credit from the federal government of up to 30% of a solar installation’s costs. However, you can only take full advantage of the credit if you have that much tax liability in the tax year.

Under current law, the 30% ITC is extended through 2019 but is scheduled for a phase-out after that. In the 2020 tax year, the credit decreases to 26%. It drops to 22% for the 2021 tax year and is scheduled to expire on 31 December 2021. Existing homes and new construction of both principal and second homes qualify for the ICT. Rental homes, however, do not qualify.

Businesses may also qualify for a corporate depreciation incentive, as well as the Business Energy Investment Tax Credit (ITC-1603).

State Incentives

The following is a limited sample of state solar energy incentives recorded on the North Carolina page of the DSIRE Incentives Database.  Operated by the N.C. Clean Energy Technology Center at N.C. State University, the Database of State Incentives for Renewables & Efficiency (DSIRE) website offers a comprehensive and up-to-date public clearinghouse for solar energy incentives across the US, including federal and state incentives, programs, and policies.

North Carolina Solar Energy Net Metering Policy – Last updated 17 August 2017:

Established in 2005, the North Carolina Utilities Commission (NCUC) provided net metering rules for the three investor-owned utility companies: Duke Energy, Progress Energy, and Dominion North Carolina Power. Rules were amended in 2009 and will be amended soon to meet new requirements established by HB 589, signed into law in July 2017.

HB 589 includes several new provisions for net metering. Each investor-owned utility must file revised nondiscriminatory rates with the NCUC, established only after a costs and benefits investigation of customer-sited solar energy generation. The new rates will require net metering customers to pay their full fixed cost of service, possibly including fixed monthly energy and demand charges.

Until the new rates are established, solar customers are eligible for their utility’s existing net metering tariffs, detailed as follows. Customers who own their systems and are net metering under their utility’s existing tariffs will have the option to remain on these tariffs until 1 January 2027.

Current Net Metering Program Overview:

• Utilities: Duke Energy, Progress Energy, and Dominion North Carolina Power
• Eligible Renewable/Other Technologies: Solar Photovoltaics, Wind (All), Biomass, Hydroelectric, Hydrogen, Landfill Gas, Tidal, Wave, Wind (Small), Hydroelectric (Small), Anaerobic Digestion, Fuel Cells using Renewable Fuels
• Applicable Sectors: Commercial, Industrial, Local Government, Nonprofit, Residential, Schools, State Government, Federal Government, Tribal Government, Agricultural, Institutional
• Applicable Utilities: Investor-owned utilities: Duke Energy, Progress Energy, and Dominion North Carolina Power
• System Capacity Limit: Customer-owned systems: 1 MW; Leased Photovoltaic Systems (Residential): Lesser of 20 kW or 100% of estimated demand; Leased Photovoltaic Systems (Nonresidential) Lesser of 1,000 kW or 100% of contract demand
• Aggregate Capacity Limit: Customer-owned Systems: No limit specified; Leased Photovoltaic Systems: 1% of the utility’s previous five-year average coincident retail peak demand; Community Solar Projects: Statewide limit of 20 MW
• Net Excess Generation: Credited to customer’s next bill at retail rate; granted to utility at beginning of summer billing season
• Ownership of Renewable Energy Credits: Utility owns RECs (unless customer chooses to net meter under a time of use tariff with demand charges)
• Meter Aggregation: Community Solar authorized for Duke Energy Carolinas and Duke Energy Progress

Additional Notes on Net Metering:

• A customer may choose to net meter according to any available rate schedule. However, net metering under any tariff besides a time-of-use demand (TOUD) tariff will require the customer to surrender all renewable energy credits (RECs) associated with customer generation to the utility with no customer compensation.

• For residential installations up to 20 kW and non-residential systems of up to 100 kW capacity, the utility may not impose standby or additional metering charges beyond those normally charged to non-net metering customers under the applicable tariff. For larger installations, the utility is allowed to charge standby charges according to approved standby rates applicable to other customer-owned generation.

• Net excess generation (NEG) during a billing period is carried forward to the next billing period at the full retail rate of the utility. However, at the beginning of each summer billing season, accumulated net excess generation is surrendered to the utility with no customer compensation.

• For customers on TOUD tariffs, on-peak NEG is used to offset on-peak consumption, and off-peak NEG offsets off-peak consumption. Remaining on-peak NEG, after offsetting on-peak consumption, may additionally be used to offset off-peak consumption, but off-peak NEG may only be used for off-peak consumption.

• Net metering is available for eligible systems with battery storage. However, manipulating NEG via battery storage technology under a TOUD tariff is not allowed.

• Blue Ridge Electric Membership Corporation Net Metering program is handled slightly differently. Please consult the DSIRE listing for further details.

• Net metering customers are not eligible to participate in the statewide NC GreenPower Program (see next section).

NC GreenPower Production Incentive Program – Last Updated 1 April 2015:

North Carolinians who are not participating in net metering have the option to sell Solar Renewable Energy Credits (RECs) through the statewide not-for-profit NC GreenPower (NCGP) production incentive program.  Owners of small solar energy systems up to 5 kW may apply online at any time, but payment arrangements for systems over 5 kW (to a maximum of 10 MW) are made by submitting a proposal for consideration when NCGP issues an RFP.

Current NC GreenPower Program Overview:

• Website: http://www.ncgreenpower.org
• Budget: Small PV: 100kW annual budget limit
• Utilities: extensive list – please consult DSIRE listing for full details
• Eligible Renewable/Other Technologies: Solar Photovoltaics, Wind (All), Biomass, Hydroelectric, Landfill Gas, Wind (Small), Anaerobic Digestion
• Applicable Sectors: Commercial, Industrial, Local Government, Nonprofit, Residential, Schools, State Government, Agricultural, Institutional
• Incentive Amount: Varies by technology and system size: PV up to 5 kW: $0.06/kWh; PV larger than 5 kW: must enter bid process; Wind up to 10 kW: $0.09/kWh; Wind larger than 10 kW: must enter bid process.
• Terms: Payments contingent on program success
• Eligible System Size: Solar PV: 5 kW maximum for expedited process; Wind: 10 kW maximum for expedited process
• Ownership of Renewable Energy Credits: NC GreenPower receives and then retires the REC

Additional Notes on the NC GreenPower Program:

• NCGP is an independent, not-for-profit organization created in October 2003 by a consortium of North Carolina government officials, electric utility companies, nonprofit organizations, consumers, renewable energy advocates, and other stakeholders. It was the first statewide green power incentive program in the US. All three investor-owned utilities and many of the state’s municipal utilities and electric coops are participating in the NC GreenPower program.

• Eligible generators enter into power-purchase agreements (PPAs) with NCGP as well as their utility company. Guaranteed contracts are not provided by NCGP to generators, however, because premiums paid to NCGP are funded solely by voluntary contributions from statewide electric customers.

• Incentives include payments from NCGP and from utility PPA, made on a per-kilowatt-hour (kWh) basis varying by technology. Small solar energy system owners currently receive $0.06/kWh from NCGP, plus about $0.04/kWh from their utility PPA, for a total production incentive of approximately $0.10/kWh, paid quarterly.

• Tennessee Valley Authority (TVA) customers are also eligible for the TVA Green Power Providers (GPP) program. This 20-year program for eligible generators provides an incentive of $1,000 upon installation. TVA purchases 100% of the output from eligible systems at a premium of $0.02/kWh on top of the retail electricity rate. For years 11-20 of the contract, participants are paid only the applicable retail rate. Payments may be made monthly or annually. Current premium amounts are published annually. For more details, please see the Green Power Provider Guidelines for 2017.

NC GreenPower helps get a wounded Veteran’s solar PV system back on track. Credit: NC GreenPower

Property Tax Abatement for Solar Electric Systems – Last Updated 4 December 2015:

Effective 1 July 2008, 80% of the appraised value of a solar energy electric system is exempt from property tax. In February 2011, further clarification was issued to provide 100% exemption for residential PV solar systems not used to generate income or in connection with any business.

Links to Additional North Carolina Solar Energy State Incentives and Programs:

• Local Option – Property Assessed Clean Energy (PACE) Financing Last updated: 18 September 2015

• Active Solar Heating and Cooling Systems Exemption Last updated: 04 December 2015

• Local Option – Green Building Incentives Last updated: 04 December 2015

• Local Option – Financing Program for Renewable Energy and Energy Efficiency Last updated: 15 March 2017

• TVA – Solar Solutions Initiative Last updated: 04 June 2015

• Solar Rights Last updated: 18 November 2016

Interconnection Standards – Last Updated 17 August 2017:

Legislation signed into law in August 2007 required the NCUC to establish interconnection standards for distributed generation systems with up to 10 MW capacity. Similar to the Federal Energy Regulatory Commission’s (FERC) interconnection standards for small generators, the NCUC standards govern interconnection to distributes systems of Duke Energy Progress, Duke Energy Carolinas, and Dominion North Carolina Power. Municipal utilities and electric cooperatives in the state are not governed by the NCUC’s interconnection standards.

The NCUC standards use a three-tiered approach to simplify the interconnection process:

• Inverter Process: Systems up to 20 kilowatts (kW)
• Fast Track Process: Systems larger than 20 kW that meet the eligibility criteria in the table below
• Study Process: Systems that fail to qualify for the Fast Track Process

The applicable interconnection standard for most North Carolinian homeowners is the Inverter Process. Specified for systems up to 20 kW in capacity, homeowners pay an application fee of $100 and the utility may require an additional safety disconnect switch. The fee must be reimbursed if the system is under 10 kW. Learn more details on DSIRE’s NC interconnection standards listing.

Duke Energy pilot project to serve a remote communications tower in Great Smoky Mountains National Park. Credit: Duke Energy

North Carolina’s (Remotely Interesting) Energy Storage Policy

A recent study from the Center for the New Energy Economy notes that North Carolina does not have a procurement target or set goals for energy storage. It adds, however, that utilities in the state are actively interested in energy storage technologies and are currently developing storage projects. In November 2016, for example, Duke Energy proposed a solar energy and battery storage project in the Great Smoky Mountains National Park to power a remote communications tower.

The Energy Storage Workgroup of the North Carolina Sustainable Energy Association notes that the cost of energy storage has declined significantly and storage technology performance has advanced appreciably. Expressing optimism about the growing number of NC utilities’ energy storage pilot projects, the workgroup states that improvements will come as the state provides clear guidance on how energy storage may be commercially deployed.

The recent passage of HB 589, covered below, may help provide this much-needed guidance. As reported by North State Journal Online, “The bill also includes a study of energy storage and a path for swine and poultry waste-to-energy development and connection to the North Carolina electric grid.”

HB 589 Brings Big Updates for North Carolina Solar Energy

Entitled Balanced Energy Solutions for North Carolina, HB 589 was signed into law on 27 July 2017. Requiring new regulations aimed at achieving a statewide solar target of 6,800 MW by 2020, HB 589 would far exceed SEIA’s forecast, mentioned above, and more than double North Carolina’s solar energy capacity in the next 3 years.

Passing the House by 66-41 and the Senate by 36-4, the new solar law represents an intensive negotiation effort between NC utility officials and solar advocates. Features of the bill include establishing a competitive bidding program, better access to low-cost financing, a solar leasing program, and community solar provisions. As mentioned above, HB 589 also requires new net metering rates and gives a nod towards developing the state’s energy storage policy.

Plans for community solar programs in Duke Energy Carolinas and Duke Energy Progress territories are now required to be filed with the NCUC and programs will be available after the NCUC approves the plans. HB 589 states that a minimum of 5 subscribers is required, with no individual subscriber owning over 40% interest in the project. No net metering will be available for community solar projects. Rather, subscribers will be credited at the avoided cost rate for all electricity generated by their share of the project.

Also authorized by HB 589, solar leases will now be available in Duke Energy Progress and Duke Energy Carolinas service territories, as well as any municipal utility opting into the solar lease provision for its customers. Costs associated with offering solar leases by these utilities to their customers may not be recovered through customer rates.

A set of requirements is also imposed on the companies offering solar leases, including required contractual provision between the customer and the company, disclosure requirements, and record-keeping requirements. In addition, an official certificate must be obtained from the NCUC before a company may offer solar leases in North Carolina.

Current Solar Costs in North Carolina

The cost of a solar installation in North Carolina has dropped dramatically in the past few years. As of mid-2017, the average installed price for solar panels in North Carolina is $3.23 per watt. With a typical rooftop solar system size of 5 kW, the average price in North Carolina would be $16,150 before any tax credits, incentives, or rebates. After the federal ITC of 30%, or $4,845, the price whittles down to $11,305.

Of course, every solar installation is unique so it’s best to get an initial quote and then have a local installer take a closer look at your situation so you can get a more specific quote.

Keep in mind that residential solar installations typically produce electricity for 20-plus years, offering substantial savings in utility bills over this long term. Studies have found that the average solar homeowner saves about $1,000 a year over 20 years as a result of going solar. This means your payback period is roughly 11.5 years and it’s all free, clean energy after that–contributing a solar power harvest of about $8,500 by year 20.

And, even if you decide to move before 20 years, the rise in property value contributed by your solar installation can likewise be substantial. For example, a 5 kW solar installation adds an average of $29,555 to the retail value of an average, medium size home. The appreciation in property value alone is more than double the price of the solar installation!

Notable North Carolina Solar Energy Installations