Solar Panels in North Carolina: Cost, Trends, Incentives

The typical pre-incentives price for a home solar system in North Carolina was $34,816 in the second half of 2023, according to data from EnergySage, a solar and home energy product comparison marketplace. That’s in the midrange among the 42 states that EnergySage surveyed, compared to a low of $21,786 in California and a high of $46,403 in Kentucky.

In 2024, North Carolina ranked fourth in the nation in terms of installed solar capacity, according to the Solar Energy Industries Association. ^[0]

According to EnergySage, the average home solar power system size in North Carolina in late 2023 was 12.8kW, offsetting 94% of the average 887 kilowatt-hours (kWh) of monthly household electricity consumption in the state. That falls in the midrange of system sizes in the states surveyed, with California the smallest at 8.1kW and Kentucky the largest at 14.5kW. North Carolina solar is slightly cheaper per watt than the national average, at $2.71 per watt compared to an average of $2.96 per watt. ^[0]

The federal solar tax credit can reduce the $34,816 upfront cost of a typical North Carolina home solar system by as much as 30%, bringing it down to $23,405. Some significant local utility incentives can further lower the cost.

The average payback period for a solar system in North Carolina is 11 years, according to May 2024 data from EnergySage, with 20-year savings on an average system estimated at about $20,000. As in many states, solar costs in North Carolina have been trending down.

North Carolina’s solar industry got a boost in 2007 from the Renewable Energy and Energy Efficiency Portfolio Standard (REPS), which required the state’s major utilities to meet up to 12.5% of their energy needs through energy efficiency or renewable energy. That spurred North Carolina to become a leader in utility-scale solar, but the state still lacked many incentives for homeowners to go solar.

In 2005, the North Carolina Utilities Commission, which governs the state’s two large utilities, Duke Energy and Dominion Energy, had established a limited net metering (NEM) program that gave solar customers credit on their electric bill for unused electricity their system sent back to the power grid. ^[0]

As in many other states, North Carolina solar policy has been volatile. Unlike in some states, the NEM program in North Carolina has not been discontinued. However, in 2023, the Utilities Commission made some changes to the program that made it less cost-effective for solar customers to send their excess solar-generated electricity back to the grid.

The Commission established minimum monthly bills for solar customers and required that new solar customers transition to a time-of-use (TOU) electricity rate, under which electricity rates are lower at times of low demand and higher at times of high demand. Instead of getting a fixed rate for the excess solar they send back to the grid, North Carolina solar customers now get a variable rate based on time of use. The times when you send excess energy back to the grid are usually times of low demand, when rates are lower, making it likely that North Carolina solar will be less cost-effective under the new system.

To complicate matters, the state’s dozens of rural electric cooperatives and municipal electric utilities, which serve 2.5 million customers, are self-governing and are not subject to the same regulations, says Brian Lips, senior project manager for policy at the North Carolina Clean Energy Technology Center, a state agency focused on clean energy policy research. And the state’s two major utilities are handling NEM differently. If you’re a customer of Dominion Energy, you can still get net metering without being subject to TOU rates; if you’re a customer of Duke Energy, you have two options to pick from:

1. Switch to the TOU export rate with the minimum bill requirement.

2. Avoid the TOU export rate by choosing what’s called a Bridge Rate for 15 years after your solar project is connected to the grid. This option, which also comes with a minimum bill requirement but only about a 10% to 15% cut from the previous NEM rate, will be available through 2027, but it is subject to annual caps so may not be available for all solar customers.

Despite the changes to NEM, North Carolina homeowners can still benefit from the policy, and they also have access to significant incentives to go solar. One of these is the federal solar tax credit, also known as the Residential Clean Energy Credit, which provides a credit of up to 30% of the cost of your solar power system. Additional incentives and protections are available at the state level. You can find details on these and more at the Database of State Incentives for Renewables & Efficiency (DSIRE):

• Residential solar systems in North Carolina are exempt from property taxes, provided they “are owned by individuals and not used to produce income or in connection with a business.” ^[0]

  https://www.ncdor.gov/documents/bulletins/solar-energy-electric-systems-memorandum-2011/open. Solar Energy Electric Systems. Accessed Jun 25, 2024.

• The North Carolina Solar Rights policy stipulates that cities and counties in the state may not adopt ordinances that prohibit the installation of solar panels, though they may regulate the location and screening of the panels. ^[0]

• The state’s programs for low-income households will be expanding with a grant of $156 million as part of the Biden administration’s $7 billion Solar for All program. ^[0]

North Carolina utilities sometimes provide incentives for solar customers, too, such as the significant rebate for solar plus storage covered in the following section. Check with your utility to see what programs are currently available in your area; your solar installer can also help you find these. In addition, the North Carolina Sustainable Energy Association (NCSEA) maintains a consumer guide that lists incentives and resources, as well as a list of installers who have agreed to the terms of their Solar Business Member Code of Conduct.

Energy storage can help offset lower NEM export rates and hedge against future rate cuts, making a home solar system more cost-effective. Home solar batteries cost an average of $11,831 in North Carolina after the federal tax credit, according to EnergySage. ^[0]

Utility incentives like Duke Energy’s PowerPair program can significantly lower that cost. PowerPair offers customers who install solar combined with energy storage a rebate of up to $3,600 for solar and $5,400 for batteries, for a total of $9,000. ^[0]

“We have seen a dramatic increase in battery sales,” says Matt Abele, executive director of NCSEA, which he partly attributes to the PowerPair program. “Some of our residential solar installers have moved from a 20% to 30% attachment rate in all of their projects to a 100% attachment rate, in which storage is associated with 100% of their projects.”

This is not surprising, because batteries installed with solar power systems can bring North Carolina homeowners significant benefits:

• Batteries improve the economics of home solar as NEM export rates are lowered, because instead of sending excess energy back to the grid at a lower credit, you can store the energy to use later.

• If you are transitioned to a TOU electricity rate, a solar battery can lower your costs by storing the electricity your panels generate during the day, when demand is low and export rates are low, and letting you use it in the evening.

• When extreme weather events strain the power grid, batteries provide reliable energy backup. Solar alone won’t keep your home powered during an outage, because systems are designed to shut off if there’s an outage to ensure the safety of utility workers.