Upstate homeowners who notice more houses in their neighborhoods with solar energy panels are witnessing a recent trend. Increasing numbers of residents are installing solar panels thanks to a state tax incentive and a South Carolina Duke Energy subsidy that make it more affordable than it ever has been.
The trend is real: Solar Energy Industries Association reports that South Carolina solar installers are among the busiest in the country. In 2014, Gov. Nikki Haley signed in the Distributed Energy Resource Program Act (Act 236), allowing Duke Energy and other utility companies to build solar in the state and recoup their costs just like they do with power plants. The legislation led Duke Energy to offer a limited-time solar rebate program to help its South Carolina Duke customers with the upfront cost of installing solar on their homes and buildings.
“The typical solar panel installation adds to a house’s resale value about $6,000 for each 1 kilowatt of installed solar. So for a 5 kW installation, there is an additional $30,000 added to the home’s value.”
And, finally, solar panel installation also could qualify for a 30 percent federal tax credit on qualified expenditures by the homeowner. The deadline is Dec. 31, 2019.
So the savings are significant, but what does it mean for the average homeowner to harness the sun’s energy with solar panels? Here are a few facts about solar panels:
DIFFERENT TYPES OF SOLAR PANELS:
Monocrystalline silicon solar panels, also called the most efficient panels, are useful on smaller roof surface areas because you don’t need as many of these on your roof. They generate more electricity per square foot than other types.
Polycrystalline silicon panelsare less efficient and less expensive. They don’t have as much silicon as the monocrystalline silicon solar panels.
Building integrated photovoltaics (BIPVs) are the most expensive solar panels, but they work well with new construction because they’re designed to be part of the building and not added on.
DIFFERENT TYPES OF SOLAR PANEL INSTALLATIONS:
Roof installation: This works well for people in urban, historic, and suburban neighborhoods where it’s important to keep the panels as aesthetically pleasing as possible and where a Southern-facing surface is available.
Ground mount: For people who have enough property space, a ground mount is simple and easier to install, although it could be more costly.
Pivoting stands: This type of installation is attractive to people who want their panels to follow the sun throughout the day. They’re more efficient, but also more expensive to install.
ALTERNATIVE WAYS TO FINANCE SOLAR PANEL INSTALLATION:
Solar leasing: This way to pay for solar panels has become very popular because homeowners can lease panels for little or no money down. They pay a set amount each month, and the leasing fee usually is less than the cost of electricity from the power company.
Power purchase agreement: Similar to a lease, the PPA has a homeowner pay a set amount for every kWh the solar system produces.Home equity loan:Solar panels can add to a home’s value, so – like renovation costs – it might be more affordable to borrow from your home equity to fund it.
Energy efficient mortgage: The federal government offers EEMs for the purpose of financing solar panels, but the home has to be home energy rated through an energy audit professional.
Dollars and sense
How long does it take for me to get a ROI for solar?
The return on investment for solar panels is not so much a question of how much, but how long. South Carolina has been one of the places where out-of-pocket for solar power is higher and slower to recoup, but that is changing with more solar venders moving to the state within the past year. The average cost of installing solar panels is $15,000 to $20,000 nationwide.
For homeowners who expect to sell their homes in the near future, there might be an immediate return on investment: The typical solar panel installation adds to a house’s resale value about $6,000 for each 1 kilowatt of installed solar. So for a 5 kW installation, there is an additional $30,000 added to the home’s value.
But homeowners also can gain a ROI if they stay in their home. Here’s a sample scenario: An Upstate homeowner spends $20,000 on a 5 kW solar panel installation. The project qualifies for a $5,000 Duke Energy rebate (although the rebate amount could be reduced by Duke at any time), a $6,000 federal tax credit, and a $5,000 state tax credit distributed over two years. (Note: The out-of-pocket expense would be recouped in the 36th month, but since Duke Energy’s rebate is considered taxable income, there is a slightly higher overall cost.)
The two tax credits and rebate come to $16,000, leaving the homeowner responsible for $4,000. In South Carolina, a homeowner who has installed solar panels could expect an average utility savings of $114 per month. This means the homeowner would receive a return on investment in about three years. Without rebates and tax credits, the ROI is typically about 10 to 14 years.