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A 2023 Guide to Top Solar Incentives in South Carolina

Solar incentives in South Carolina help homeowners and businesses save up to 40% on their solar systems. Over the last ten years, solar prices have fallen 52%, which has helped around 245,000 homes to have access to clean and green energy in the form of solar power.

Before discussing solar incentives in South Carolina, let’s briefly look at why you should turn to solar in South Carolina. One, South Carolinians are the third biggest spenders on electricity bills in the US—electricity is 23% more expensive here than the national average. Two, South Carolina has pleasant weather, with up to 5 peak sun hours, allowing solar panels to generate enough electricity for the day.

And lastly, the solar incentives in South Carolina, as we discussed, can reduce the cost of solar installation by 50% or even more. So, what are the top solar energy incentives available for South Carolinians?

Solar incentives in South Carolina

Here is a list of the top solar incentives you can claim upon going solar in the Palmetto State.

Federal Solar Investment Tax Credit

Formally called Clean Energy Credit, it is a federal income tax credit that saves you a flat 30% on the very first day of your solar installation. If you want to install a system that costs you $18,000, the price will become $12,600. As you start the installation process, your solar installer will do all the paperwork to get you the Federal Income Tax Credit.

The good thing about this tax break is that it covers almost everything involved in solar installation. The eligible expenses include solar panels, inverters, batteries, wiring, labor costs, and other associated costs. You just need to be a homeowner and a taxpayer, and the system installed must be installed between January 1, 2017, and December 31, 2034. Starting from 2033, the tax credit falls to 26%.

But what if you do not have enough tax liabilities? Carry it forward! And you can carry it forward to coming years until your income tax liabilities match the federal tax credit.

South Carolina state tax credits

South Carolina offers one of the country’s excellent state tax credit programs. Upon installing solar, you can be eligible for a 25% tax credit, capped at $3,500 per year, against your state tax liabilities. So, if you install a solar system worth $30,000, deduct the 25% from the full price of your solar installation becomes $22,500.

But here is the catch!

While the cost of your system will become $22,500, you cannot claim more than $3,500 or 50% of your state tax liabilities, whichever is less, in a given year. It means that you will have to carry forward the remaining $3,000 to the next year. The good thing about the South Carolina Tax Credit is the rollover period—you can carry the unused credit forward for ten years until it matches your liabilities!

If you are a taxpayer, you are eligible for the tax credit. Eligible expenses include solar equipment as well as installation costs. Combine it with the federal tax credit, and the cost of your solar system is reduced by 55%. Full marks to South Carolina here!

Did you know?

South Carolina ranked 14th in 2022 for most solar power installed, up 12 ranks from 26th in 2021.

Currently, 2.9% of South Carolina’s electricity demand is met by solar power.

South Carolina solar rebates

Solar rebates are upfront incentives solar shoppers can claim upon going solar. They are often offered by states, utilities, local governments, or even manufacturers.

In South Carolina, the residential customers of Santee Cooper can receive a rebate of $600-1,200 for every kW of solar power they install, with a maximum size of 6 kW. But note that these rebates are limited, with the applications being reviewed on a first-come, first-served basis. Also, the rebates, which are capped at $6,300, last as long as there are enough funds.

Net metering policy in South Carolina

Net metering is an excellent program that lets homeowners export the excess energy their solar systems generate to the grid, against which they receive energy credits. Homeowners can use these credits during times of need, for instance, at night or in unpleasant weather. If the energy credits are still in surplus, utilities may adjust them in the electricity bill.

As a state policy, South Carolina offers the net metering facility to homeowners and businesses. But there are three things you need to know about net metering policies in South Carolina.

  • 1. You cannot have systems larger than 20 kW. Usually, systems within the range of 10 kW work for most homeowners. Since bigger systems would export more electricity, the utility cannot afford to pay each solar customer for their net excess generation.
  • 2. Your unused credits are carried forward to the next month. But the utility companies must pay for the surplus unused credits at avoided cost rate. Avoided cost rates are lower than the rates at which utilities sell electricity.
  • 3. The aggregate capacity limit is capped at 2% of the respective utility’s peak demand for the previous five years.

Earlier, the net metering policy was more generous, but this is not bad either. Installing the right-sized system can save hundreds of dollars on your electric bill every year, depending on your usage.

How much do solar panels cost in South Carolina?

The average cost of solar PV systems in South Carolina range between $2.5 to $2.8 per watt before the 30% federal tax credit is deducted. After the deduction, the cost comes down to $1.9 to $2.2 per watt.

Based on the price above and the incentives offered, let’s see how much can solar system cost you in South Carolina.

Suppose you are a homeowner, consuming about 900 kWh of electricity every month. You would need roughly a 6 kW solar system to meet this demand. A 6 kW grid-tied system can cost you anything between $16,000 to $18,000—we will take the average cost as $17,000.

Deduct the Federal income tax credit, and the cost turns out to be $11,900. Now, deduct the 25% state tax credit ($4,250), and the cost further falls to $7,650. But you cannot claim more than $3,500 in the state tax credit, so you will have to pay $8,400, provided that you have enough federal and state tax liabilities.

If your liabilities are less than what you are getting in incentives, you will pay a little more. But the good thing? The tax credits are not going anywhere. They will be rolled over to the next years to match your tax liabilities match your tax breaks!

Add more incentives to it, and you get your system installed at the lowest costs. On the other hand, you are also saving hundreds of dollars on your electricity bills every year. It is time to join the solar revolution and start reaping the benefits!

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