Crazy New Incentives in South Carolina

[Robert1234]

Been out of solar for a couple years since I sold the last place, but have always intended to put some in at the new farm. Time is right to pull the trigger, and WOW are the incentives good in South Carolina right now. Last install I did my own with my co-op, but Duke Carolinas will chip in handily if I use a certified installer (and have to have one for commisioning anyway). Check out these incentives:

18.36 kW DC System
23.5 MWh Annual Production (my calcs for payback use 22.1)
SolarEdge system
Turn Key Price: $42.5 k (2.5k less if we can pull wires through a conduit I already have running to the barn and not have to trench again)
That's $2.32 per watt before incentives

Feds will chip in 12.7 k
State will chip in 10.6 k
Duke will chip in 18.4 k (based on current incentives)

That leaves me with a net cost of 4.4 k (or $0.24 per watt) based on expected taxes I will have to pay on the Duke rebate.

At my current electricity cost of $0.1026 per kWh that gives me a 2 year payback (1.5 year if I can save the 2.5k new trenching cost).

My permits and rebate applications are filed. If Duke comes through as expected, I'll be back in the game by the end of this year. I'm so glad I waited and didn't install last year!!

Anybody else in the Carolinas? You might want to get busy fast before the rebates run out.

[cebury]

Omg...

[DanKegel]

2 year payback? That's insanely good!

Details seem to be at http://www.duke-energy.com/south-car...ar-rebates.asp
Interesting that they want a copy of your quote.

[foo1bar]

Turn Key Price: $42.5 k
...

Feds will chip in 12.7 k
State will chip in 10.6 k
Duke will chip in 18.4 k (based on current incentives)

My understanding of fed tax incentive is that it's 30% of the net price.
So it will be 30%*(42.5-10.6-18.4) = $4050

But if your tax expert says you get the full amount (and won't have to pay income taxes on the state/poco rebates) then good for you.

[foo1bar]

That leaves me with a net cost of 4.4 k

That's not the number I came up with from the numbers you posted.
$42500
-12700
-10600
-18400
==========
800

That's separate from whether you get $12700 from feds.
I'm guessing you had a typo in the rebates you posted or something.

[SunEagle]

My understanding of fed tax incentive is that it's 30% of the net price.
So it will be 30%*(42.5-10.6-18.4) = $4050

But if your tax expert says you get the full amount (and won't have to pay income taxes on the state/poco rebates) then good for you.

I agree with your math. Still that comes to about $9500 for a 18kw system or close to $0.50/watt. Not too shabby.

[Robert1234]

That's not the number I came up with from the numbers you posted.
$42500
-12700
-10600
-18400
==========
800

That's separate from whether you get $12700 from feds.
I'm guessing you had a typo in the rebates you posted or something.

Glad you don't do my taxes. Fed stands on it's own on price out of pocket. So does state.

Duke will provide me with a 1099-Misc income form for the rebate i receive in the year I receive it - might be 2017 as it takes a month or so to process but is guarenteed once approved. I will need to pay fed & state tax on that "income". That is all accounted for in my statement, "That leaves me with a net cost of 4.4 k (or $0.24 per watt) based on expected taxes I will have to pay on the Duke rebate."

If you want details... I pay the full 42.5
Fed Income tax is credited 12.7 (credit is limited by my tax burden, which is less so some feeds forward to the next tax year)
State Income tax is credited by 3.5 first year, 3.5 second year, etc untill full 10.6 is achieved (you can feed forward for up to 10 years)
Duke Rebate is taxable in the year that it is recieved. It is treated as income, so does not affect my project expenses.

[foo1bar]

Glad you don't do my taxes. Fed stands on it's own on price out of pocket. So does state.

http://solaroutreach.org/wp-content/uploads/2015/03/ResidentialITC_Factsheet_Final.pdf

is first item when I searched.

IF that is accurate (and I don't guarantee it is) then probably your state rebate would effectively be taxed (lower state tax ==> more fed income to be taxed)

My POCO rebate was not a 1099 and not taxed. And therefore had to be netted out of the price before taking the federal credit.
(If your POCO treats it as income and your marginal income tax rate is less than 30% in total, then I'd think you're better off with it being income.)

I'd discuss it with your tax expert (I think now is a good time to talk to them about it, rather than during tax prep season)

[Robert1234]

My point in this post was not to get into a detailed tax discussion, but rather was to alert anyone in the Carolinas that if you had ever considered getting solar then NOW is the time. If won't get any better than this and the program is limited. Over 25% of the POCO rebates have already been allocated.

You are correct in that I neglected to account for the fact that effectively my reduced state tax would be taxed by the Feds in future years, and yes - Duke does issue the 1099-Misc in the Carolinas so it counts as income. Now, since we started down this path, let's look at the hard numbers using my personal incremental tax rates. I'll use your format of calculating being that I get to start at an apparent initial $800 out of pocket expenses with incentives lol.

Upfront Cost 42,515
Fed Tax Decrease 12,755
State Tax Decrease 10,629
Duke Rebate 18,360 (as income)
Net Price 772
Fed Inc Tax Rate 15.0%
State Inc Tax Rate 7.0%
Fed Tax Due on State Refund 1,594
Fed Tax Due on Duke Rebate 2,754
State Tax Due on Duke Rebate 1,285
Net-Net Price 6,405
Annual Savings 2,270
Payback 2.8 years
10 Year Power Savings 22,699 (dollars at current electricity rates)
Effective 10 Year ROI 13.5%
Effective 10 Year ROI Tax Sheltered 17.3% (Remember I don't have to pay taxes on the fact I don't pay for power)

So, I was low on my original estimated net cost by about 2k. Still, that's a pretty serious effective 10 year return on investment (ROI). Now if I can just get lucky enough to have room left in that 1.5" conduit running to the barn - I'll get back closer to my 2 year payback

[J.P.M.]

That SC situation sure does look interesting, worthy of note and perhaps of a time sensitive nature for folks in that state.

Aside from that, three things stick out to me in this thread:

1.) Questions everything you read here, especially including what the perhaps uninformed write.

2.) This is an example of the importance of getting it right and a little, or a lot of fact checking before pulling the trigger on a post.

3.) The sign over the door says "Solar Panel Talk", not "Tax treatment for Residential Solar". I suspect there are more engineers reading this forum than CPA's.

[gbynum]

If you want details... I pay the full ...

I'm addressing financial issues in solar panels ... and agree with Robert above that this probably is somewhat off topic.

I'm in Greenville SC and had a 4.25kW (DC) system installed last fall. Duke rebated $4250, taxed by US and SC. US rebate was within my tax bill and I got it all. My wife and I are both semi-retired and our SC taxes are low; rebate cannot exceed 50% of taxes; it will take me 5-10 years, at least, to get the SC rebate; it cannot go past 10. Even with that, I'm predicting a 6-8 year payback. FWIW, my roof pitch (just over 50 degrees) favors winter and I'll annually make maybe 90% of what a 30 degree would do. If you do 2 years, that is GREAT.

[Robert1234]

Hi gynum - You're just up the road from us (Woodruff, SC).

Your point deserves to be emphasized again... I am not retired, but it is still going to take 4 cycles of the SC tax for us to get all our rebate. Depending on your individual tax burden and with the limit on the years you can feed forward solar expense carry over on taxes, each person's solution needs to be indiviudally taylored and evaluated. What makes sense for one person, may not be the best soluton for another.

With regards to why your payback my be longer than mine, from what I have seen (and just like many other things in life), generally a larger install reduces the cost per unit item (in this case the cost per watt). Our system is 4-5x your install. A 6 year payback on a 4 kWatt install really isn't bad at all.

[Robert1234]

cubury - Yep this post is real (I'm replying to the original thread so as to let the copied thread die.)

Just got approval to install this morning. Still waiting on confirmation of the rebate, but my source inside DEC (Duke Energy Carolinas) tells me the $1 / DC Watt rebate program is alive and well and that it will be approved. Probably will be another month or so before I get the "real" guarenteed confirmation so we can place the equipment on order.

[Robert1234]

Got the commitment from Duke Power on the rebate and the thumbs up from an engineering firm that the barn roof will hold all the panels and wind/snow. We are a go. Hope to commission the system before year end (possibly by end November).

[solar pete]

Thanks for keeping us all up to date with this one Robert, sounds like an awesome deal, cheers.