Solar Cost Slasher: Renewable Energy Credits

A recent EnergyNorthCarolina podcast about the rise of solar in the state says that installed costs for most homes are now 24 percent lower than in 2006. A system for a typical home can now be installed for $6,840 per kilowatt (kW) in the state, down from the $9,000/kW it would have cost in 2006.

As solar panel prices have dropped, the cost of installed solar systems (worldwide) is increasingly now made up of the cost of everything but the actual panel. The balance of the system— racking, the inverter (that converts the DC that the solar makes into AC, which is what is on the grid), customer acquisition, permitting and labor—now accounts for the lion’s share of the cost of a solar installation.

image via Richard Darwin Inskeep

But solar costs still vary greatly from state to state, even though homeowners in every state are eligible for the 30 percent federal tax credit. That is because every state has its own incentives for solar, in addition to the federal tax credit.

In North Carolina, to meet the state renewable energy standard (RES) the investor-owned utilities must generate at least 12.5 percent of their retail electric sales from a combination of renewable energy and energy efficiency resources by 2021, including at least 0.2 percent of retail electric sales from solar energy.

Co-ops and municipal electric utilities in the state must meet a 10 percent requirement by 2018, including at least 0.2 percent of retail sales from solar energy.

Utilities can meet the RES not just by building their own clean energy, but by taking credit for your solar system. When you, as a North Carolina utility customer, install solar that generates power, you can sell the utility the REC for however many units of power you generated each year.

With RECs, the more power that your system generates, the more money you earn every year.

And even though it is you benefitting from the solar power you generate on your own roof (cutting your own energy bill), you can still earn money as well for doing so, from RECs. The logic is that, as more people must be supplied with energy, the new energy, even though you are using it, is still new electricity being generated that the utility did not have to pay to build. You are an energy supplier.

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image via Shutterstock

One REC is paid for each megawatt-hour of solar electricity produced, like in New Jersey, which has catapulted to No. 2 nationally because it uses (incredibly well-paying) solar credits as incentives. In Pennsylvania, so many people got in to selling their (solar) SRECs that the price crashed.

Since passing the North Carolina REC bill in 2006, till the end of last year, a total of over 128 megawatts of solar power has been installed, among 1,142 solar systems across the state. That’s the equivalent of building one small coal plant right there.


  • Reply April 15, 2012

    Willie Wonka

    At a time when we should be encouraging solar and other non-fossil energies look at what the Tennessee Legislature is trying to do.  Could coal and other fossils be behind this?  This is from the Tennessee Conservation Voters Legislative Report 4.13.12

    SOLAR ENERGY – Tennessee -Senate Bill 3296, sponsored by Senator McNally (R-Oak Ridge) and House Bill 3520, sponsored by Representative Hawk (R-Greeneville), will increase the appraised value of solar property for purposes of property taxation from 0.5 percent to 33 percent of the original cost, resulting in an incredibly large and burdensome tax increase of over 6,500 percent.  Click here to read further about this issue that has become a hotly contested political fight between the solar industry (and other business interests) and the comptroller’s office.  TCV is opposed to this bill and agrees with points raised by solar businesses, for example:
    This is a new, significant tax increase on solar installations in the state. It will affect every part of the solar value chain in Tennessee that employs over 6,000 workers at hundreds of companies.This bill raises taxes on solar and other renewable energy facilities, and will result in fewer solar installations in the state.Fewer Tennesseans will have jobs installing solar panels that are made in Tennessee with locally-made components.There are almost 700 solar installations in Tennessee. Policies like the property tax exemption have made solar more competitive and created jobs making and installing panels.    

    • Reply April 15, 2012

      Susan Kraemer

      Wow, that is an incredible increase! To “increase the appraised value of solar property for purposes of property taxation from 0.5 percent to 33 percent of the original cost”
      Talk about a disincentive. Those good ole boys sure know how to keep the clean energy away.

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