In August 2016, Furman University announced that it would build a 743-kW solar facility along Poinsett Highway. The $1.7 million project is expected online in early 2017 and will consist of approximately 3,000 photovoltaic solar panels. The solar facility will be directly connected to Furman’s electrical system and the energy produced will be used by the University. The project is expected to reduce the University’s electricity costs by up to 5% – $88,000 – and reduce greenhouse gas emissions by 3%. It will also advance the University’s goal of achieving carbon neutrality by 2026. The return on investment is expected to be about eight years. The useful life of the system is 25 to 30 years.
Furman’s solar project highlights 4 reasons why you should consider including solar power in your next project:
First, South Carolina currently provides an income tax credit, available to both businesses and individuals, equal to 25 percent of the cost incurred by a taxpayer for the purchase and installation of a solar energy system. A taxpayer can claim a maximum of $3,500 of their income tax liability each year and credits exceeding the maximum yearly amount can be carried forward for up to ten years, providing a tax savings of $38,5001.
Second, the federal government also has a solar Investment Tax Credit that provides a 30 percent federal tax credit for the installation of solar systems on residential, commercial and utility property. The tax credit is calculated based on the investment in the solar property. So, a taxpayer is eligible to receive a credit for 30% of their basis invested in the project. The full 30% tax credit is available to all solar projects that commence construction through 2019. After 2019, the tax credit will gradually step down to a permanent 10% for commercial and utility installations and will phase out entirely for residential solar projects in 20232.
Third, like Furman, Duke Energy customers in South Carolina may also be eligible for rebates related to installing solar panels. Duke Energy has Large and Small Solar Rebate programs that offer a rebate of $1 per watt of installed solar power. The Small Solar Rebate program is available to residential and non-residential customers for systems with a capacity of 20kW or less. The Large Solar Rebate program is available to nonresidential customers only for systems with capacities between 20kW and 1,000kW. Participation in the rebate program is approved at the company’s sole discretion on a first-come, first-served basis. Notably, Duke Power must receive and approve applications prior to the installation of solar panels, otherwise the customer is ineligible3.
In addition to tax credits and rebates, South Carolina businesses and homeowners that install solar panels on their rooftops before 2021 will receive full retail credit for any power that flows back into the grid and will remain eligible for this rate through the end of 2025. The practical effect of this net metering is that the customer pays the utility when they generate less electricity than they consume each month. If the customer generates more energy than consumed in a month, the customer receives a credit for the next month.
Fourth, solar power allows businesses and public entities to harvest the power of the sun to reduce carbon emissions, increase sustainability and lower energy costs, all while achieving a return on investment years before the solar panels reach the end of their useful life. With these benefits, the time is right in South Carolina to consider including solar in major construction projects as a means to promote sustainability and significantly reduce energy costs.
If you have any questions, please let us know. The attorneys of Gibbes Burton are passionate about helping professionals and businesses to minimize risk and build success.
1To find more information on South Carolina’s solar tax credits, refer to S.C. Code § 12-6-3587 at https://www.scstatehouse.gov/code/t12c006.php.
2For more information on the federal solar tax credits, check out the Solar Energy Industries Association’s fact sheet at https://www.seia.org/sites/default/files/ITC 101 Fact Sheet – 04-19-2016.pdf.
3Additional information on Duke Energy’s solar rebate program is available at: https://www.duke-energy.com/south-carolina/renewable-energy/sc-solar-rebates.asp.