A Tale of Two Carolinas

15 Mar 2016


North Carolina is the country’s #2 solar market, but the 35% state tax credit is no more.

It was the best of times, it was the worst of times. North Carolina is the country’s #2 solar market, but the 35% state tax credit is no more.

Without the state tax credit, the Tar Heel state starts to look a lot more like its neighbor to the South. And that’s not a bad thing. North Carolina and South Carolina are both in the same genre of solar market. Land lease and labor costs are low, and interconnection costs are low or reasonable for sites near transmission lines or substations. Both share the gift of relatively high production versus their counterparts north of Mason-Dixon line. They’re similar in terms of geography and the types of projects that can be built (ground mounts with low upfront and ongoing costs). Unlike high saturation states such as Hawaii and California, grid penetration is not an issue. The two states even share utility companies in common, and projects in the 5-10MW AC range benefit from long-term fixed contracts at similar rates. Larger projects require directly negotiated bilateral contracts for slightly lower rates, which are becoming more common in both states.

We’d also cite property taxes as a differentiator between the two. Unlike South Carolina, North Carolina benefits from an 80% property tax abatement for non-residential solar projects. This means that in South Carolina, developers must negotiate a payment in lieu of taxes (PILOT) agreement with each solar installation, or head to their local town council and explain that the solar energy system will not be attending public school or driving on the roads, and as such, should be exempt from the bulk of property taxes.

We’re mixing our Dickens here, but all we have to say about property taxes and the expense uncertainty they create, is “Bah! Humbug!”

This is an excerpt from our March edition of SOURCE: the Sol Project Finance Journal, a monthly electronic newsletter analyzing the solar industry’s latest trends based on our unique position in the solar financing space. To view the full Journal or subscribe, please e-mail pr@solsystems.com


Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments, project acquisition and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

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Sara Rafalson

Sara Rafalson