Solar Incentives in Washington State
Get Paid to Go Solar – Sell Your Power, Tax Credits and Exemptions
What? Clean air, reducing your dependence on fossil fuels, generating your own electricity, saving money over time, avoiding the rising cost of energy, being part of the future isn’t enough? You need more on top of all of that? Well okay. To be truthful, I’m not opposed to getting extra benefits to going solar either.
In Washington State you’re going to see a few different kinds of incentives.
Net Metering– Net Metering is a contract that you sign with the utility that allows you to trade your power with them at retail rates. You get credit on your bill for your excess Kilowatt Hours (kWh) when your system is producing more than you consume. At night or when your system isn’t producing you buy power from the utility like you do now.
Typically in Washington State we produce vastly more than we consume during the summer and build up big credits. Then during the darker winters we use the credit we’ve built up. The fiscal year for Net Metering is from May to April. If you still have kWh “in the bank” at the end of April you forfeit their value. It’s for this reason you don’t usually see systems designed to more than 100% of your annual consumption. It’s also important to understand how your utility handles minimum charges, and how solar production impacts your bill.
A professional solar contractor should be able to help you understand the balance of production and consumption on an annual basis. Net Metering is a Washington State law and does not expire.
Production Incentives– The main production incentive in our area is provided by Washington State and managed by your local utility. A production incentive is a program that pays you (you can receive a check!) for every kWh you produce whether you consume that solar electricity in your house or not.
Whereas Net Metering gives you value at retail rates for your power, our Production Incentive pays a premium starting at $0.15/kWh up to $0.54/kWh depending on the mix of equipment made in Washington in your solar array. Production Incentives are paid on top of the Net Metering benefit you’re already receiving.
This program is in place until 2020, and is measured from July to June. How the value of the Production Incentive is applied to your bill changes from one utility to the next. Talk to your solar contractor for details.
Income Tax Credit– Okay so this is actually a Federal Incentive, but it’s awesome. You receive an Income Tax Credit (not a deduction!) valued at 30% of your total system cost. This is huge. If you can’t use the full value in one year, you can roll over the remainder to next year. You should certainly check with a tax advisor to make sure you can claim the entire value, but make sure they’re referring to the most recent tax documents. The ITC is applicable to your Alternative Minimum Tax (AMT) as well. This incentive expires in 2016.
Sales Tax Exemption– Washington State extended the Sales Tax Exemption for Solar at the 11th hour until 2018, and in some cases until 2020. This means you pay no sales tax on the full invoice for installing a solar photovoltaic or solar hot water system for systems smaller than 10kW (most residential systems) saving you 8.5-10% on your system price. For larger systems a 75% remittance for sales tax paid can be claimed immediately after your system is installed.
More Incentives – Rebates, Grants, and Group Buys
Rebates– Rebates in solar work much like solar anywhere else. Think of these incentives as “Cash Back” after you complete your installation. In Washington, most rebates are coming from your local utility. Check out their webpages to see if they have anything available or look at the Database of State Incentives for Renewables & Efficiency.
Grants– There aren’t a lot of grant funding sources out there. Two to check out would be:
- SnoPUD Planet Power – Run by Snohomish PUD “the program supports local small-scale solar demonstration projects on buildings such as schools, libraries, city halls, and other community sites where customers can learn about solar and see the technology in use.”
- BEF Solar 4R Schools – “Developed and managed by Bonneville Environmental Foundation (BEF), Solar 4R Schools provides schools nationwide with hands-on teaching tools such as science kits, lesson plans and photovoltaic solar arrays so students can learn about solar, wind and other renewable energy technologies.”
Group Purchases– These programs reduce the upfront purchase price by aggregating people in a geographic area to provide bulk prices for a limited time. Some of these are led by a contractor, and some by community groups and non-profits like NWSEED and Community Energy Solutions.
Knowing how incentives are going to impact the financials of your solar investment is key. Your solar integrator will know what’s available and when. And as a solar industry we are always fighting to make it easier for people to “Go Solar.”