Washington State Solar Power Rebates, Tax Credits, and Incentives

Updated 10/9/09

Solar Legislator Score:

Dreary cloudy Washington? It’s really not that dreary at all. Click here to check out a solar resource map for the entire Pacific Northwest region. There, you can see during the summer months especially, the region enjoys a considerable amount of sunlight. So at least our legislators there have some sun to work with! Lets turn to the current state incentives.

Net Metering

Washington State law requires utilities to credit Net Excess Generation (NEG) of a grid-tied solar electric system (up to 100kW generating capacity) at the full retail rate. If your solar system generates more electricity than you use, the utility credits your account. This credit can be carried-over month-to-month. NEG, however, does not carry over on a year-to-year basis and on April 30th of every year, any remaining NEG is ceded to the utility.

Interconnection

Solar electric systems can be connected to the grid as long as they comply with all applicable safety codes and standards. Interconnected systems must have a safe means of disconnection. Any reputable solar installer will be familiar with these requirements and be capable of installing a system that meets this standard. No additional liability insurance is required for systems that are net-metered.

Utility Rates

Washington has probably the lowest utility rates in the country. Hydroelectric Dams on Snake, Columbia, and numerous other northwest rivers make electricity cheap. These same Dams have decimated populations of native salmon and steelhead fish. Personally, I consider the destruction of riparian ecosystems in the Columbia River basin to be an environmental catastrophe. We are all entitled to our own opinions.

Although electricity is cheap in Washington, prices are expected to increase by 5.5% annually, and many utilities offer tiered rate structures that charge less per kWh for lower consumption.

Incentives

Washington was the first US state to implement a statewide Renewable Energy Production Incentive. Per SB 5101, Utilities pay grid-tied pv system owners $0.15—$0.54/kWh for all the electricity they produce.

The incentive starts at a base rate of $0.15/kWh.

The base rate is multiplied by 1.2 ($0.15*1.2=$0.18/kWh) if the inverter is manufactured in Washington state.

The base rate is multiplied by 2.4 ($0.15*2.4=$0.36/kWh) if the solar modules are manufactured in Washington state.

If both the inverter and modules are manufactured in Washington state… you guessed it. ($0.18+$0.36=$0.54/kWh)

Originally, the payout was capped at $2,000/yr. and the legislation expired in 2014, but the law has subsequently been extended to 2020 and the cap increased to $5,000/yr. Pretty sweet.

For community solar projects, the deal gets sweeter because the base rate is $0.30/kWh and the same multipliers apply, bringing the maximum incentive payment to $1.08/kWh! Each investor in a community solar project is eligible for up to the $5,000/yr payout.

This incentive must be applied for once when the system is commissioned. Again, a reputable installer should walk you through this process and simply present you with the papers to sign.

In addition to the statewide production incentive, many Washington utilities have their own renewable energy production incentives. So again, ask your local installer for details.

Further incentives are available by selling green tags. The Northwest Solar Cooperative http://nwsolarcoop.org/ will pay you $0.02/kWh for the right to sell the fact that you produced green electricity to someone else.

This is pretty measly, but every little bit counts right? The value of green tags is likely to go up in the future so wise pv system owners don’t lock into such low rates. For example, in New Jersey, where the market for green tags is more developed, a similar product recently sold for $0.66/kWh. Now that’s some real money; east coast city prices whoo’eeh!

Sample 5kW home solar electricity system cost — Seattle

1. Cost before incentives:$35,000 (5,000Watts*$7/W)
2. 30% Federal Tax Credit: Subtract $10,500
3. Estimated annual production ±5,500kWh*:subtract between $825 and $2,970
4. Avoided Energy Costs: subtract about $440 (cost of electricity increases 5.5%/yr)
5. Years to payback: as fast as 7 years!

Estimated Net Cost Now: between $21,088 and $23,233

Estimated Net Cost in 2020: ¡-$12,437!**

*in most of Washington, a 5kW pv system will produce much more than 5,500kWh of electricity a year. Ask your local installer for more details.

**that’s right. A negative cost. That is the same thing as a payment. In this scenario, the system has paid you to the tune of $12,437.00!!! A 35% ROI! We kid you not. Ask your local installer for a payback estimate!

Check out Solar Fred’s video about going solar in sunny Seattle.

Older but still helpful Washington State solar info:

Washington State Senate Bill SB 5101 provides consumer credits for installing small scale solar power systems connected to the grid and SB 5111 provide incentives for solar manufacturers that may be interested in moving to the state of Washington. These bills passed both the Washington House and Senate in April of 2005 by landslide margins. Not one Washington state legislator voted against these bills! How could you? That’s political suicide.

If you live in Washington, here’s what you need to know about the state solar credits provided by SB 5101:

• There is an annual credit available to you for producing solar power that is tied back to the grid.

• This credit expires on June 30^th, 2014 (Washington is hoping a state solar economy is built by that point which makes entry into the solar market less prohibitive. WSU will file a report to Olympia on the status of that market in 2009.)

• You must submit a form to the Washington State department of revenue that will be forwarded to the Climate and Rural Energy Development Center at the Washington State University. To download the form, click here [pdf].

• On that form, the DOR is gonna want to know how you’re producing this electricity and where that equipment is manufactured.

• If your equipment is manufactured in Washington, you’ll qualify for an accelerated kilowatt credit multiplier (up to .36/KwH up to $2000 a year)

• Within 30 days the DOR will chat with WSU and get back to you in writing to let you know if your system qualifies for the credit.

• After you qualify (hooray!), every year by August 1st, you must apply for the incentive through your utility (Boooo!).

• In that yearly application to the utility, you must furnish documentation of the kilowatt-hours generated by your solar system in the previous year.

• Within 60 days of that application, your utility will notify you in writing whether that incentive payment was accepted or not.

• Make sure you keep records of the incentives you apply for and the incentives you receive.

• Light and power companies in Washington are not mandated to participate in these incentive programs (what? yes. Bogus!). This means you could have a bit of a challenge on your hands if your utility is not familiar with this legislation or small scale solar power systems.

• If you’re a tenant of a building (not an owner) and install a solar system, you’re ineligible for the credit. Lame.

• The incentive paid by the utility is not taxable. Ok, Nice!

The enabling legislation for these incentives, described by primary sponsor Sen. Erik Poulsen, D-West Seattle, as “the most progressive in America,” was passed in 2006.

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But Whoa, Not So Fast!

Well Erik, I’m here to say, 1) not so fast and 2) who are you crapping? While those power payment rates may seem huge, the annual $2,000 cap on payments per year in Washington sort of sucks. In comparison to other progressive state’s energy policies, Washington does little to offer much in terms of an across the board rebate or tax break for those installing solar systems. Some have argued that this more gradual rebate of up to $2000 per year supports long term energy efficiency instead of just getting solar panels on roofs. However, in my opinion, there aren’t many businesses that can make the upfront financial investment necessary to justify the cost without such a rebate. For example, in Oregon, there’s a $70,000 installation cap for businesses provided through the Oregon Energy Trust (Granted they aren’t paying a rate of $0.54/KwH, but hell they are at least paying up to a significant amount and the cash is available within 5 years). So in Washington, it is quite a bit more prohibitive to initially go solar – especially if you’re a business.

Installation

Already on Washington’s books are laws forgiving the state sales tax on the purchase and installation of alternative-energy equipment through 2011. Also, there are grants up to 33% provided for installation costs solar thermal electric and PV systems. They are available via “Green Tag” purchases through the Bonneville Environmental Foundation (BEF). For further information and to apply for a grant, click here. While this is good, there is a limit on the cash BEF can dole out every year.
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Solar Water Heating Rebates

Several Washington counties (Ahem, 4 out of 40) offer rebates for solar water heating systems and PVs. For example in Clallam county, solar hot water systems are eligible for a rebate of $500 for each 40 square feet of collector area installed. PV systems are eligible for a rebate of $500 for each kilowatt of capacity installed. Others:

• Clark Public Utilities – SWH Rebate -$2000 Qualifying equipment must meet certain specifications.
• Franklin PUD – SWH Rebate- $500 for a solar water heater with minimum 40 square foot collector.
• Grays Harbor PUD – SWH Rebate – $600 for solar collectors of 40 square feet or more

Solar Water Heating Financing

Again, in a sparse amount of Washington counties, there are loans available for solar hot water heating systems:

• Clark Public Utilities – Solar Loan Program-Max $4000- 5% 60 mo.
• Franklin PUD – Energy Loans Max: $7000- 3% APR or 6% APR when loan combined with rebate program. Max. $850 (in the form of rebate or buying down loan from 6% to 3%).
• Grays Harbor PUD – SWH Loan Maximum Loan Amount: $4,000 Terms: 3.5%

Consensus

There could be better a lot more done to spur on homeowner and small business solar implementations in Washington state. Specifically, if the state of Washington worked with the utilities in a similar way that Oregon has, there could be better incentives for businesses. Hopefully, more catalyzing legislation winds up in Olympia in the coming years.

Click here to have multiple solar installers bid to upgrade your Washington home or business.