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2019 Policy Grade

A

Avg. Yearly Savings

$1,265

Congratulations! You've found the ultimate guide to going solar in Washington DC

2019 Policy Grade

A

Avg. Savings/year

$1,265

Your 2019 guide to getting solar panels for your home in Washington DC

This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Washington DC home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!

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** What's new for 2019 **

When most people think of D.C., they think of big government buildings and big marble monuments. But from the Potomac River, to the nearly 3 square mile Rock Creek Park within the city borders and the beautiful forests found just outside of D.C. in virtually any direction, our nation’s capital has a lot of natural beauty to protect. And protecting it they are. Thanks to the nation's best Renewable Portfolio Standard (RPS) backing up solid performance payments, both initial costs and payback time frames here rank among the best in the county. Let’s take a look at the details…

In recent years, Washington D.C. has seen a veritable explosion in new solar installation, but there’s still plenty of roof space left, and plenty of incentives to help you make your sunshine dreams come true. In fact, the District offers some of the best solar incentives anywhere in the country.

Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Washington D.C. solar incentives you see below.

The Solar Strategy section is focused on the 3 ways of paying for solar in Washington DC, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.

The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Washington DC. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.

Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Washington DC.

Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.

Your Solar Strategy in Washington DC

Figuring out the best way to go solar in Washington DC can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.

We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:

How should you pay for solar?

Use our decision tool to find out!

How to pay for solar panels in Washington DC

The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or Power-Purchase Agreement (PPA). One thing it's important to note is: solar makes you a lot of money in Washington D.C.. Yes, we said "makes!" You see, the District's lawmakers value solar so greatly, they set up an amazing Solar Renewable Energy Credit (SREC) market, which means the utility company will pay you thousands of dollar just for producing solar power. Combine that with energy savings, record-low installed prices for solar, the Federal government's 30% tax credit, and local tax exemptions, and it's clear: there are few places in the country better than D.C. for solar.

Now let's discuss that chart above. We've examined three scenarios for going solar here, including a solar PPA, buying solar with a loan or home equity line of credit (HELOC), or buying solar with cash. As you can see, the cash purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a HELOC and paying for the system over time (the orange bars) means you'll spend absolutely zero dollars of your own money, while big financial benefits in year 1 and beyond.

That's because you take a loan for the system, but you still get all the benefits of paying up front. In Washington D.C., that means SREC sales, a 30% federal tax credit, and big annual energy savings. With those incentives, you'll actually come out way ahead after the first year. And even though you'll be making loan payments for 15 years, the benefits outweigh the costs from day 1. Read more about solar loans in Washington D.C. below.

Finally, take a look at the blue bars. They represent a solar Power-Purchase Agreement (PPA), which is also called third-party ownership. With a PPA, the solar installation company puts panels on your roof at no cost to you, and you just buy the electricity they make, which eliminates most of your power bill from the utility company. PPAs in Washington D.C. are good for homeowners with no equity or cash, because they require neither of those things, and the District's electricity prices are high enough that you start saving money right away. Your savings may start small, but they'll finish big, because the cost of electricity from the PPA should rise by less than the electric company's annual rate hikes.

Read more below about each of the three options for solar in Washington D.C..

How much can you save with solar?

Find out

Option 1: Paying cash for solar

An outright purchase used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true—with lower equipment costs and that big Federal tax credit, solar costs less than ever before, and a solar installation pays itself off in just 6 years. But if you're interested in solar as an investment, taking a loan to pay for the system is a better option.

With a loan, you can make monthly payments instead of putting $20,000 down on a solar system, which means you save money on electricity (and make money selling SRECs) as you pay down the cost of your panels. If you have equity in your home or can get a large loan with a good interest rate, a loan is the option to go with. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.

If you've got cash and you prefer to pay up front, you'll have to plunk down $20,000, but SREC sales, tax breaks, and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced over $27,000 in income, after your system cost is paid back. Solar offsets your electricity costs enough to save you $811 in year 1, and it just goes up from there. As the electric company raises rates, you save more and more, and more...

Here’s how the numbers work for a 5-kW rooftop solar system in Washington D.C.:

  • Installing a typical 5-kW solar system should start at about $17,500. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
  • The Federal government offers a great income tax credit of 30% of system costs. That's $5,250 you won't be paying to Uncle Sam this year, and it brings your first-year investment down to $12,250.
  • After that tax credit, we subtract your first year’s energy savings, which we estimate to be $811. That reduces your cost after the first year to only $11,439—a savings of about 35% off the cost of your system. That's a huge cost reduction!
  • But then comes the meat of this deal. Your SREC sales in 2016 will net you $2,355, bringing your final first-year cost of solar down to $9,084.
  • Those electricity savings will quickly pile up, and your system will pay for itself in year 6. But your panels carry 25-year warranties, and they'll likely keep on kicking out kilowatts for a few decades or more. You'll see a total net profit of $22,672 by the end of that warranty. The internal rate of return for this investment is an astonishing 19.1%. That's more than DOUBLE the return of an investment in stock market index funds, and it's more reliable, too!
  • And here's a nice bonus to consider: your home's value just increased by $9,871, too—the NPV of your expected electricity savings over 20 years—and thanks to Washington D.C.'s property tax exemption for solar, none of that is subject to taxation!.
  • In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 104 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Washington DC. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Option 2: Using a loan to pay for solar

You don't need $20,000 sitting around to pay for solar. As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.

That’s because, in Washington D.C., using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a tax break!. You'll come out thousands ahead this year, and you'll see a spectacular profit over the 25-year life of your system. The reason this works so well is that you're paying over time, but reaping all the benefits now. Your yearly energy savings will offset about half of the cost of the loan payments, and you'll get cash from selling your SRECs too, which might sound like it's too good to be true... so let's take a look at the numbers.

A solar purchase like this will make sense for you if the following is true about you and your current situation:

  • You can get a home-equity line of credit (HELOC) for $20,000, with a fixed rate of 5% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
  • You love making money without much risk.

Here’s how the numbers pencil out for a Washington D.C. homeowner who makes a solar purchase with a HELOC:

  • Installing a typical 5-kW solar system should start at about $17,500. That's how big your loan will need to be to cover it.
  • The electricity you'll save in the first year of operation would have cost $811, but your annual loan payments will be $1,553, meaning you would spend $742 on solar this year, but...
  • You'll also be able to sell your SRECs. Each SREC represents one megawatt-hour of electricity, and each is worth about $380, after the SREC broker takes their cut. Your 5-kW system will earn you a little more than 6 SRECs in a year, which means you'll see an estimated $2,355 in income in 2017 from SREC sales. WOW.
  • And we know this is sounding too good to be true, but you'll also get a huge federal tax break! Uncle Sam will give you 30% of the cost of your system back as an income tax credit, which in this case means $5,250 you won't be paying the Feds this year.
  • The energy savings, SREC sales, and tax credits mean you'll you'll come out $6,863 ahead after year 1, and it's pretty smooth sailing from then on out. With SREC sales and electricity savings, you'll actually only start paying for solar in 2023, when your net cost will be about $27/month.
  • By the time you've paid off your loan in 2031, you'll see yearly savings of about $1,100. After 25 years, your total profit will be $16,872! That's beyond any other "investment" that requires $0 of your own money..
  • On top of the green that will stay in your pocket, your system will mean green for the environment, too—104 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Washington DC. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)

Leasing is a great way to go solar if you haven't got stacks of cash or oodles of equity in your home. With a lease, it's possible to get solar panels for $0 down and see big savings over 20 years!

As for leases in Washington D.C.: the electricity costs here aren't very high—we're actually almost exactly the nationl average of $0.13/kWh. But... the sun shines bright enough here to make solar power really profitable! That means a lease saves you money starting on day 1. For now, the payments on a leased 5-kW solar system should be around $690 per year, but the energy the panels generate will save you $811 per year. That's $121 you get to keep in your pocket this year, just for saying yes to solar!

And those savings will only get larger over time. As the utility company raises rates, your lease costs will go up by a smaller amount, meaning you'll see greater annual savings. Over 20 years, our estimate shows a total savings of $4,079. And the best part is the panels will be owned and maintained by the installation company, so all you have to do is brag to the Joneses down the street about your green habits!

Here's a little more about how a Washington D.C. solar PPA works:

Keep in mind, the numbers above are based on an average home in Washington DC. If you're ready for a custom quote for a solar PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

How much can you save with solar?

Find out

Washington DC Solar Policy Information

Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.

State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.

Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Washington DC:

Washington DC's Renewable Portfolio Standard

100% by 2032

Grade: A

Washington DC's Renewable Portfolio Standard grade

A Renewables Portfolio Standard (“RPS”) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels.

In December, 2018, Washington D.C. passed its second RPS law in two years, and now has the best RPS of any state in the nation. Calling for 100% renewable energy by 2032 (the previous standard had a 50% goal by the same date), the District's new standard will result in a huge boom in home and utility-scale solar. But the real big story here is that 10% of all energy in the district must be generated from solar power by 2041. This is also called a “solar carve-out” and it’s discussed in more detail below.

Washington D.C.’s RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state.

Learn more about Renewable Portfolio Standards

Washington DC's RPS solar carve out

10% by 2041

Grade: A

Washington DC's Solar Carve-out grade

D.C. has a District-wide performance payment plan that is built into the RPS’s solar carve-out.

In order to meet the RPS’ solar power targets, utilities must purchase Solar Renewable Energy Credits (“SRECs”) from folks like you (generators are issued one SREC for every megawatt-hour of solar power produced). For every megawatt (MW) of energy a utility falls short, they must pay an Solar Alternative Compliance Penalty (SACP)of $500.

That effectively means that SREC payments could get as high as $500, but it varies in practice, depending on how much the utility needs that SREC to avoid paying the $500 default. Read down below for an in-depth explanation of what these SRECs mean for home solar in D.C.

Learn more about Solar Carve-outs

Washington DC Electricity Prices

$0.13/kWh

Grade: C

Washington DC's Electricity cost grade

D.C. pays an average of about 13 cents/kWh of electricity. That’s just a smidge more that the national average, but we still think that’s pretty cheap. Cheap electricity rates mean you’re probably not feeling too much of a strain in your pocketbook …. yet. Just don’t forget why electricity is so cheap.

That’s right, fossil fuels. Lots and lots on non-renewable, greenhouse gas-producing fossil fuels. When all those fossil fuels really start to bite us in the butt, or start to run low … or both … electricity rates are going to rise, and fast. When that happens you’re going to be really, really happy you switched early to all that efficient, clean solar power that will be in high demand. In the meantime, solar power will still save you a chunk of change. Win-win!

Find out why electricity prices matter

Washington DC Net Metering

District-wide

Grade: A

Washington DC's Net Metering grade

Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus.

Pepco (D.C.’s only electric utility) offers a standard net metering contract to all residential customers. For all systems under 100 kW, all surplus electricity is credited to your next bill at the full retail rate. Surplus may be carried over indefinitely. All that is superb, and net metering is very strong for residential customers here.

Learn more about net metering

Washington DC Interconnection Rules

District-wide w/caveats

Grade: B

Washington DC's Interconnection Standards grade

The District’s interconnection policies are also very strong for residential customers. If your system is less than 10kW (most residential systems will be), you qualify for simplified interconnection procedures, and will not be required to install a redundant external disconnect switch nor carry separate liability insurance. Again, we gave interconnection a “B” here only because of some limitation for larger customers that don’t concern your residential system.

Learn more about solar interconnection rules

Solar Incentives in Washington DC

Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.

These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 30% of your total system costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.

Let's see how Washington DC measures up:

The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.

Washington DC Solar Power Rebates

Affordable Solar Program

Grade: B

Washington DC's Solar Rebates grade

D.C. used to offer a strong district-wide rebate program, but as of 2016, that's ended for the general public.

What replaced it is much more exciting. Called the "Affordable Solar Program," it was designed to help bring solar to homes owned by families who make less than the median income for the area. As of September, 2016, the program ended, but we're feeling pretty confident they'll bring it back in some for for 2017.

Learn more about solar rebates

Washington DC Solar Tax Credits

None

Grade: F

Washington DC's Solar Tax Credits grade

While there are no tax credits available here, we can’t fault the city government too much. Those SRECs and rebates are still holding down the fort. Keep in mind, you can also take the 30% federal tax credit for your solar installation, putting thousands back in your pocket next April.

Learn more about state solar tax credits

Washington DC Solar Performance Payments

~$380 per SREC

Grade: A

Washington DC's Solar Performance Payments grade

As we discussed above in the solar carve-out section, D.C. homeowners with solar on their roofs earn an Solar Renewable Energy Credit (SREC) for every MWh of electricity generated by their system. A typical 5-kW system will generate a little over 6 MWh in a year, meaning 6 SRECs, each of which can be sold to the utility through a broker like SRECTrade.

SRECs are sold through brokers because utility companies don’t engage the hundreds of individual sellers, instead preferring to purchase SRECs in large quantities to meet their compliance requirements.

The good news is that SREC prices are still pretty darn high—2015 prices have been consistent at around $480—but there's some less-good news, too. Those Solar Alternative Compliance Penalties (SACPs) we mentioned will be reduced in 2017, from $500 to $350. Then they'll be stepped down about every year until 2023, when they'll be just $50. After 2023, the District will have completed its journey to 20% renewables, and, without new legislation to increase that goal, SRECs from D.C. solar will be just about worthless (but solar will still save you tons of money).

What this all means for savvy homeowners like you is that your 6.24 SRECs in 2016 will make you about $2,700. In 2017, the reduction in SACP means your SRECs will net you about $1,900, and it goes down from there until 2023. That's not so bad, though! By 2023, sales of SRECs will have put over $10,000 in your pocket, making solar in the District of Columbia a completely brilliant investment.

Learn more about SRECs

Property Tax Exemption

100%

Grade: A

Washington DC's Solar Property Tax Exemptions grade

We can stand up and applaud, however, that the District gives you a 100% property tax exemption on all that extra home value you get from your solar power.

Sales Tax Exemption

None

Grade: F

Washington DC's Solar Sales Tax Exemption grade

Sadly, D.C. offers no sales tax exemption, meaning you’ll pay the full tax of 5.75% on the purchase. But even with the tax, solar in D.C. makes more sense than almost anywhere in the country.

Learn more about tax exemptions for solar

The consensus on Washington D.C. solar power rebates and incentives

Our nation’s capital is certainly one of our nation’s leaders when it comes to strong solar energy policy. The picture here is sunny indeed for the switch to solar power; with a 1st year price break of over 50% and a lightning-fast 5 year payback timeframe, Washington D.C. earns a high “A” grade.

Again, if you are confused about how these numbers work and would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!

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YLRBen ZientaraAvatar for Dave Llorenswww.spiffysolar.comDave Llorens Recent comment authors
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YLR
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YLR

The heading reads incentives, grants and credits but you don’t mention any grants! Is that because there are none? It’s just misleading to put it in the wording.

Ben Zientara
Admin

There are some rebates available in the District for low-income homeowners, but in General, DC has decided to focus on its SREC market to help solar owners recoup their costs.

Anonymous
Guest
Anonymous

If DC rates so highly for solar, shouldn’t the “See Your Roof’s Value” section include a pulldown code for “Washington DC” pulldown in the “State” tab (whether that pulldown is “Washington, DC” for purists who recognize that we’re not a state, or “DC” if, like most sites, it’s easier to pretend we’re a state and use a two-letter code)?

Ben Zientara
Admin

We realize it’s inconvenient, and we’re working on getting a DC option added to the dropdown. For now, the best bet is to choose Maryland, but put in your actual address. Our installer partners will be able to see that your home is in the District. Thanks!

www.spiffysolar.com
Guest
www.spiffysolar.com

This story gives it five suns, but the side bar only says three. Looks like it’s not completely updated.

David
Guest
David

I was wondering if of you have any resources you can point me towards in getting my PEPCO issue resolved. I’ve been setup and fully installed with solar panels for a little over a year and a half and PEPCO does not recognize ANY of the energy I put back into their system. There are no credits on my bill nor does the meter go in reverse when energy is produced. I am sure my system is generating electricity because I use another company to monitor the energy produced. ANY help is appreciated. Thanks in advance.

Howard Lowe
Guest
Howard Lowe

I would like your advice re solar power for residential. Based on usage I use 1,200 kWh on average per month how much would a residential system cost to install. Used 1.5 cents per kWh.

bryan
Guest
bryan

please see the link below. DC had ended their program and not paying some already in it:
http://www.washingtonpost.com/wp-dyn/content/article/2011/02/27/AR2011022702910.html?hpid=artslot

John Loop
Guest
John Loop

Hi just thought you might want to know. The federal government has a rooftop initiative in the national capitol region. Participating companies can lease space on government rooftops. They can install PV or other green energy approved systems. GSA may purchase all the power, or even enable the companies to sell back to the grid. Its in its formative stages right now.

Regards John

Michael
Guest
Michael

You should update your information to reflect that the $2,000 cap on the residential credit has been removed. The credit is now for the full 30%.

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