Solar Power Rebates, Tax Credits and Solar Panel Incentives in Washington State; 2012 Update
Washington state has a host of supportive policies that can make a solar system a great idea for its residents despite Washington state having one of the lowest solar resources available to it in the US. Net Metering Your Grid Tied System If you generate more electricity over a billing period than you consume, the utility will credit your electric bill for every kilowatt-hour of electricity sent back to the power grid. The credit is applied at the retail rate for power. Net metering will continue for the life of the solar electricity installation. This means that each year the return you get from your solar panels will go up with increasing power prices. Washington State Sales Tax Exemption Until June 30, 2011, all solar electric systems less than 10 kW in size are exempt from the state sales taxes. From July 1, 2011, through June 30, 2013, solar electric systems less than 10 kW in size are exempt from 75% of the state sales tax. The tax exemption expires June 30, 2013.
As of August 2006, Washington State provides a financial incentive (Renewable Energy System Incentive Program/ Renewable Energy Cost Recovery Incentive Program) for electricity generated from renewable energy resources. Eligible electricity producing renewables include solar power and wind. The incentive is based on the total number of kilowatt-hours (kWh) of electricity generated between July 1 and June 30 (or the closest regular billing cycle) of the following year. The way the scheme works is that the solar incentive is determined by multiplying a base rate of 15 cents per kWh by 2.4 to get the solar incentive rate. So the base solar incentive rate is 36 cents per kilowatt-hour if you use components that are made in Washington state. This is really very generous because it is on top of the value you were already given from having the kWh of exported electricity deducted from your bill. This means that if you are paying 10 cents per kWh for power then each kWh of power that you export to the grid gives you a total return of 46 cents. This is fantastic and is the reason why Washington state is a great place for a solar system. Yes, a solar system installed near Seattle will produce up to 30% less than the same system installed in the sunny southern states but with this level of incentive it still kicks goals as an investment option. 1 kW of solar installed facing true south in Seattle will produce about 1000 kWh per year. Customers with eligible generation systems who have signed up for the program by submitting the Department of Revenue (DOR) application form and received certification from the DOR, will receive a letter and application Guide to Installing a Solar Electric System The program is capped at $5,000 per year, per customer. As of February 2019, new applications will be placed on a waitlist and will only be processed if funds become available. This program expires June 30, 2020. No incentive payments will be made for electricity generated after the program’s expiration date.
Up front Incentives
There is no state wide up front rebate or tax credit in Washington state but some counties or utilities offer up front rebates. For example Snohomish county offers $500 per kilowatt as an up front rebate. Use the quote finder to get in touch with local installers who can tell you if your utility has such an incentive.
Utility Solar Power Loans
Most of the utilities in Washington state offer solar power loans of up to $30,000 with a seven year term and a capped interest rate of 5.25%. When you combine this with the generous performance payments you get for solar power fed back into the grid it is hard to see why a resident in Washington state would not be thinking about solar. Here is an example of possible returns from a 5kW system for a customer in Snohomish county.
|Size of System (kW)||5|
|Space required (square feet)||650|
|Price of system per watt||$3.50|
|Price of power (marginal cost high usage kWh's) $ per kWh||0.09|
|Average daily kWh produced per 1 kW of solar||2.8|
|Total average daily production||14|
|Total Price (before incentives)||########|
|Federal Tax Credit||$5,250.00|
|State Tax Credit|
|Utility Rebate (based on Snohomish)||2500|
|Actual out of pocket cost after incentives claimed||$9,750.00|
|Annual Power production||5110|
|Total Annual Energy savings based on net metering at 1:1||459.9|
|Value of production incentive (assuming 50% of power exported to the grid)||919.8|
|Total Annual Return||1379.7|
|Annual Return on Investment||14%|
|Return rises to around 18% annual return after 8 years if you assume just a 7% annual increase in power prices|
|Payback Time assuming no increase in power prices||7|
|Payback time assuming 7% annual increase in power prices||Less than 6 years|
14% seems pretty good to me, especially when it can be bought with a loan capped at 5.25%. Even if we run the same numbers for a customer in Washington state that does not have a utility that provides any up front incentive then the return is around 11% and increasing each year. Please note that these are only rough figures and they make a number of assumptions that may not be correct for your installation. We recommend you use the quote form here to get in contact with 3 local installers who can tell you in greater detail what your returns might look like.