Washington's Rebates and Incentives for Solar Energy Systems

In 2006 Washington became only the second state to pass a renewable portfolio standard through a popular vote. That mandate requires utilities serving over 25,000 people to get 15 percent of their energy from renewable resources by 2020, and requires them to undertake all cost-effective energy conservation steps. The result has been a sharp increase in rebates and incentives for energy efficiency, including some incentives for solar power, although the main focus for utilities in Washington has been large-scale hydroelectric and wind power.

Most solar rebates and incentives are available primarily through individual utilities attempting to meet RPS mandates. What state incentives exist are as follows:

Washington State Renewable Energy Production Incentive

Beginning in 2005, the state of Washington enacted a production incentive -- essentially a feed-in tariff -- for individuals, businesses and local governments that produce solar power, wind power or electricity from anaerobic digesters. The best rates are reserved for those projects using equipment made in Washington.

• Incentive rates start at $0.15 per kilowatt-hour (kWh) and are adjusted by multiplying the incentive rate by one of four factors.
• For solar systems built using solar modules made in Washington, multiply by 2.4
• For solar systems equipped with an inverter made in Washington, multiply by 1.2
• For electricity produced by anaerobic digester, by solar equipment made outside of Washington, or by wind generators with blades manufactured in state, multiply by 1.0.
• For all other wind electricity: 0.8

This results in solar production incentives ranging from $0.15 to $0.54 per kWh, with incentives capped at $5,000 per year. Ownership of renewable energy credits (RECs) remains with the customer-generator. As of May 2009, community solar projects up to 75 kW are also eligible for the incentive.

For more information, see the Northwest Solar Center.

Renewable Energy Sales and Use Tax Exemption

Under a law passed in 2006, any equipment purchased that is applicable to renewable energy systems, including solar water heaters and PV systems, are completely exempt from sales tax. Unfortunately, the incentive for solar water heating expired in 2009. Fortunately, also in 2009, the state extended the exemption for solar electric systems through June 30, 2013. While the incentive for other systems will decrease from 100 percent to 75 percent in July of 2011, the exemption was extended in full until 2013 for solar systems up to 10 kW in size, which should include nearly all home solar power systems.

Utility Loan and Rebate Programs

There are a number of utility rebate and loan programs designed for homeowners transitioning to solar hot water or space heat, as well as solar electricity. While there are too many to list here, on average, solar electric rebates are offered at $500 per kW of installed capacity, with a maximum between $2,000 and $3,000. Loan programs vary widely from utility to utility. Most offer loans ranging from $1,000 to $25,000 at relatively low interest rates (typically between three and six percent). For more information on utility loan and rebate programs available to you, find your utility on this list from the Database of State Incentives for Renewables and Efficiency (DSIRE).

Net Metering

Washington also has net metering rules to ensure the proper interconnection of customer power generators and power providers. Systems up to 100 kW are eligible, with an overall aggregate capacity limit of 0.25 percent of a utility's 1996 peak demand. That total increases to 0.5% in 2014. Excess energy created by a solar energy system is granted to the homeowner's next bill at the utility's retail rate. Whatever energy is left over at the end of the annual billing cycle is granted to the utility. Participating in Washington's renewable energy production incentive (see above) does not affect savings from net metering, although utilities may require separate metering for production, for which customers must pay.

Gray's Harbor Public Utilities District has its own, slightly modified, net metering rules as well. They are essentially the same as the state's, but at the end of the annual billing cycle, the utility must pay customers for excess power at 50 percent of the retail rate.

Find more information on Washington's net metering laws at the NW Solar Center or get an estimate from certified Washington solar contractors.