Virginia Solar Incentives (Rebates, Tax Credits & More in 2024)

In this Virginia solar incentives guide, we’ll answer: 

  • What solar incentives can Virginians take advantage of in 2022?
  • How much can I save with solar incentives in Virginia?
  • How can I apply and qualify for each solar incentive in Virginia?

Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.

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Do Virginia Solar Incentives Make It Affordable for Homeowners to Go Solar?

The average cost of a solar panel system in Virginia is $36,850. That’s considering the per-watt price of solar equipment and the average energy consumption per household in the state.

Thankfully, residents can benefit from solar incentives in Virginia, including the 30% federal solar investment tax credit, Virginia’s Solar Renewable Energy Credits program, property tax exemption and net metering.

Virginia’s favorable incentives, ambitious renewable energy goals and below-average cost of solar equipment make it a top state for solar panel installations.1

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The below table highlights the main solar incentives available in Virginia:

Solar Incentives in Virginia Incentive Type Description Occurrence Estimated Dollar Amount You Can Receive
Federal Solar Investment Tax Credit (ITC) Federal Virginia homeowners are eligible for a credit on their federal tax returns worth 30% of the cost of their solar panel system Will apply to your federal tax returns and will roll over for up to five years On average, $11,055 in VA
Virginia’s Solar Renewable Energy Credits (SREC) Program State Virginia’s SREC program allows homeowners to earn and sell energy credits for every 1,000 kilowatt-hours (1 megawatt-hour) they produce with their PV systems2 One SREC is earned every time you generate 1,000 kilowatt-hour (kWh) of energy $45-$70 per SREC (an average-sized system in VA will generate around 13 SRECs each year)
Residential Property Tax Exemption for Solar in VA State Virginia’s property tax exemption prevents your property taxes from increasing as a result of going solar3 Exempted annually on tax returns N/A
Net Metering in Virginia State Net metering programs offered by local utility companies — primarily Dominion Energy in Virginia — allow homeowners to sell excess energy back to their power provider Monthly on electric bill Up to the full cost of your electric bill each month

What Do Virginia Residents Need to Know About the Federal Solar Tax Credit?

va solar incentives

The federal solar investment tax credit, commonly abbreviated as the ITC, is a solar incentive offered to all Virginia residents by the federal government. The credit is applied to your federal income taxes owed for the year you install and commission your solar project.

The amount of the credit varies between systems, as it will equal a massive 30% of your entire solar system cost. In Virginia, where the average system totals around $36,850, the ITC is hugely beneficial, with the average credit being $11,055.

We’ll get into why a bit later on, but we believe that, in the future, most solar customers in Virginia will need to install batteries to maximize their solar savings. Batteries add between $10,000 and $20,000 to your solar installation costs, which is substantial and makes going solar far less accessible. Thankfully, the ITC also applies to batteries if you install them alongside your panels (retroactive installation won’t qualify). That means the ITC could effectively save an additional $3,300 to $6,600 if you also install batteries.

It’s also important to note that this is not a rebate. It’s a tax credit, which means you can only take advantage of it if you owe taxes in the years after you go solar. You can split the credit up among five years, so as long as you owe an average of around $2,200 per year for five years, you should be able to take the entire credit.

The 30% federal solar tax credit applies to all residential solar installations in the U.S. through 2032. It is set to reduce to 26% for photovoltaic systems installed in 2033 and 22% in 2034, and is set to expire in 2035 unless Congress renews it.

How to Claim the Federal ITC in Virginia

Claim your 30% solar tax credit on your annual federal tax return. If you’re filing yourself, you’ll need to:

  1. Download and complete IRS form 5695. Write the final cost of your solar installation on line one and calculate your credit on lines 6a and 6b. Your solar installer or a CPA can help you with this if necessary.
  2. On IRS form 1040, fill out your Schedule 3 using the figure you calculated on line 15 of your 5695 form.

Visit the IRS.gov website for full instructions on how to apply for the Federal ITC. We strongly recommend consulting with a tax expert and your solar panel company when applying for the federal solar tax credit.

EcoWatch’s Opinion on the Federal ITC in Virginia

The Federal Solar Tax Credit is worth 30% of the cost of your solar panels, easily making it the most valuable solar incentive available to Virginians.

That being said, you will only realize the full benefit of the Federal ITC if you expect to owe several thousand dollars in federal taxes within the next five years. The credit will only carry over for that length of time.
Watch Below: Is Solar Actually Worth It? What’s True vs What’s a Myth

Solar Renewable Energy Credits in Virginia

Some states provide a state tax credit in addition to the federal tax credit to incentivize homeowners to convert to solar energy. Virginia does not have a state tax credit — it instead uses Solar Renewable Energy Credits (SRECs) to entice residents to adopt solar.

Virginia has a Renewable Portfolio Standard (RPS) that aims to generate 100% of the state’s electricity from renewable energy sources by 2050, and SRECs will help the state reach that goal.4

SRECs are energy credits that any solar customer in VA can earn simply by producing solar energy. For every 1,000 kWh (or 1 mWh) your system produces, you earn one SREC. You can then sell your SRECs on the SREC market, and the kickback you get for selling your credits can help you pay off your solar loan or recuperate your investment more rapidly if you paid cash for your solar panels.

There is a cap on the price of SRECs in Virginia, so you’ll never get more than $75 per credit. A more modest price between $45 and $70 is more realistic. With the typical 11-kilowatt system required to offset energy needs in Virginia, the average system will produce around 13 SRECs annually, which comes out to an average of around $585 or a maximum value of $910.5

How to Claim SRECs in Virginia 

Even if you are not a customer of Dominion Energy or Appalachian Power, you can still claim SRECs for your solar panel system in Virginia. Here’s how:

  1. Complete the interconnection process to make sure your solar panel system is connected to the utility grid.
  2. Register your system with an SREC broker like SRECTrade.
  3. Once your system is registered, it will generally start generating SRECs within two months. Your SREC broker will automatically sell your SRECs on the market for you.6

Your solar panel installer in Virginia may complete this process for you. Ask the installer to make sure you’re taking advantage of this incentive.

EcoWatch’s Opinion on SRECs in Virginia 

The market price for SRECs will fluctuate, as will the amount of energy your solar panels generate throughout the year. That means that how much you earn from SRECs will also fluctuate. This isn’t ideal, but the savings are still worthwhile for those who can take them.

Sure, you won’t get rich off SRECs, but it’s nice to have some extra cash to put towards paying your solar panel system off faster. You’re basically getting paid for just having solar panels on your home.

Residential Property Tax Exemption for Solar in Virginia 

Installing solar panels on your residence can cause the value of your home to increase. Without a property tax exemption, that means that you’ll be paying more each year in property taxes.

Through the beginning of 2024, Virginia did not have a statewide property tax exemption for new solar panel installations. That changed, though, with the passing of Senate Bill 686.7

Given the state property tax rate of 0.75% and the average system value of $36,850, you would be looking at an increase of around $276. Over the 20 years or so that your system is expected to hold value, that’s a total theoretical increase of $5,527. Thankfully, the change to the policy makes this mandatory, which means these are potential savings rather than an increase in property taxes. The actual savings will be lower, though, because your system will depreciate in value over time.

How to Claim the Residential Property Tax Exemption for Solar in Virginia

To be eligible for the solar property tax exemption, your local building department or the Virginia Department of Environmental Quality must inspect and certify your solar energy equipment and installation. This is how your tax credit will be determined.10 Your exemption is automatic, though, and doesn’t require any paperwork to be filled out.

EcoWatch’s Opinion on the Residential Property Tax Exemption for Solar in VA

A statewide property tax exemption for solar was long overdue in Virginia, so it’s nice that it’s available for customers now.

A universal property tax exemption in VA further encourages the adoption of clean energy in the state by removing one of the only downsides of going solar, and it could possibly save you thousands of dollars in taxes over the lifetime of your solar panels.

The Solar Energy Industries Association (SEIA), a nationally operating solar nonprofit, commended the state’s decision to make the exemption mandatory. The southeast regional director of SEIA, Will Giese, said that “this new law empowers millions of Virginians to choose the energy that works for them, while increasing the value of their homes and creating certainty to attract new businesses and jobs.”11

Net Metering in Virginia

solar incentives va

Net metering is a billing policy designed to help property owners reduce or eliminate their electric bills. Normally, it can be quite difficult to provide constant power for your home with solar panels, as their efficiency decreases on cloudy days and they can’t produce power at night.

You can pull power from the grid as required when your panels are underperforming, and through net metering, when your panels are producing more power than you need, you can send the excess back to the grid. When this happens, your utility company will give you credits for the power, which you can use toward your utility bills or roll over to following years.

Virginia’s investor-owned utility companies, Dominion Energy and Appalachian Power, must follow the state’s Net Metering guidelines spelled out in Virginia code §56-594, as must all electric cooperatives.

If you are a customer of a municipal utility, you may not qualify for net metering in Virginia, as these smaller utilities are not required to offer a net metering program like Dominion Energy and Appalachian Power are.12

Customers of Dominion Energy and Appalachian Power in Virginia are eligible for compensation of the full retail value of any excess energy their solar panels generate. At the end of the billing cycle, those customers can either roll over unused credits to the following year at the retail rate, or get compensated for the accrued credits at the avoided cost rate, which is below retail. These options are really nice to have, and most states that have net metering don’t allow for payouts on excess credits.

Dominion Energy customers with residential solar systems larger than 15 kW may have to pay standby charges based on peak power demand. Dominion Energy customers with solar systems between 15 kW and 25 kW may have to pay transmission and distribution standby charges.13

How to Enroll in Net Metering in Virginia

How you enroll in net metering in Virginia will depend on which utility provider you use. For Dominion Energy customers, before you install your solar panels, you must:

  1. Apply for the Dominion Energy Net Metering Program by filling out sections one through four of the notification form.
  2. Submit the notification form with proof of insurance to Dominion Energy via email or U.S mail.
  3. Dominion Energy will review your application for approval. A representative will make sure that your proposed interconnection is compatible with the electric distribution system.
  4. Once your application is approved, Dominion Energy will sign and return your notification form and share any required changes to make your system compatible.

Then, once your solar panels are installed, you must complete the net metering application process by:

  1. Completing section five of the notification form and submitting it to Dominion Energy again.
  2. Dominion Energy will then complete the process and send you authorization to start your solar panel system and enjoy net metering benefits.

The full instructions for Dominion Energy customers to apply for net metering in Virginia can be found here.

If you are an Appalachian Power customer, click here to learn how to apply for its net metering program.

EcoWatch’s Opinion on Net Metering in Virginia

Unfortunately, Virginia’s net metering program is not universal to all residents in the state. Investor-owned utilities and electric cooperatives are the only providers that the state of Virginia requires to offer net metering to their customers.

There’s also a net metering cap, so the program is only available until the generating capacity from net metering customers reaches “1% of an electric distribution company’s adjusted Virginia peak-load forecast from the previous year.”14 So, even if you qualify for net metering, the benefit may run out before the year ends.

Dominion Energy customers may also be charged transmission and distribution standby fees depending on the size of their solar energy systems.15

Overall, we wish that all residents of Virginia with solar were eligible for net metering. The application process is long and complicated — but usually for your installer and not for you — and the net metering cap and fees for Dominion Energy customers can limit the benefits of this program.

Local Solar Incentives in Virginia

Some states’ municipalities and utility companies offer local incentive solar programs and rebates, which are often backed by the state. These programs typically either cover solar, specifically, or energy efficiency upgrades that can be coupled with solar panel installation to maximize energy savings.

Despite Virginia being a solar-friendly state, as of January 2024 there are no local incentive programs available to homeowners beyond property tax exemptions. Keep your eyes peeled in your locality for any new programs that may emerge.

See also: Find out how much solar power your roof can produce with our solar calculator

What Do Virginia Residents Need to Know About SRECs?

Virginia’s Solar Renewable Energy Certificate (SREC) program was created in 2020 with the passage of the Virginia Clean Economy Act (VCEA).

When you sign up for SRECs, your SREC broker will automatically sell the SRECs your solar system generates at the going market price.

Are SRECs Taxable in Virginia?

There is some debate concerning whether or not SRECs are taxable, but the general consensus is yes, SRECs are considered taxable income on both federal and state income taxes.

Always consult with a tax expert to help you determine your taxable income. You will most likely report your SREC income on Form 1099-MISC if you have made $600 or more from selling your SRECs.

Or, if you don’t receive the 1099-MISC form, you’ll go to the Wages & Income section under your federal taxes and input your SREC earnings under Miscellaneous Income, 1099-A, 1099-C. You can find more detailed instructions from TurboTax here.

What’s the Near Term Outlook for More Incentives in Virginia?

Virginia doesn’t have any specific plans to change solar incentives in the coming years for the better or for the worse. Since the state has a solid RPS goal, we’d expect most of the current incentives to stay how they are and continue benefitting customers.

The only exception is net metering. We’ve seen this perk get downgraded time and time again in other states, and most notably in California, which has historically been the most solar-friendly state in the country. If there is going to be a change to Virginia solar incentives, we’d expect that it would be a downgrade to the net metering policy, or an abandonment of the perk altogether.

 

The cost information presented in this article is derived from a comprehensive analysis, incorporating data from multiple industry sources. The average cost per watt per state was calculated based on figures from Consumer Affairs, Energy Sage, and Berkeley Lab’s Electricity Markets & Policy Department. Additionally, monthly energy consumption and the average monthly cost of electricity were sourced from the U.S. Energy Information Administration, ensuring a well-rounded and accurate representation of the information presented.

FAQ: Solar Incentives Virginia

The EcoWatch team gets questions about solar incentives available in Virginia regularly. Since you might have similar questions about how incentives and rebates in the state work, we’ll include some of the most commonly asked questions below. If you have specific questions that aren’t answered here, reach out to our team of solar experts at solar@ecowatch.com.

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Faith is a writer based in North Carolina. She holds English and economics degrees from UNC Chapel Hill, and her background includes event management and technical publishing. Faith is passionate about the arts and loves exploring environmental issues through economic and artistic lenses. She also enjoys spending time in nature, collecting books and practicing her Spanish.
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Expert reviewer
Tori is an editor, writer, rock climber and travel enthusiast. A native New Yorker, she graduated from the College of Saint Rose with a degree in communications and journalism. Before joining EcoWatch, Tori helped to oversee communication strategies for the City of Philadelphia. Her experience also includes communications work in the nonprofit and academic sectors. A journalist by trade, she started her career covering political, environmental and social issues in New York's Hudson Valley. In her spare time, Tori can be found in the mountains climbing boulders, traveling to new cities or at one of Philadelphia's many music venues.

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