2022 Washington Solar Incentives, Tax Credits, Rebates (And More)
Here’s a quick look at the solar incentives in Washington:
- Federal Solar Tax Credit
- Net Metering
- Sales Tax Exemption
- Additional City & Utility Rebates
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Washington homeowners pay an average of $26,900 to install solar panels, assuming the average per-watt price in the state of $2.69 and the typical system size of 10 kilowatts required to offset electricity usage. While this total is prohibitively expensive for some, there are some solar incentives and tax credits available to Washington homeowners to help make renewable energy systems more accessible.
In this guide, we’ll discuss all of the solar incentives, rebates and credits you can take advantage of as a Washington resident, and we’ll provide some information on how each can affect your total cost to go solar.
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.
Current Solar Rebates, Tax Credits and Incentive Programs in Washington
The table below provides a quick view of some of the most appealing incentive programs available to Washington homeowners who are looking to install solar panels on their homes. We’ll include additional information about each incentive further below.
|Washington Solar Incentive||Description|
|Federal Solar Tax Credit (ITC)||The federal solar tax credit is provided to all WA residents and amounts to 26% of the total cost of installing a solar panel system.1 In Washington, where the average system costs homeowners $26,900, that’s a typical credit of $6,994. This is applied to your federal income tax liability the year your system is turned on.|
|Net Metering||Net metering is a policy that lets you exchange excess energy for credits you can use to offset electricity costs when your panels don’t produce enough power.2 We’ll explain the specifics of the net metering program in Washington below.|
|Renewable Energy Projects Sales & Use Tax Exemptions||This sales and use tax exemption prevents Washington residents from having to pay sales tax on their solar arrays.3 Given the average system cost of $26,900 and the average sales tax of 6.5%, that’s an average savings of $1,749.|
Washington Solar Tax Credit
Despite the nationwide availability of the federal tax credit, many states choose to incentivize solar conversions even further by providing access to a state solar tax credit as well. Unfortunately, Washington does not have a state solar tax credit or any kind of statewide rebate program.
Unless you live in the eastern half of the state, solar isn’t the most practical renewable energy source for your home. Hydropower is far more accessible, so the state government pushes conversion to hydropower over solar. As a result, lawmakers have not passed many bills that provide solar-related incentive payments.
Public utilities in the Pacific Northwest — particularly Washington and Oregon — have been so proactive about decarbonizing their operations and reducing their carbon footprint via hydropower that state governments don’t need to incentivize many residents to do so. It’s unclear but unlikely that this will change anytime soon. Still, converting to solar can provide you with many personal benefits, like an improved home value, lower utility bills and more.
Other Washington Solar Incentives
Despite not having a state solar tax credit to incentivize solar conversions, Washington does take some steps to make solar power more widely available to homeowners. Below is an additional solar incentive that you can enjoy in Washington State.
Solar Easement & Rights Laws
Washington maintains Solar Easement & Rights Laws, which guarantee that all taxpayers have access to solar panels and the sunlight available to their homes. In some states without these laws, strict homeowners associations, individual municipalities and other governing agencies prevent solar panel installation.
The rights laws state that any homeowner — even those in HOAs and privately governed areas — are lawfully allowed to install rooftop solar panels. The easement laws also prevent your neighbor, new buildings or other obstructions from impeding your access to sunlight.
Washington Solar Sales Tax Exemption
Another way Washington State helps reduce the barrier to entry to get solar panels installed is by offering the Solar Sales Tax Exemption, also called the Renewable Energy Projects Sales & Use Tax Exemptions. Normally, the sale of home improvement equipment would be subject to sales tax, but this exemption prevents you from having to pay any on solar equipment. With the average solar energy system in Washington totaling $26,900 and an average state sales tax rate of 6.5%, a typical homeowner would save around $1,749 by not having to pay sales tax.
Many states take the additional step of offering a property tax exemption to limit the financial burden of going solar. Unfortunately, Washington does not provide a property tax exemption, so your property taxes will increase after installing solar panels. Adding a photovoltaic system raises the home value and the assessed value, which means your new tax rate will be slightly higher. Luckily, the savings you’ll enjoy can still offset this bump in property taxes.
Net Metering in Washington
Most home solar projects benefit from interconnection, which allows power to travel in both directions between the system and the local utility grid. When your panels fail to produce sufficient energy to power your home, the grid supplies the difference. When your panels produce more than you’re using, the excess is sent to the grid. Net metering — or net energy metering — is a policy that lets you earn credits for what you overproduce, which can be used to offset what you pay for incoming electricity.
Washington State’s net metering policy was established in 2000 when the state legislature enacted a bill mandating that all utility companies offer net metering.4 That means Washington solar customers have a good chance of reducing energy costs to $0 a month, provided their system is appropriately sized for the kilowatt-hours they use daily. Specifically, the Mandatory Utility Green Power Option guarantees that you’ll earn energy credits for any overproduction of power.5 You can use those credits to bring down electric bills in future billing cycles.
While net metering is mandatory throughout Washington, the terms of the policy are not defined by the law. Every utility company will have different net metering policies, so be sure to check your own provider.
The statewide incentives in Washington are relatively limited, but, thankfully, there are some local solar incentives provided by utility companies that make going solar slightly more appealing. Some of these additional local incentives are explained below:
- Richland Energy Services’ Residential Energy Conservation & Solar Loan Program: Residents in the City of Richland who are customers of Richland Energy Services (RES) can take advantage of the utility’s solar loan program. The program aims to make solar financing more accessible, and to that end, it provides low-interest loans of up to $15,000 to help homeowners convert to clean energy.6
- Clark Public Utilities’ Solar Energy Equipment Loan: Similarly, customers of Clark Public Utilities can apply for solar loans with a low APR — 3.5% for all customers — for a total loan amount not to exceed $30,000.7
These solar loan programs can help homeowners secure financing to ease the financial burden of going solar. Unsurprisingly, these loans are found more in the southern and eastern sides of the state, far from Seattle and the Puget Sound area.
Federal Solar Tax Credit
Finally, the federal solar investment tax credit, commonly referred to as the “ITC,” is a solar tax incentive provided by the federal government. The eligibility for the ITC in Washington is statewide, and it’s valued at 26% of the entire cost to go solar. In Washington, where the typical system totals $26,900, that’s an average credit of $6,994.
The federal tax credit has been decreasing over the past decade, and it’s scheduled to drop again in 2023, to 22%. For systems that begin operating in Washington in 2023, the average credit value will be $5,918. Unless Congress renews the credit, the ITC will no longer be available for home systems in 2024 — although commercial customers can still enjoy a 10% credit. That means that it’s most beneficial to install solar as soon as possible to take full advantage of this tax credit.
FAQ: Washington Solar Incentives
The EcoWatch team gets questions all the time from Washington homeowners about the solar incentives available in the area. Below are some of the questions we see most frequently.
Washington does not have a state solar tax credit, primarily because the state’s Renewable Portfolio Standard (RPS) will likely be met thanks to hydropower production incentives. However, Washington State residents will still have access to the federal tax credit in 2022 and 2023.
In terms of rebates and state tax credits, no. However, there are some other incentives available to Washington residents in 2022. The 26% federal tax credit is available for all solar power systems installed and commissioned in the state. Washington residents can also enjoy a decent net metering policy and Solar Easement & Rights Laws that protect their right to install and benefit from solar panels.
Unfortunately, there are currently no rebates for solar power available in Washington. This is unlikely to change in the near future because hydropower is still the most practical renewable energy source for most of the state.
Unfortunately, yes. Washington does not have a property tax exemption for solar equipment. Solar panels increase your home value, which will, in turn, cause your property taxes to increase slightly. However, the savings you’ll enjoy from installing panels on your home will likely offset this hike in taxes over time.