FEDERAL SOLAR TAX INVESTMENT CREDIT(ITC)

The Federal Solar Tax Credit, also known as the Investment Tax Credit (ITC), incentivizes investments in solar energy systems. This credit is accessible to both residential and commercial clients. Currently, the ITC allows a deduction of 30% of the installation cost of a solar energy system from your federal taxes for systems installed between 2022 and 2032.

Here’s how it works: If you install a solar panel system costing $10,000, you will reduce your federal taxes by $3,000 the following year. The ITC applies to the total system cost, encompassing both equipment and labor expenses.

Keep in mind that the ITC is available only to customers who own their solar energy systems, not those who lease them or enter into power purchase agreements (PPAs), which are forms of third-party ownership.

It is important to note that the ITC rate will decrease in the coming years. The credit will reduce to 26% for systems installed in 2033 and to 22% for systems installed in 2034. For more information, visit the Office of Energy Efficiency and Renewable Energy website.

SALES TAX CREDIT

The state of  Washington offers a sales tax exemption for eligible solar equipment as stipulated by ESS Senate Bill 5116. From July 2019 through December 2029, solar energy systems under 100 kilowatts are exempt from state and local sales and use taxes. For larger systems, specifically those between 101 and 500 kilowatts, there is a 50% tax exemption. It’s important to note that different rules apply for systems within the 100 kW to 500 kW range. Customers need to complete and provide a Buyer’s Retail Sales Tax Exemption Certificate to the seller.

WASHINGTON NET METERING

Net metering in Washington State allows both residential and commercial customers to send unused solar-generated electricity back to the grid.

This system provides several advantages. It helps solar power users manage their energy production and consumption, ensuring they have electricity available when their solar panels are not generating power, such as during nighttime or overcast days. Moreover, it offers financial perks since any excess power fed back into the grid can be credited towards future electricity usage, thus reducing energy bills.

The Washington Utilities and Transportation Commission (UTC) oversees the services and rates of privately-owned utility and transportation companies. The UTC has set regulations for net metering in Washington, mandating that utilities provide net metering programs to their customers.

The state’s net metering law covers systems with capacities up to 100 kilowatts (kW), and utilities are required to offer net metering until the total generating capacity of net-metered systems reaches 0.5% of the utility’s peak demand.

For more detailed information about net metering in Washington State, you can visit the Washington Utilities and Transportation Commission’s net metering page.

ADDITIONAL LOCAL INCENTIVES

Washington State offers several local-level solar incentive programs. Here are a few to consider:

Chelan County’s Sustainable Natural Alternative Power Program (SNAP): Initiated in 2001, SNAP is the Chelan County public utility district’s renewable energy initiative. It strives to make various renewable energy sources, including solar, more accessible to the county’s residents.

Clark Public Utilities’ Solar Energy Program: This program is Clark County’s public utility district’s renewable energy initiative. It offers loans to residents interested in adopting solar energy solutions.

IS GOING SOLAR WORTH IT IN WASHINGTON?

Considering the cost of electricity in Washington State and the available solar incentives, it is highly beneficial to explore solar energy options in Washington. As of 2024, the average electricity rate in Washington is around 12 cents per kWh, which is lower than the national average. However, with electricity prices on the rise, switching to solar can provide substantial cost savings for homeowners.

Although the initial investment in solar systems can be high, the long-term savings are noteworthy. Washington State offers several incentives to help reduce these upfront costs. For example, the Solar Energy System Sales Tax Incentive grants a 100% sales tax exemption on the purchase and installation of solar systems.

Additionally, Washington’s Net Metering policy enables homeowners to earn credits for excess electricity produced by their solar panels. These credits can be applied to offset the cost of electricity drawn from the grid.

Bottom Line Despite its cloudy reputation, Washington State is advancing significantly in solar energy adoption. The state’s dedication to renewable energy, coupled with various incentives and tax credits, makes solar power an increasingly appealing option for homeowners.

Incentives such as the Solar Energy System Sales Tax Incentive and the Federal Solar Tax Credit can greatly reduce initial costs. Furthermore, Washington’s Net Metering policy allows homeowners to earn credits for surplus electricity generated, further improving the financial viability of solar power in the state.

In conclusion, transitioning to solar power in Washington State is a wise financial and environmental choice.