Washington Solar Incentives: Net Metering, Tax Breaks, and More

Harnessing the sun’s energy to power your home is a great way to reduce your carbon footprint. While solar panels are now more affordable than ever, the process of going solar can still be a bit expensive for many. Fortunately, there are options. Some areas have community projects that you can get involved with. If you’d rather have personal solar panels, there are state and federal incentives you should look into to help you do just that. You’ll likely save money on your energy bills once they’re up and running, which can offset some of the cost.

Comparison of Washington Solar Incentives

Washington State Solar Tax Credits, Exemptions, and Loan Programs

One of the strongest incentives Washington state currently offers is a VAT exemption on solar energy.

• The state will waive all sales tax on the purchase and installation of solar energy systems up to 100 kilowatts.
• You may qualify for the tax exemption as long as your solar installer is properly registered with the state.
• Customers can take advantage of the tax deduction by completing the following form: Retail Sales Tax Exemption Form.

The other big solar discount in Washington is known as the Renewable Energy Systems Incentive Program. While RESIP is still an active program, it reached full capacity in 2021 and is no longer accepting new clients. The Washington State Legislature would need to authorize additional funding to reopen the program.

Local Rebates for Energy Efficient Appliances in Washington

The state, cities, and utilities offer rebates on a number of energy-efficient electrical appliances that can help you lower your energy bill or get more out of your solar energy.

Puget Sound Energy offers discounts for eligible customers Switch from an electric, forced-air heater to a heat pump. You can get $2,400 for making the switch, or $4,000 if you install an AHRI-certified, ducted or ductless heat pump instead of natural gas heating. Puget Sound Energy customers can energy efficiency upgrade discountsincluding insulation, duct sealing, Energy Star appliances, smart thermostats, heat pump water heaters and more. Low and moderate income customers can receive bigger discounts.

The city of Seattle will provide its residents $2,000 to switch from heating oil to an efficient heat pump and up to $600 for other heat pump purchases.

A coalition of cities near Seattle will up to $1,500 off qualifying heat pump purchases.

Special Loans for Solar Panels in Washington

If you plan to finance your solar panels, a number of loan programs in the state can make this more affordable.

One of the offers is the Washington State Housing Finance Commission EnergySpark Home Loan.

• Customers who purchase a home can apply for an EnergySpark mortgage with a reduced interest rate.
• You qualify if your household earns less than $180,000 per year and the home you purchase exceeds Washington state energy standards by at least 15% or can be upgraded to provide 10% energy savings over current consumption.
• With the EnergySpark loan you get a 0.25% discount on your mortgage interest, which can add up to thousands of dollars in savings over time.

Special solar loans are offered by banks and credit unions in Washington state. For example, Puget Sound Cooperative Credit Union has an Energy-Smart loan that can be used for solar power and energy-efficient appliances, such as water heaters. Loan terms vary depending on the county you live in and the size of the project. Click here for more information.

Federal Solar Tax Credits and Incentives for Washington Residents

Washington state residents may also qualify for the federal government’s Residential Clean Energy Credit. The program covers up to 30% of the cost of a solar installation from now through the end of 2032. The credit will remain valid for two years after that, albeit at a lower rate.

The tax deduction also applies to other home energy investments, such as boilers, wind turbines, geothermal heat pumps, fuel cells and battery storage technology.

Washington’s Net Metering Rules for Solar Energy

When you install solar panels on your roof, you’ll probably produce more electricity than you need at times. Washington State allows you to send that energy back to the grid and get paid for it, with a program known as net metering.

The state’s three largest utilities (Puget Sound Energy, Avista And Pacific Power & Light Corporation) all use similar conditions for net metering.

• When your solar panels produce more electricity than you need, the power is supplied back to the electricity company.
• You don’t get the value of that extra energy back in cash. Instead, the utilities let you “save” extra kilowatt-hours of electricity credits that you can use for future bills.
• However, the credits are not valid forever. The net metering credits expire on March 31st each year, in accordance with state law.

Because the credits expire annually and can only be used to settle bills, utilities advise against oversizing solar panels to increase net metering revenue.

Community Solar Projects in Washington

For residents who cannot install solar panels on their roofs, Washington State is also home to many community solar installations.

With community solar energy, customers can subscribe to a portion of the yield of a large solar park, thereby supporting renewable energy and reducing their energy bills.

Washington state residents can subscribe to community solar energy through their electric utility. Puget Sound Energy allows customers to sign up for $20 a month, but in return they get bill credits for the solar energy generated by their share. Community solar doesn’t always save you money. Puget Sound Energy’s page states that bill credits “offset a portion of your monthly subscription fee.”