Net Metering: Why Solar Can Work With Rainy Winters
Solar energy works incredibly well in the rainy areas of Washington. This is due, in part, to a clever legal solar incentive called “net metering.”
Under a net metering agreement, you will use any solar electricity that you need at your home, first. Then, when you generate more power than you use, your utility will credit your account — at the same rate they normally charge you!
This makes solar energy an excellent fit here in Oregon and Washington because our long, sunny summer days are excellent for generating power. Most home owners significantly over-produce power during the summer and then automatically use the extra credits they earn during the winter and fall.
Your solar credits are managed automatically by the utility, so there is no extra effort required on your part.
Also, contrary to popular belief, solar panels on your home do work when skies are cloudy. They do not produce as much power, of course, but even small bursts of sun can give your winter generation a significant boost.
When a solar panel system is sized correctly for your home, it is even possible to off-set most of your annual costs! However, you may wish to design a solar installation that maximizes your return on investment. This requires additional solar energy incentives, which we will cover in detail, next.
The Federal Solar Tax Credit
The federal government offers a tax credit that covers 30% of your total solar installation costs, including parts and labor.
This tax credit can be taken in the same year you install panels on your home and it is easy to claim. You must first subtract your utility cash incentive from the total amount, however.
It is important to note that the federal tax credit program is ending. In order to take advantage of the full 30% rate, you must install a solar energy system before January 1st, 2020.
Here are the scheduled changes you can expect as you plan your solar energy investment:
- 30% for systems placed in service by 12/31/2019
- 26% for systems placed in service after 12/31/2019 and before 01/01/2021
- 22% for systems placed in service after 12/31/2020 and before 01/01/2022
- There is no maximum credit for systems placed in service after 2008.
- Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021.
- The home served by the system does not have to be the taxpayer’s principal residence.
After Jan 1st, 2023, only commercial installations may take a 10% credit
Washington State Renewable Energy System Incentive Program
Governed by RCW 82.16.165, a Production Incentive is paid per kilowatt hour (kWh) to those who install solar based upon the size of the solar system, date of certification/installation and whether or not the solar modules are Made in WA according to the following schedule:
|Fiscal Year Ends||Base Rate: Residential or Community Solar (per KWH)||Base Rate: Commercial or Shared Commercial Solar (per KWH)||Bonus for Modules (solar panels) Made in WA|
Systems installed after 6/30/2021 do not receive a WA State Production Incentive.
Solar systems of 1 kW through 12 kW are classified as “residential” regardless of the type of facility where they are installed. The maximum annual incentive payment for residential scale is $5,000/year. Solar systems larger than 12 kW are classified as “commercial” unless they are installed as a Community Solar Project. The maximum commercial annual incentive payment is $25,000/year.
The utility reads the newly added production meter and reports readings to solar customers. Production Incentive payments are made annually following the June 30 state fiscal year-end. Payments last for 8 years or until payments add up to 50% of the total system cost including sales tax, whichever occurs first. Utility participation in the program is voluntary. Payments are made after June 30 and by December 15.
Shared Commercial is a system that is owned or administered by an electric utility and is size 1 MW to 5 MW and serves at least five participants all of whom are located in Washington. Participating companies receive up to a maximum of $35,000 per year for no more than 8 years or until 50% of the system price including sales tax is reached.
Community Solar is a system not larger than 1 MW that is shared by many owners who purchase shares and share in the benefits of solar. Community Solar allows for participation by people who do not have good solar sites or who want a lower cost to participate. Community Solar projects must be created by utilities, non-profits or other local housing authorities. The same maximum of $5000/year for 8 years until 50% of total cost is earned back as with residential systems. Not more than 50% of a utility’s available pool of funds can go towards Community Solar participants.
The Washington State University (WSU) Energy Program is the administrator for this incentive program.
Residential Scale (1-12 kW): Pre-Approval is not needed. To receive the state incentive, the owner or the installer registers the system after it has been inspected and approved by the local authority having jurisdiction.
Commercial Scale, Shared Community, or Shared Commercial: These categories of projects are defined in the legislation. All require pre-approval from the WSU Energy Program before incentive funds can be obligated.
CAPS & LIMITS: There exist upper caps (limits) – per utility – on the total dollar amount that can be paid out for Production Incentives. The WSU Energy Program website shows progress toward reaching the caps. The utility cap is 1.5% of taxable power sales in calendar year 2014 or $250,000, whichever is greater. Furthermore, there exists an overall cap on the total amount of money available for this Incentive Program. The total program cost is limited to $110 million. Again, progress toward this cap is shown on the website.