From the charm of Chesapeake Bay to the unmistakeable hue of Blue Ridge Mountains, Virginia sure does have a lot of natural places to protect. Unfortunately legislators down in Richmond have not followed in the footsteps of their great forebears when it comes to promoting sensible self-driven solutions like solar power (Jefferson’s yeomen farmers would so be using photovoltaics). Despite strong solar resources and a strong potential foundation for statewide policy, lawmakers have failed to pass or promote meaningful incentives thus far. We’ll be checking in periodically to see if all this potential turns into some real incentives for you, the customer. In the meantime, solar power is still a pretty sweet investment, even without big state incentives chipping in.
Virginia’s Renewable Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of rebates and performance payments when you switch to solar power.
Virginia first passed its voluntary RPS in 2007. In our state updates here at Solar Power Rocks, we have often used “goals” or “targets” to refer to RPS-determined minimum levels of renewable energy production that are actually firm mandates. Those mandates are backed by penalties for noncompliant utilities. In this case “goals” really means just that; aspirational targets not backed by any penalties for failing to meet the set standards.
The voluntary goal is currently 15% renewable energy by 2025. That includes intermediary goals of 7% renewables by 2016, and 12% renewables by 2022. Information on how much progress Virginia utilities have made toward those goals is not readily available.
As you might have guessed, the voluntary program here has not been as effective as the more typical mandatory RPS in promoting incentives for solar power. Virginia legislators should convert the framework of an RPS already in place into true mandates for renewable energy. We’ve the utilities start seen strong programs to encourage solar energy production in virtually every state with a strong RPS, and we’re confident that would work here as well.
Solar Performance Payments in Virginia
Virginia’s only performance incentive comes through the Tennessee Valley Authority (“TVA”). Unfortunately TVA serves Lee, Scott and Washington counties and a small portion of Wise County, so only a small portion of Virginians can cash in.
If you’re lucky enough to be TVA customers, your new solar power system is eligible for TVA’s Generation Partners Program. TVA offers a ten-year contract to purchase 100% of the energy produced by your solar power system for a premium of $0.12 on top of the retail electricity rate.
Virginia Solar Utility Rebates
Participants in TVA’s Generation Partners program are also eligible to receive a $1,000 rebate to offset initial costs of your solar power system. Unfortunately the TVA program is the only rebate available here
Solar Tax Credits in Virginia
Without a strong, mandatory RPS in place, politicians don’t have much motivation to focus on renewable energy either. It’s therefore not a surprise that lawmakers in Richmond have not passed any state tax credits for soar power.
Solar Tax Exemptions in Virginia
The tax code is not entirely devoid of love for solar power. Virginia passed legislation, way back in 1977, authorizing municipalities to exempt residential solar power systems from taxation, i.e. exempting the value that the solar power system adds to your home from being counted in property tax calculations.
Note that we said the state legislation authorizes municipalities to exempt your solar power system from property taxes. The law does not require that municipalities do so. Be sure to ask the expert installer we partner you with about whether or not your town offers such an exemption.
Utility Prices in Virginia
Electricity costs an average 11.46 cents per kilowatt-hour here; almost exactly the national average of 11.43 cents/kwh. We know you hate that monthly electric bill, but here at SPR, we actually think that energy is too cheap right now. Yes we said too cheap.
Electricity remains inexpensive only because most of it is still produced by burning fossil fuels. All that earth-killing oil and coal may still be cheap, but the long-term costs will far outweigh those monthly bill savings. When all those long-term costs, or scarcity problems, or both, really start to kick in, those monthly electricity bills are going to rise quickly. When that happens, you’ll be patting yourself on the back for having already switched over to clean efficient solar energy.
Virginia Net Metering and Interconnection
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus. Virginia’s net-metering law applies to residential generating systems up to 20 kilowatts (kW) in capacity and non-residential systems up to 500 kW in capacity (utilities may choose to offer net metering to larger non-residential systems). All surplus generation is applied as a credit to your next bill at the utility’s avoided cost (or other previously agreed upon) rate. All cumulative surplus built during each 12-month billing cycle may be carried over indefinitely, or you can choose to sell the electricity back to the utility at the end of the 12-month period. In order to sell the electricity to the utility you must negotiate a purchase agreement prior to starting net metering.
That’s a pretty solid law overall, but there are definitely some easy tweaks the legislature could implement to make net metering even stronger. The maximum limit on overall enrollment should also be raised from the current 1% to at least 5% of a utilities peak production capacity. The current system size limitations should also be removed to ensure that all customers can meet on-site generation needs with solar power.
Interconnection standards here are strong overall, but there are significant areas for improvement as far as residential customers are concerned. First, requirements for additional insurance should be eliminated for small residential systems. Currently systems up to 10 kw must carry $100,000 in liability insurance. In addition, whether or not a redundant external disconnect switch must be installed is currently left to the utility’s discretion. Such redundant switches should be prohibited altogether.
5kW Example Return on Investment in Virginia
What do all the numbers add up to for you? Let’s check:
Installing a typical 5kW solar system should start at about $25,000. Don’t worry – even without state incentives, that’s still going to drop a lot!
- Since the feds calculate their incentive based on actual out of pocket costs, no state incentives means a bigger federal tax credit. Subtract $7,500 (30% of $25,000) for a new price of $17,500.
- After the tax credit we subtract your first year’s energy savings, which we estimate to be about $715. That brings your cost after the first year to $16,785, a discount of nearly $8,500 from the starting cost.
- With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in about 16 years. After that you’ll be turning a profit (yes, a profit) for the rest of the life of your solar panels, which is typically about 25 years total.
- In addition to those direct wallet-fattening savings, you also increased your home value by $14,302.
- You’ve also created a whole bunch of other green. Money green, tree green, all sorts of green! First, your expected profit over the life of your solar power system is approximately $17,000! That’s a whole bunch of cash … but don’t forget that you’ve done a service for the earth as well by not using all that fossil-fuel backed electricity. In fact, the fossil-fuel energy you’re not using is the carbon-saving equivalent of planting 110 trees a year, every year your solar power system is humming.
These numbers are estimates. Your home is unique and how much power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
Virginia Solar Consensus
Virginia has all the right pieces in place for strong statewide solar policy – good net metering, standardized interconnection, and even the framework of an RPS. Unfortunately the RPS’s current voluntary nature is preventing that potentially strong foundation for spurring any meaningful incentives for residential solar power. With above average first-year costs and below average payback time frames, Virginia comes in at a sub-par “D” in our ratings.