When most people think of D.C., they think of big government buildings and big marble monuments. But from the Potomac River, to the nearly 3 square mile Rock Creek Park within the city borders and the beautiful forests found just outside of D.C. in virtually any direction, our nation’s capital has a lot of natural beauty to protect. And protecting it they are. Thanks to a strong RPS backing up solid performance payments and an extensive district-wide rebate program, both initial costs and payback time frames here rank among the best in the county. Let’s take a look at the details …
Washington D.C.’s Renewable Portfolio Standard
A Renewable 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. If you keep up with renewable energy policy, you already know that a great many states have passed such Standards. Many of the RPS’ mandate goals as high as 30%, even 40% production in the not-that-distant future.
The District’s RPS sets minimum renewable energy production at 20% by 2023. That 20% includes a strong 2.5% carve-out specifically for solar power. Both the 20% overall figure and the solar carve-out will be phased in via targets that raise slowly, year-after-year. By the end of 2012, 5% of D.C.’s power must come from renewable sources and 0.5% from solar power.
Solar Performance Payments in Washington D.C.
D.C. has a District wide performance payment plan that is built into the RPS’s solar carve-out.
In order to meet the RPS’ solar power targets, utilities must purchase Solar Renewable Energy Credits (“SRECs”) from folks like you (generators are issued one SREC for every megawatt-hour of solar power produced). For every SREC a utility falls short, they must pay an alternative compliance penalty of $500. That effectively sets the maximum SREC payment at $500, but it also helps keep SREC prices pretty high in general. Trade prices vary, but as of March 2012 sales averaged $320 per SREC, which would return about $1,800 a year for the average 5kw system here.
Washington D.C. Solar Utility Rebates
D.C. also offers a strong district-wide rebate program. When you install a new solar power system here, you qualify for an up-front rebate. The size of that rebate depends on the size of your system. You’ll get $1,500 per kilowatt (kw) for the first 3 kw installed; $1,000/kw for kws 4-10; and for larger systems, $500/kw for kws 11-20.
Washington D.C. Solar Tax Credits
While there are no tax credits available here, we can’t fault the city government too much. Those performance payments and rebates are still holding down the fort.
Solar Tax Exemptions in Washington D.C.
We would, however, really like to see City Hall pass some tax exemptions. A sales tax exemption would save you 6% up front, and a property tax exemption protect you from any increase in taxes when installing a solar power system increases your home’s value (we’ll get to that in a minute).
Utility Prices in Washington D.C.
D.C. pays an average of 12.48 cents/kw of electricity. That’s about a penny more than the national average 11.43 cents/kwh, but we still think that’s pretty cheap. Cheap electricity rates mean you’re probably not feeling too much of a strain in your pocketbook …. yet. Just don’t forget why electricity is so cheap.
That’s right, fossil fuels. Lots and lots on non-renewable, greenhouse gas producing fossil fuels. When all those fossil fuels really start to bite us in the butt, or start to run low … or both … electricity rates are going to rise, and fast. When that happens you’re going to be really, really happy you switched early to all that efficient, clean solar power that will be in high demand.
In the meantime, solar power will still save you a chunk of change here. We’ll go over just how much in a minute.
Washington D.C. 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.
Pepco (D.C.’s only electric utility) offers a standard net metering contract to all residential customers. For all systems under 100 kw, all surplus electricity is credited to your next bill at the full retail rate. Surplus may be carried over indefinitely. All that is superb, and net metering is very strong for residential customers here. We gave net metering a “B” in our summary only because of the size limitation (1 mw) that may prevent larger commercial customers from filling all of their on-site generation needs with clean solar power, but that won’t affect you and your single-home system.
The District’s interconnection policiesare also very strong for residential customers. If your system is less than 10kw (most residential systems will be), you qualify for simplified interconnection procedures, and will not be required to install a redundant external disconnect switch nor carry separate liability insurance. Again, we gave interconnection a “B” here only because of some limitation for larger customers that don’t concern your residential system.
5kW Example Return on Investment in Washington D.C.
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 freak – that’s gonna drop fast!
- We start with that big rebate from the city government. You get $4,500 for the first three kws and $1,000 for the last two kws, so subtract $6,500 for a new starting cost of $18,500.
- The feds are smart – they calculate your 30% tax credit on your costs after state rebates. So we take 30% of $18,500 and subtract another $5,550 for a new price of $12,950.
- Don’t forget about those SREC payments. Using the current $320/SREC average, we estimate your first year SREC sales to bring back $1,872. Subtract that for a new cost of $11,078
- Finally we subtracted your estimated annual electricity savings of $730, giving us a total cost after year 1 of just $10,348. That a discount of nearly 60% already.
- With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in just 5 years!
- In addition to those direct wallet-fattening savings, you also increased your home value by a whopping $35,337.
- On top from all that green in your pocket, you’ve created a bunch of green for the planet; 103 trees worth, every year your solar power system is humming and you’re not buying fossil-fuel based electricity.
Remember that 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.
Washington D.C. Solar Consensus
Our nation’s capital is certainly one of our nation’s leaders when it comes to strong solar energy policy. The picture here is sunny indeed for the switch to solar power; with a 1st year price break approaching 60% and a lightning-fast 5 year payback timeframe, Washington D.C. earns our highest “A” grade.