Mt. Rainier National Park
Dreary cloudy Washington? It’s really not that dreary at all. Check out a solar resource map for the entire Pacific Northwest region. There, you can see during the summer months especially, the region enjoys a considerable amount of sunlight. So at least our legislators there have some sun to work with! Lets turn to the current state solar incentives.
Washington’s Renewable Portfolio Standard
In 2006 Washington became the second state in the nation to pass a Renewable Portfolio Standard (RPS), mandating that 15% of utilities’ electricity production must come from renewable resources by 2020.
The 15% standard will be phased-in over 3 targets: 3% of production from renewable resources by 1/1/2012, 9% by 1/1/2016, and finally 15% by 1/1/2020.
Washington deserves some credit for being the second state behind Colorado to pass an RPS of any kind. But not that much credit; compared to the Standard in a whole lot of other states, Washington’s is now sorely lacking. That 15% mark needs to be pushed to 30%, even 40% in the years after 2020 to be at parity with more aggressive standards set across the country.
A strong Renewable Portfolio Standard is an irreplaceable part of any successful renewable energy policy. If targets are low than the State and the utilities lack real motivation to encourage more renewable energy. They can throw a few REC payments, and a scant other incentive or two out there; if some people switch that’s great, but if not it’s no skin off anyone’s back. But if Washington had a stronger RPS that set higher renewable energy targets … that’s a different story!
You’d see the state and the utilities get off their butts and start plugging all of these inexcusable holes in Washington’s renewable energy policies!
Washington has a Renewable Energy Credit (“REC”) program that will pay you for every kilowatt-hour (kwh) of solar energy you produce. The base pay rate starts at $0.15/kwh. Shop around and find local products, and that pay rate can go up quite a bit.
If your solar system uses modules produced in the state of Washington for instance, and you qualify for a multiplier of 2.4 to the pay rate, or $0.36/kwh of solar energy produced.
If your system’s inverter was manufactured in Washington, you qualify for a multiplier of 1.2, or $0.18/kwh.
What if both your inverter and your modules are manufactured in Washington? Yep – you get both multipliers for a maximum rate of $0.54/kwh.
REC payments are capped at a maximum of $5,000 per year, and they can be combined with net metering (explained below).
Community solar projects get an even sweeter deal; the base rate is $0.30/kWh and the same multipliers apply, raising the maximum possible incentive to an incredible $1.08/kWh! Each and every investor in a community solar project is eligible for a payout up to the $5,000 cap.
All of this sounds fantastic, and to be certain, those REC payments are pretty high. Hinging those high payments on local goods however, that gets a little bit trickier.
We get the desire to help local manufacturers. Really, we do. Unfortunately, using solar panels and an inverter produced in Washington will run you a tad bit more than say, solar panels made in China (we called our expert solar installers in your area and asked). It still probably makes sense to use financial sense to use local products, as we explain in a bit more detail below, but the increased up-front costs cut into your payback timeframe and profits. Since payback and profits is the bottom line, Washington’s overall performance payments scheme leaves a lot to be desired.
We know all of this information sounds like a lot. Don’t worry! All of these incentives must be applied for once when the system is commissioned, and any of the reputable installers we partner with should walk you through this process and simply present you with the papers to sign.
A few of Washington’s smaller communities also have their own performance incentives. If you live in Chelan County ($0.22/kwh), Okanogan County ($0.57/kwh), or the San Juan Islands ($0.17/kwh through OPALCO), you may be eligible for these local incentives, in addition to the state RECs.
Further incentives are available by selling green tags. The Northwest Solar Cooperative http://nwsolarcoop.org/ will pay you $0.02/kWh for the right to sell the fact that you produced green electricity to someone else.
That seems small, but pennies do add up. More importantly, the value of green tags is likely to go up, so smart solar system owners don’t lock into those low rates. For example, in New Jersey, where the market for green tags is more developed, a similar product recently sold for $0.66/kWh. Now that’s some real cash; east coast city prices whoo’eeh!
The more than 700,000 residents of Snohomish County (Washington’s third largest) are eligible to receive a rebate on the price of solar installation at a rate of $500 per kilowatt installed, up to a maximum rebate of $2,500. That’s it? That’s it. Combined with the lack of a state tax credit for solar systems, the vast majority of Washington residents aren’t getting any help with installation costs at all. We thought you were pro-environment, Washington.
State Tax Credits
Since Washington State doesn’t have any income tax, there aren’t any solar tax credits to redeem! Moving on to other tax exemptions…
Washington exempts all equipment used to produce solar power, and all labor and services related to the installation of that equipment, from all sales and use taxes. As the sales tax in Washington is currently 9%, that’s nothing to sneeze at when purchasing equipment that costs twenty to thirty thousand dollars. That’s a model law right there. No twists, no tricks, just savings for smart solar energy.
What’s not so hot is the lack of a corresponding property tax exemption for the increase to your home’s value from installation of that new solar system. Another failed simple opportunity to encourage clean solar power. Seriously Washington, what is with all these gaps in your renewable energy policy?!
Washington pays a bit over 8 cents per kilowatt-hour. That’s low. One of the five lowest average electricity prices in the nation, actually. Unfortunately that electricity is artificially cheap. It may not cost a lot in dollars and cents, but the dirty energy sources like fossil fuels that are producing those low energy costs are also producing environmental costs that are so high they may turn out to be incalculable.
When those environmental costs come to the forefront the cost of energy is going to skyrocket, and you are going to be really, really happy that those solar panels on your roof are producing your own clean, cheap electricity. Fossil fuels may go the way of the dinosaur (no pun intended), but we’re pretty sure the sun isn’t going anywhere! At least for another six billion years, give or take?
Net Metering and Interconnection
Net Energy Metering (“NEM”) is one of the critical contributors to every solid statewide renewable energy policy. Net metering means the utility company has to keep an energy tab for you; they have to track how much energy you produce and how much you consume. Every surplus kilowatt-hour you produce is carried over as a credit to future bills at the regular retail rate. So for every extra kwh of energy you produce one month, you get 8.39 cents to carry forward to any subsequent charges. That’s pretty standard stuff, but it’s the heart of good net metering.
Unfortunately Washington fails the test that separates a great net metering law from one that’s just OK. The best net metering laws make sure that you get the value of every kwh of surplus you produce – either in credit to future bills, or if you consistently run a surplus, in cash payments at the end of a regular accounting period.
In Washington, any net surplus you have accumulated and not used as a bill credit are forfeited to the utility on April 30th of each year, without compensation. Don’t fret! This just requires a little more planning to make sure you don’t install more solar power capacity than you will use each year.
The expert local installers we partner with can help guide you through this planning and a whole lot more. Besides, even if you produce a tad too much energy one year, you are still eligible for the state REC payments, even with net metering.
NEM is solid in Washington, if not spectacular. Sadly, interconnection is not solid at all; unless by solid you mean hard, and by hard you mean difficult, as in difficult to connect to the grid simply and cheaply.
Now, we don’t want to get carried away. Utilities may not require net-metered customers to comply with safety and performance standards not required by the Washington Utilities and Transportation Commission (“WUTC”) or, or to purchase additional liability insurance. So it’s not the worst interconnection we’ve seen … but it’s close.
Redundant external disconnect switches are generally required; customers are responsible for providing too much of the connection equipment; and the performance standards that the WUTC itself mandates — four of them: the National Electric Code, National Electric Safety Code, and standards from the Institute of Electrical and Electronic Engineers and the privately owned Underwriters Laboratories– could be made less onerous.
Example 5kW (5000 Watt DC STC) Solar System Return on Investment in Washington
So right about now you’re wondering what all this boils down to, as in how much money is all these Washington solar incentives are going to save you. Lots! Lots and lots! Take a look at the 5kw system example above and we’ll explain everything for you here:
This estimate uses an average price of $7,500/kW. That’s the price you’ll pay, give or take, if you purchase solar panels and an inverter manufactured in Washington to qualify for the increased REC payments. The example does not include the Snohomish County rebate program or the small local incentives. Our partners on the ground can let you know if you qualify for any of that extra free money. In the meantime, let’s see how this breaks down without any of those local programs:
- Cost Before Incentives: $37,000 (5kW x $5,000/kW) (Don’t Worry! It gets lower!)
- SREC payments in year 1: subtract $2,738 ($0.54 x 5070kwh)
- 30% Federal tax credit: subtract $10,429 (calculated after subtracting SREC payments)
- Annual electricity savings: subtract $425 annually multiplied by an increase of electricity rates by 1.5% every year thereafter (a 5kW system in Washington will generate roughly 5070kwh over the course of a year. Since the average price of electricity in Washington is 8.39 cents per kwh, that amounts to $425 saved per year, or $35 a month in savings!
- Cost after 1 year: $23,908, a discount of more than $11,00 already!
- Years to Payback: At that current rate of electricity savings annually, and assuming you cashed in on those REC multipliers, you can expect your system to pay for itself in about 15 years. Wait … 15 years?! Washington is behind the curve on solar policy folks. We’re not legislators, but we think this calls for some letters to your legislators.
- New electricity bill: instead of paying $100/mo (let’s just say) you’re paying only $65!
- Greenhouse Gas (CO2) Saved: 7707lbs/year, or like not buying 392 gallons of gasoline, recycling 1.2 tons of waste (instead of sending it to landfills), or planting 90 trees!
Like we said, this example assumes you chose to go with the higher REC payments, because that gets you the fastest payback. If you want lower up front costs, you can usually install a solar system for about $5/watt, but you’ll also wind up waiting a few more years for the system to fully return your investment because of the lower REC payments.
It’s really up to you: lower up front costs or better long-term financial results. Any of our local experts can help you design the system that is most lucrative for your priorities.
To find out how the numbers work out for you, fill out the form below and we’ll connect you to experts we trust in Washington to get calculate realistic estimates for you based on your unique energy usage, location, shading, roof orientation, and roof type. They’ll even do it for free!
Also, as of 2012, there are even plans available that let you go solar for nothing down, also called solar power purchase agreements (PPAs). You’ve probably heard of them before. Be sure to ask your Oregon solar installers about that possibility too if you’re interested.
It’s pretty ugly out there in the world of Washington solar policy. No rebates; no tax credits; no property tax exemption; appallingly low, fossil fuel-backed electricity rates; poor interconnection; mediocre net metering; and REC payments that require you to purchase expensive local equipment to take full advantage. Add it all up and what you get is up front costs that are too high, electricity savings payback timeframe that is far too long, electricity savings that are far too law, and a payback timeframe – 15 years – that is far too long compared to our target “A grade” of 8 years or less in every state.
For such an environmental friendly state, you sure have dropped the ball on this one, Washington.