New Solar Incentives in Washington State!

On July 1st 2017, the Washington State Legislature passed Senate Bill 5939 (PDF), which fixes problems with the existing solar incentive program for current solar system owners and creates a new, better program for future customers.

Fixing the Existing Washington State Solar Incentive System

Under the existing solar incentive system, oversubscription was slowing killing industry growth. The solar incentive cap was set at 0.5% of each utility’s taxable income. Utilities were hitting this cap beginning in 2015 and decreasing customers’ incentive rates annually or closing their incentive program altogether. Other problems with the current incentive structure include:

• Residential and commercial renters are locked out from taking advantage of solar on their leased property.
• Incentives are capped at $5,000/year, making it unattractive for nonresidential systems.
• Systems under 10 kW in size are sales tax exempt, so the program is not creating direct revenue for the State (though creating $23 of indirect revenue for every $1 spent).
• The Made-In-Washington (MIW) inverters have been less than reliable, yet the MIW bonus was highest with both MIW solar panels and inverters.
• Community Solar projects are few and far between, and compete for incentive dollars with residential and commercial systems.

Senate Bill 5939 fixes these problems. It eliminates the 0.5% cap and resets customers’ incentive rates back to the fiscal year 2015-2016 rates. Here are those rates for the major utilities in the Puget Sound. These rates are now guaranteed until June 30, 2020:

New Solar Customers in Washington State

Senate Bill 5939 creates a new solar program with its own separate cap. The rate you get depends on the year your system is installed and certified. Here are the main features:

• The rates are much lower and step down annually, but the program guarantees the customer’s rates for up to 8 years.
• Customers pay sales tax starting October 1 2017, raising direct revenue for the state..
• The incentive is now available for renters/leasers of homes and buildings.
• Incentives caps are much higher per owner for commercial and utility-scale systems.
• “Community Solar” expands to mean a system installed by non-profits and HUD housing authorities.
• The MIW incentive applies only to panels. This allows installers to use the inverters they prefer.
• Residential, Commercial, Community and Utility-scale solar systems are not competing against each other as each category has it’s own designated funds.

Here are the new 2017 Washington Solar Incentive rates:

New Incentive Cap

Also new is an incentive cap based on the total cost of the incentive. Incentive payments are fixed at either 8 years or until 50% of the total cost of the system has been paid, whichever happens first. In other words, once the incentives have covered 50% of the owner’s initial cost, they end, regardless of which year it is.

Note that Senate Bill 5939 caps the new incentive program at 1.5% of a utility’s taxable income, and the overall program cap is $110 million cumulative, whichever comes first for a utility. The Washington State Legislature has an option to review the program in 2019 and increase the cap to 2% based on data from Washington State University, who will taking over from Department of Revenue as the administrator. Regardless, once the cap is hit, utilities must close the program to new participants. In other words, it is first come, first served, with better rates the sooner you go solar.

Expanding the Size of a Solar Photovoltaic System

Want to expand your existing system? You can, but the expanded system will be treated as a new system and metered separately from the current system. Your incentive rates will fall under the new incentive program, for the new equipment.

If you install a system under the new program and expand the system later, your whole system will be at the same rate for the life of the system. The bill does not say explicitly, but if the system expansion goes over 12kW, the working assumption is that the whole system will then be subject to a lower incentive rate.

Overlapping Programs

From July 1, 2017 to September 30, 2017 customers can CHOOSE between the existing program and the new incentive program. Either way, there is no sales tax until October 1, 2017. This is guaranteed to cause a rush for installation before October 1st, so if you are trying to get a system without sales tax, contact Artisan Electric soon at 206-557-4215 or info@artisanelectricinc.com.

Other Incentives

On top of incentives created by Senate Bill 5939, solar customers still have access to the following incentives:

• 30% Federal Tax Credit for the total cost of the system. This is not a deduction, but a credit, so it’s a dollar-for-dollar return. The Federal Tax Credit is scheduled to phase out by the end of 2021 and the credit reduces to 26% in 2020 and 22% in 2021 and 0% after 12/31/21, so the sooner you decide to go solar, the more the Federal Tax Credit will reimburse you. This credit includes all the materials, labor, permits and any related work (for example, electric panel upgrades) that needs to be done for the solar PV system to work.
• Net Metering. Solar PV ties into your electrical system and powers your loads directly. If you produce more than you need, (typically in the Spring, Summer or early Fall) your main household electrical meter spins backwards and your Utility gives you a 1:1 credit. In the Winter when you need more electricity for lighting and heating, you access and use up your credits before purchasing electricity from the Utility. In effect, the grid becomes your storage!
• IBEW rebate. Artisan Electric employs highly-skilled IBEW Local 46-trained Union Electricians. All of our customers who install a system over 5kW get a $500 rebate from the IBEW.

Note… the Federal Tax Credit (Residential Renewable Energy Tax Credit) is vulnerable next year because, well, I am sure you can figure that out.

Upshot Of Senate Bill 5939

Overall, Senate Bill 5939 goes a long way to fix the issues with the current system and extends the incentive program for years to come. If the current incentive program is meant to avoid another “cliff”, however, there is a big elephant in the room. The $110 million cap for the new program is cumulative, not annual. This guarantees that funds will run out for the new program as soon as 18 months from now (December 2018). In other words, the new cap does not adequately fund the program through 2021, especially given Senate Bill 5939’s stated mission to increase solar capacity from 30 megawatts currently to 145 megawatts by 2021.

Last Modified: July 31, 2018