The complete list of Virginia solar incentives and tax credits for 2023
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Virginia utilities have installed more than 2,500 megawatts of solar capacity in the state since 2020, in large part because state legislators passed the Virginia Clean Economy Act (VCEA) forcing them to generate energy from renewables. This is great news for Virginians who can’t go solar at home for whatever reason, as it means more of their electricity comes from solar.
It’s also great news for anyone wanting to install rooftop solar in Virginia. Utilities are now incentivized to purchase homeowners’ solar renewable energy certificates (SRECs) and to offer net metering and other incentives to customers installing solar.
Virginians can also take advantage of PACE loans, property tax exemptions (as of 2023), and the federal solar tax credit.
Virginia Solar Incentives
|Solar Renewable Energy Certificates (SRECs) in Virginia||Virginia has both a renewables portfolio standard and a solar carve-out, with homeowners in the state able to make several hundred dollars annually by selling SRECs.|
|Solar loans in Virginia||PACE loans are legal in Virginia, allowing homeowners to access low-cost loans for solar energy installations.|
|State property tax exemption||Solar energy equipment is already at least partially exempt from property taxes in some counties and cities in Virginia but will be fully exempt across the state starting in 2023|
|Net metering in Virginia||Many utilities offer generous net metering programs in Virginia, but beware selling SRECs for less than market price!|
Solar Renewable Energy Certificates (SRECs) in Virginia
In 2020, Virginia passed the Virginia Clean Economy Act (VCEA), which forces utilities to generate energy from renewables or purchase SRECs. The VCEA includes a solar carve-out, requiring utilities to meet certain targets for energy from solar. This has already created a robust market for SRECs in Virginia. The VCEA also specifies that utilities must purchase a certain number of SRECs from low-income households, further incentivizing solar for all.
SolSystems offers an upfront payment option of $100 per kW for 15 years of SREC generation, amounting to $800 for an 8 kW system. Alternatively, residential solar producers can currently earn $30-$51 per SREC on various contracts or can sell through SunTribe.
The price per SREC in Virginia is unlikely to rise beyond $75 for a few years, however, as this was the cost of Solar Alternative Compliance Payments (SACP) set in 2021.
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Solar loans in Virginia
Virginia allows cities and counties to offer Property Assessed Clean Energy (PACE) loans. These long-term loans are designed to finance clean energy and resiliency projects on commercial, multifamily, and nonprofit buildings and are sometimes available for single-family residences.
Homeowners pay back the loans as a line item on their tax or utility bill. This makes for simpler financial management and means the loan is attached to the property, not the property owner, making it easier to transfer if you move. That said, some mortgage providers require all liens on a property to be settled before providing a loan, so homeowners may need to pay off the full solar loan amount to finalize a home sale.
State property tax exemptions in Virginia
Until the end of 2022, the State of Virginia allows any county, city, or town to exempt or partially exempt residential solar energy equipment from local property taxes. Starting January 1, 2023, however, residential and agricultural solar installations up to 25 kW will be wholly exempt from state and local taxation. This is thanks to Chapter 496 (SB 686) being added to the Code of Virginia in 2022.
If you don’t want to wait until 2023 to install solar, you’re in luck if you live in the following cities or counties. Residents here are already exempt from paying extra property taxes when they install solar at home:
Alexandria, Charlottesville, Fredericksburg, Hampton, Harrisonburg, Lexington, Lynchburg, Petersburg, Roanoke, Suffolk, and Winchester;
Albemarle, Augusta, Botetourt, Chesterfield, Dinwiddie, Fairfax, Frederick, Giles, Hanover, Isle of Wight, King George, Loudoun, Prince William, Pulaski, Scott, Spotsylvania, Warren, and Wise.
Net metering in Virginia
Virginia allows net metering for residential systems up to 10 kW and commercial systems up to 500 kW. Enrollment is capped at 1% of each electric distribution company’s peak load for the previous year and is first-come, first-served.
Dominion Energy is the largest utility provider in Virginia and has a well-established system for purchasing solar energy from customers. It also owns several solar facilities. Dominion credits energy produced at a one-for-one rate with surplus credits carried over indefinitely unless a customer requests to enter a power purchasing agreement (PPA) where the utility pays for excess exported energy. Net metering customers can also sign a specific PPA to sell their RECs to the utility each year. The current purchase cost of SRECs with Dominion Energy is just $10, however, which is significantly lower than the current market rate.
Appalachian Power is the second largest utility provider in Virginia and is gradually increasing its solar facilities. It also offers net metering, with one-to-one credits carried over indefinitely unless the customer enters a PPA.
Final thoughts on state solar incentives in Virginia
Virginia may have a little less sun and slightly lower electricity costs than average in the U.S., but it still makes a lot of sense to go solar in Virginia.
With a growing market for SRECs, ubiquitous net metering programs, and some existing and forthcoming property tax exemptions, Virginians are well placed to reap the rewards from a rooftop solar array.
Even here, the average household could save more than $12,000 in electricity costs over a 10-year period by going solar. Factor in the federal tax credit and annual income from SRECs, plus net metering, and your solar payback period in Virginia could be far lower than the national average of eight years.
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