The complete list of Washington solar incentives and tax credits for 2023
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The best time to install solar at home is usually… yesterday. However, some homeowners in Washington State might want to wait until the end of 2022 to get their array set up. That’s because Washington Governor, Jay Inslee, recently reinstated solar rebates for 2023.
Reader note: Our top rated solar installer in Washington is currently SunPower.
There are no details as to how this program will work, but the previous rules offered significant incentives. Homeowners could claim up to $5,000 annually or up to 50% of the cost of installation overall. With other incentives such as a state sales tax exemption, net metering, and solar loans, plus the federal tax credit, Washingtonians have a pretty good thing going for residential solar.
Washington Solar Incentives
| Incentive | Description |
|---|---|
| Washington Renewable Energy System Incentives Program | There are no details yet as to how the reinstated program will incentivize solar, but rewards are set to return for 2023. |
| State sales tax exemptions in Washington | Washingtonians can enjoy an exemption from the 6.5% state sales tax on solar equipment. |
| Solar loans in Washington | One public utility offers low-cost loans of up to $10,000 to install solar at home. |
| Net metering in Washington | Net metering is mandated by law in Washington, with credits rolling over month to month and any surplus expiring annually. |
| State business tax exemption | Manufacturers of solar panels get a major tax break in Washington, making home-grown PV installations cheaper for residents. |
Washington Renewable Energy System Incentives Program
Washington Governor Jay Inslee signed House Bill 1814 into law on March 30, 2022. This bill revives the expired Washington Renewable Energy System Incentives Program to help reinvigorate solar uptake in the state. The program is still being set up but should begin providing funding to low-income households and low-income service providers installing community solar in 2023.
The new incarnation of the program will once again be managed by Washington State University Energy Extension. Under the old program, which ran from 2017 to 2018, the state provided more than $110 million to fund residential and commercial solar energy installations. Nearly 7,500 residential solar energy systems were installed, along with 380 commercial energy systems, amounting to more than 100 MW of solar capacity.
The lapsed program applied to residential systems with a capacity of 12 kW DC or less. The maximum upfront incentive was $5,000, with base rates of up to $0.16 per Watt installed. Incentives were paid annually up to 50% of the cost of the system. There were also bonuses for using solar panels and inverters produced in Washington.
It’s not clear yet how the new program will work, so check back later this year or in early 2023 for more details.
Solar loans in Washington State
Clark Public Utilities customers in Washington can apply to its Solar Loan Program to access low-interest loans, up to $30,000. Loan interest rates are currently set at 4.99%, with loans up to $10,000 payable within five years, and loans over $10,000 payable in seven years. Loans for solar installations on manufactured homes are limited to $7,500.
State sales tax exemptions in Washington
Washington state provides a sales tax exemption for solar energy systems up to 100 kW. The tax exemption was introduced on July 1, 2019, and is set to expire on December 31, 2029. If you install solar before the end of 2029, then, you can claim the 30% federal tax credit and avoid paying the 6.5% state sales tax.
For the average home solar array in Washington, priced at around $13,400 in 2021, this sales tax exemption amounts to savings of around $870. Typically, solar installers will exclude sales tax from their estimates and invoices for solar in Washington State. So, if you see a quote that includes sales tax, don’t be shy about asking the installer why it’s there.
State business tax exemptions in Washington
Washington doesn’t offer a state property tax exemption for solar installations but it does offer manufacturers of PV equipment a huge reduction in the business and occupation (B&O) tax rate. This incentive, originally set to expire in 2014, has been extended to June 1, 2027.
While this tax reduction doesn’t have a direct impact on how much residents of Washington pay to go solar, it may help to make buying solar cheaper in Washington compared to in other states.
Net metering in Washington
Washington State mandates net metering for all investor-owned utilities (IOUs). The three main IOUs in the state are Avista, Pacific Power & Light Corporation and Puget Sound Energy.
Avista offers a net metering program with credits rolled over month to month until the annual review. Any unused credits then expire without payout. Puget Sound Energy offers a similar net metering program, as does Pacific Power & Light, which lays out its tariff in Schedule 135.
Given that credits expire annually, customers in Washington would be wise to size their solar array to match their household’s needs. Bigger is not always better as you’ll likely waste credits under the current net metering policy.
Customers of the three main IOUs in the state might also want to consider installing battery storage for their solar energy systems. This way, you can use up any unused credits to charge your batteries just before the anniversary date, then use that energy throughout the next few days or weeks, so no credits go to waste.
Final thoughts on state solar incentives in Washington
Washington State gets an average amount of sun for the U.S. and has lower than average electricity costs. Homeowners here can save more on their energy bills, however, by going solar at home. And, thanks to a reinstated state incentives program, the cost of solar in Washington State looks set to get even lower in 2023.
Net metering rules are also fairly generous in Washington State, meaning homeowners can offset all or most of their energy use if they’re canny about credits. With the federal tax credit bumped back up to 30% and a state sales tax exemption, going solar is a great choice for Washingtonians in 2023 and beyond.