Incentives for Solar Energy

Federal Incentive: Income Tax Credit (Investment Tax Credit or ITC) for Solar Energy

Until the end of 2023, a federal income tax credit is available for 26% of the total cost of purchase and installation (including sales tax) of a solar photovoltaic system provided the solar system owner has sufficient tax liability. This tax credit is a dollar-for-dollar reduction in taxes owed and can be used by either individuals or businesses. Consult your tax adviser to learn how this tax policy affects you.

Individuals use tax form 5695 (see line #1 on the form for “qualified solar electric property costs”). The electricity generated must be used to power a home that you live in at least part of the year.
The business that installs, develops and/or finances a solar project claims the credit using tax form 3468. Businesses also benefit from modified accelerated depreciation schedule (MACRS) over 5 years, plus a double-counting bonus of half of the federal tax credit (ie half of 22%) of the system cost. If a commercial project is started in one year and finished in another, the owner or developer may benefit from the “commence construction” clause.
Consult your tax advisor; NWES does not provide tax assistance, forms or advice.

There is no upper limit on the value of this tax credit. It can be used more than once if you are installing solar in a subsequent year provided you meet all other qualifications.

Learn more:

State Incentives: Sales Tax Exemption or Rebate

As of July 1 2019, the purchase and installation of a solar system in Washington (size 1 KW to 100 KW) is exempt from state sales tax. Customers are not required to pay sales tax at the time of installation. This incentive was passed by the state legislature to support the continued growth of clean renewable electricity in our state. Installation must be completed by Dec. 31 2029, to qualify for the sales and use tax exemption.

For systems larger than 100 KW, a partial or full sales tax rebate is available within parameters governed by CETA, the Clean Energy Transformation Act E2SSB 5116 (sections 18 and 19, Chapter 288, Laws of 2019) for further details). Learn more on the State Dept of Revenue website.

Renewable Energy System Incentive Program (RESIP) – no longer accepting applicants – RESIP was enacted by the Washington State Legislature in July 2017 as the Solar Jobs Bill, SB 5939. Although RESIP was designed to help consumers go solar over a 4 year period (2018 through 2021), it was so popular that state funds were obligated before the end of the second year. It is no longer accepting applications. Contact WSU Energy Program if you have questions. If your solar system was certified to receive the RESIP incentive, this page explains how it works.

Utility Incentive: Net Metering

When you go solar, your electric bill is immediately reduced because you pull less electricity from the grid. Additionally, whenever your system generates more electricity than you are using at that moment, your excess power automatically feeds back into the grid – in essence spinning your meter backward. The kilowatt-hour (kWh) are credited to your bill for later use, for instance in winter, further contributing to your Electric Bill Savings. When you end the month with excess kWh, the credits are reported to you on your bill. Credits roll over month to month but not year to year. Credits zero out on March 31 annually, then a new net metering year begins. This date aligns well with Washington’s solar generation so that you can make the most of solar electricity generated in April.

“Every day we help people fulfill their desire to do their part to protect the planet and future generations by choosing clean energy.”

Derek White, NWES Owner and CEO

utility bill savings with solar energy

Net Metering is designed to allow customers to generate electricity to offset up to 100% of what they use over one year, but net metering does not offset the utility’s monthly minimum or base rate. Learn more by going to your utility’s website and search for “net metering” or “customer generation.” Some large utilities are PSE, Seattle City Light, Snopud, Pacific Power, Tacoma Power, Avista.

In Washington, Net Metering is a one-for-one credit for each kilowatt-hour when total solar system capacity is between 1 kW to 100 kW. Utilities are not required to offer Net Metering to additional customers once their minimum obligation is met so customers should check first with their utility to find out if net metering is available to you. Net Metering is an agreement between a utility and its customer, so be sure to get a copy of that agreement. 

NWES facilitates approval of your solar system by your utility’s net metering program by providing the detailed interconnection application and electrical one-line drawing to meet your utility’s standards and requirements. And of course, we install to meet electrical code and building code standards.

Curious what solar can do for you? Get an estimate today!


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