Washington Solar Energy Incentives
Available Solar Energy Incentives
Federal Tax Credit
The Federal Investment Tax Credit is now available for 30% of the total cost of a solar photovoltaic system’s purchase and installation (including sales tax), providing the owner with sufficient tax liability. Already purchased your solar energy system? Learn how to apply for the tax credit below!
Washington Sales Tax Exemption
All solar energy system purchases between 1kW and 100kW in size are exempt from Washington sales tax. This incentive is available until December 31st, 2029; if your solar energy system is larger than 100 kW, read below to learn how the tax exemption applies to you.
Net metering allows you to reduce your electric bill by utilizing solar power. Excess electricity generated is credited to your account for later use. Credits roll over monthly but reset annually on March 31st, aligning with solar generation patterns in Washington to optimize solar electricity utilization.
Federal Investment Tax Credit:
In August of 2022, the Inflation Reduction Act (IRA) was passed, extending the Federal Investment Tax Credit (ITC) until the end of 2032. The ITC is now available for 30% of the total cost of purchase and installation (including sales tax) of a solar photovoltaic system, providing the owner has sufficient tax liability. This tax credit is a dollar-for-dollar reduction in taxes owed, usable by individuals or businesses. Consult your tax adviser to learn how this tax policy affects you.
How to apply the Federal ITC
To apply for the Federal Investment Tax Credit for solar energy systems in Washington, use Tax Form 5695. Complete Form 5695 by providing information about your solar energy system and calculating the eligible credit amount (which we provide in every solar energy system proposal). Finally, include the completed Form 5695 when filing your federal income taxes, ensuring accuracy to claim the credit successfully.
Washington State Sales Tax Exemption for Solar Energy Systems:
As of July 1, 2019, the purchase and installation of a solar system in Washington (size 1 KW to 100 KW) are exempt from state sales tax. Customers are not required to pay sales tax on the entire solar energy system cost. The state legislature passed this incentive to support our state’s continued growth of clean, renewable electricity. Installation must be completed by December 31, 2029, to qualify for the sales and use tax exemption.
Sales Tax Exemption for Solar Energy Systems Larger than 100kW
For systems larger than 100 KW, a partial or complete 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).
The Renewable Energy System Incentive Program (RESIP), managed by the Washington State University Energy Programs – is no longer accepting applicants – the Washington State Legislature enacted RESIP in July 2017 as the Solar Jobs Bill, SB 5939.
Although the RESIP was meant to last four years (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 us with your solar energy project goals, and we’ll find programs and incentives to help you accomplish your project!
Washington Net Metering
Net Metering is the agreement by which almost all Washington State utility customers enter with their electric utility provider to save money on their electricity bill with solar energy systems. Any excess electricity generated is fed back into the grid, spinning your meter backward and earning credits that offset future electricity consumption, effectively lowering overall energy costs. These credits roll over monthly but reset annually on March 31, aligning with solar generation patterns to optimize the utilization of solar-generated electricity.
Net Metering Billing
Net Metering allows you to offset up to 100% of your electricity usage costs. However, a fixed transmission charge will need to be paid even if you generate enough solar energy to offset your usage for the pay period. The kilowatt-hour (kWh) you generate and don’t consume in your home is sent to the grid and is credited to your bill for later use. For instance, in winter, Washington homes typically consume more than they produce with solar energy, so they use the credits banked during the summer and early fall to offset their kWh usage through the winter. Credits roll over month to month but not year to year. Credits zero out on March 31 annually, and 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 the sunniest months of the Washington year!
Washington Net Metering Rules and Reporting
In 2019, the Washington State Legislature enacted Engrossed Second Substitute Senate Bill 5223, mandating electric utilities to report their progress on achieving the cumulative generating capacity for net metering systems. This capacity is defined as reaching four percent of each utility’s peak demand in 1996. Utilities surpassing this capacity before June 30, 2029, can create alternative rate schedules, subject to regulatory review for investor-owned utilities and notification requirements for consumer-owned utilities, as outlined in RCW 80.60.030. Information on utilities’ proposals and adopted rate schedules is available through the link below