Washington’s Solar Incentives: Net Billing, Tax Credits, and More

Using solar energy to power your home is a great way to reduce your ecological footprint. However, while solar panels are now more affordable than ever, the process of going solar can still be a bit pricey for many people. Fortunately, there are options. In some areas, there are community projects you can join. If you prefer to have your own solar panels, you should consider state and federal incentives to help you do so. You will likely save money on your energy bill once they are up and running, which can help offset the cost a bit.

Comparing Washington’s Solar Incentives

Washington’s Encouragement	Description	Right	Estimated value
Sales tax exemption	The state will waive all sales taxes paid on the purchase and installation of solar panels.	All solar installations below 100 kW are carried out by a qualified installer.	Depends on the size and cost of the installed system.
EnergySpark Mortgage Loan	Reduces mortgage interest rates by 0.25%	Buyers of homes that meet energy efficiency standards.	Save thousands of dollars in interest over the life of your loan.
Federal Solar Tax Credit	Covers 30% of the cost of solar installation.	Any solar installation done now until 2032. (Lower rates apply in 2033 and 2034.)	Thousands of dollars less for a solar installation. (e.g. $7,200 for a $24,000 system)
Net settlement	Allows customers to add excess solar energy to their bills.	Utility company customers with home solar installations.	Annual savings on your electricity bill, based on solar energy consumption and production.

Washington State Solar Tax Credits, Exemptions, and Loan Programs

One of the strongest incentives currently offered by Washington state is a solar sales tax exemption.

• The state will eliminate all sales taxes associated with the purchase and installation of solar energy systems up to 100 kilowatts.
• You may qualify for a tax exemption provided your solar installer is properly registered with your state.
• Customers can claim tax relief by completing a Retail Tax Exemption Certificate form.

The other major solar rebate in Washington state is known as the Renewable Energy System Incentive Program. While RESIP is still an active program, it reached full capacity in 2021 and is no longer accepting new customers. The Washington state legislature would need to authorize additional funds for the program to reopen.

Local Rebates on Energy-Efficient Appliances in Washington

States, cities, and utilities offer rebates on energy-efficient electrical appliances that can help you reduce your bills or increase the efficiency of your solar energy.

Puget Sound Energy offers rebates to qualifying customers who switch from an electric forced air furnace to a heat pump. You can receive $2,400 for making the switch or $4,000 if you install an AHRI-certified ducted or ductless heat pump instead of gas heating. Puget Sound Energy customers can receive rebates for energy efficiency improvements, including insulation, duct sealing, Energy Star appliances, smart thermostats, heat pump water heaters and more. Low- and moderate-income customers can receive larger rebates.

The city of Seattle will provide residents with $2,000 to help switch from heating oil to an efficient heat pump, and up to $600 to purchase other heat pumps.

A coalition of cities around Seattle will offer rebates of up to $1,500 on the purchase of qualifying heat pumps.

Special loans for solar panels in Washington

If you’re planning to finance your solar panel purchase, several loan programs available in your state can help make the process more affordable.

One of the offerings is the EnergySpark Home Loan, offered by the Washington State Housing Finance Commission.

• Home buyers can apply for an EnergySpark mortgage with a reduced interest rate.
• You may qualify for the program if your annual household income is less than $180,000 and the home you’re buying exceeds Washington state energy standards by at least 15% or can be retrofitted to save 10% on energy compared to your current usage.
• The EnergySpark loan allows you to lower your mortgage interest rate by 0.25%, which could translate into thousands of dollars in savings over time.

Special solar loans are offered by banks and credit unions in Washington state. For example, Puget Sound Cooperative Credit Union offers an Energy-Smart loan that can be used for solar as well as energy-efficient equipment such as water heaters. The terms of the loan depend on the county you live in and the scope of the project. Check here for details.

Federal Solar Tax Credits and Incentives for Washington Residents

Washington state residents may also qualify for a federal government-funded clean energy home credit. The program covers up to 30% of the cost of a solar installation between now and the end of 2032. The credit lasts for two years after that, albeit at a lower rate.

The tax credit also applies to other home energy investments such as water heaters, wind turbines, geothermal heat pumps, fuel cells and battery storage technology.

Washington State Solar Net Billing Policy

When you install solar panels on your roof, you’re likely to produce more electricity than you need. Washington state lets you send that energy back to the grid and get paid for it, through a program known as net metering.

The state’s three largest utilities (Puget Sound Energy, Avista and Pacific Power & Light Corporation) offer similar net billing arrangements.

• When your solar panels produce more electricity than you need, the electricity is sent back to the utility company.
• The value of this extra energy doesn’t come back to you in the form of a cash payment. Instead, utilities allow you to “bank” extra kilowatt-hours of electricity that you can use on future bills.
• However, the credits do not last forever. Net credits expire on March 31 of each year, in accordance with state law.

Because the credits expire annually and can only be used to pay utility bills, utility companies do not recommend oversized solar panels to increase net income from energy metering.

Community Solar Projects in Washington

Residents who cannot install solar panels on their roofs can take advantage of numerous solar installations in Washington state.

Community solar allows customers to subscribe to a portion of the energy produced by a large solar farm, supporting renewable energy sources and reducing their electricity bills.

Washington state residents can sign up for community solar through their electric provider. Puget Sound Energy lets customers sign up for $20 a month, but in return they receive bill credits for the solar energy generated by their share. Community solar doesn’t always save money. Puget Sound Energy’s website says the bill credits “offset part of the monthly subscription cost.”