Washington Passes New Incentive

Will this new incentive run out as fast as our last one?

Kennewick, Pasco and Richland have suddenly exploded with folks going solar withing the last several weeks due to the new solar bill. Tri-Cities has always had a steady customer base for us but slowed dramatically when the last solar incentive ended early as we sold out several years early due to it's popularity. There were many residents that were waiting to see if the new solar bill would pass so when it did they have begun signing up as they missed out on the last one. While not as robust as the last incentive this current one has the ability to pay for 50% of your solar system. Combine that with the 30% Federal incentive it becomes quite attractive as an investment. For businesses it is even better as they have accelerated depreciation available. Farmers have an even better advantage as they have all the incentives plus a 25% grant making the ROI absolutely stunning. So below is an explanation of the current incentive.

The new solar incentive program replaces the existing incentive program which had essentially served its purpose of launching an instate solar manufacturing and installation industry. For the early adopters who are currently part of the existing program, their incentive payments will continue through the original end date of 6-30-2020 and then end, with the payment rate per KWH fixed at the 2016 payment rate and additional money (tax credits) provided to utilities to make those payments.

The new incentive program begins 10-1-2017 and Program Administration moves from the Dept of Revenue (DOR) to the WSU State Energy Office in Olympia. The details and tasks of certifying systems to receive incentives, certifying Made in WA solar modules, data collection and analysis, and providing transparency to the public are outlined in the legislation. The State Energy Office now begin the process of creating forms, systems, a website and rules on how the new program will work. Data will help in evaluating progress in and success of the new program. Solar system owners will pay a one-time fee of $125 which will provide funding for setting up the tracking and certification systems. With the 2018 incentive payment, this fee will be collected from solar customers in either the old or the new program.

Details of the New Incentive Program:

Incentives are paid to approved system owners based on classification of the system. Incentives are paid once a year based on the state’s fiscal year. The rate depends on which fiscal year the system is placed into service and that set rate will be paid for 8 years or until the owner/participants have earned back 50% of the price they paid (sales tax included), whichever occurs first. The start year determines the rate.

Fiscal YearBase Rate (Residential and
Community Solar)
(per kWh)Base Rate (Commercial and
Shared Commercial)
(per kWh)Modules Made in WA
Bonus
(per kWh)2018$.16$.06$.052019$.14$.04$.042020$.12$.02$.032021$.10$.02$.02

Residential Size: 1 through 12 KW (whether located at a residence or a business). Annual payment is capped at $5000 per year.

Commercial Size: greater than l2 KW (whether located at a residence or a business). Annual payment capped at $25,000 per year. Because one or two very large systems could eat up all the available incentive money, the funds for Commercial Size systems are limited to 25% of the total funds available.

Shared Commercial: This is a new concept. A group of five or more businesses may come together or be organized by a utility to invest in a larger scale (1 MW to 5 MW) solar project that is owned or administered by a WA utility. All the businesses must be located in WA. Each participants incentive payment is capped at $35,000/year.

Community Solar: This is shared solar up to 1 MW in size requiring at least 10 participants or one participant for every 10 KW, whichever is greater. The project must be put together by a utility, a nonprofit or a low income housing agency. It makes solar accessible to people whose rooftops may not be suitable, who don’t own their home or who want a lower entry price. Community Solar and Shared Commercial may share up to 50% of total dollar amount of funds in the program. Thus, pre-certification is required to ensure funds are available to pay out over time.

Made in WA Bonus: requires that modules (panels) be manufactured in WA.

Leased Properties: The ownership requirement has been removed. Incentives can be paid to entities who pay for solar on properties they lease.

Communities Benefit: By eliminating the state sales tax exemption, local governments and the state government will receive sales tax on solar installations (parts and labor). Very large systems, 500 MW and up, may apply for75% remittance of sales tax paid.

Solar Jobs Continue: In our state, we saw a significant down-turn in solar installations in 2016 compared to 2015 with additional declines expected as the old incentive program moved towards its end date. The new program means that jobs will continue. Because there is a bonus for Made in Washington solar panels, solar manufacturing jobs will continue.

Total Program Cost: The legislature imposed a total program cap of $110 million over the course of the entire new program. Today, we don’t know quite how this will work, but if uptake is high in the early years of the program, then perhaps entry into the program in later years will be limited. Like with other rules and parameters, the WSU State Energy Office will need to propose ways to address this budget limit.

Utility Tax Funded: As in the past, utility participation is voluntary and so although the program is available statewide, customer’s ability to access the program depends on their utility’s participation. The program is funded through the public utility taxes paid by utilities; caps apply which are 1.5% of 2014 taxable sales or $250,000, whichever is greater. Future payments will be not be reduced when or if a program maxes out. There will be transparency and communication if a utility is nearing its expected cap.

New Recycling Requirements: Manufacturers of solar panel sold in Washington State are required to plan and pay for a takeback and recycling stewardship plan for their equipment, or to participate in a national program.

Adding to an Existing System: Customers who wish to add on to their existing solar system after October 1, 2017 may do so and their new addition may qualify for the new program.

Window of Time Between Old and New: Entities who go solar between July 10 and September 30, 2017 can choose to be in the old program or the new one. Either way, systems sized 1 to 10 KW are state sales tax exempt, and larger systems earn the existing sales tax refund, when installation is completed by September 30, 2017.