Solar Costs and Incentives

PV grid-tied systems sold by NW Solar generally cost in the range of 10 to 60 thousand dollars.  With the current solar incentives available for Washington homeowners and businesses, solar PV systems can pay for themselves in as few as 5 years.  It is also becoming more practical and affordable these days to produce enough electricity with solar to eliminate up to 100 percent of a households annual electric bill.

The short payback period for PV grid-tied systems is due both to recent declines in the cost of solar panels but more importantly to the financial incentives available to help pay for these systems.  There are 4 main incentives that apply to Washington State residents.  Let’s look at them.

30 percent Federal Tax Credit
A homeowner or business can take 30 percent of the total cost of installed solar electric system off their federal income taxes as a credit.  So for example, a 20 thousand dollar PV system, $6,000 can be removed from income taxes owed for the year.  If your tax liability is less than the amount of the incentive in the first year, the remaining credit can be spread forward at least to the year 2016 when this federal program expires.

For more information contactNW Solar and/or check this website: Federal 30 percent Income Tax Credit

Washington Solar Production Incentive
This incentive rewards the owner of a grid-tied PV system by paying the owner for the solar power that’s generated in a year.  Washington State essentially buys back your solar power and pays you 15 cents per KWH produced for systems with solar panels and inverters made outside Washington or 54 cents per KWH produced for systems with solar panels and inverters manufactured in Washington.  This program ends June 30, 2020 so now is a good idea take advantage of the time remaining.

For more information contactNW Solar and/or check this website: WA Solar Production Incentive

Washington State Sales Tax Exemption
100 percent of WA sales tax is exempted on the total cost of solar PV systems that are less than 10 kilowatts of installed solar panels.  There is a 75 percent exemption for PV systems over 10 kilowatts of installed solar panels.  This program is scheduled to expire on June 30, 2018.

For more information contactNW Solar and/or check this website: WA Sales Tax Exemption Info

Washington Net-Metering
This incentive simply means that in Washington State you are allowed to sell the solar power you produce back to the utility at the same rate as they charge you.  This incentive takes place at your utility meter where the solar power produced slows down or reverses the meter readings.  You are allowed to bank credits in months you make more power than you use for the year.  The best you can do is to “net-zero” your utility meter for the year so essentially you pay nothing to the utility for electricity for that year.

For more information contactNW Solar and/or check this website: Washington State Net Metering Program

Business incentives
Businesses in Washington can take advantage of all the incentives available for homeowners plus several more.

Business Depreciation Tax Deduction
A solar PV installations cost is able to be depreciated under the federal Modified Accelerated Cost-Recovery System (MACRS).  Currently there is a 5-year accelerated tax depreciation plan available for solar-electric property.  This solar equipment depreciation is also available for home-based businesses.

Check with your tax advisor or CPA about whether your business could benefit from this incentive.

For more information contactNW Solar and/or check this website: Federal MACRS Business Depreciation

Grants for Rural and Agricultural Businesses
The Rural Energy for America Program (REAP) provides grants and loan guarantees to rural small businesses & agricultural producers for up to 25% of the cost to purchase & install renewable energy generation systems including solar-electric systems that NW Solar installs.

For rural small business grants, small refers to a business as that having less than 500 employees and rural as residing in a city less than 50,000 population.   Many small businesses in Eastern Washington could qualify.

Agricultural producers can qualify for the program if they 50 percent of their gross income is from agricultural business.

For more information contactNW Solar and/or check this website: USDA Rural Energy for America Program (REAP)

 

Made in Washington versus Made Outside Washington Systems

The best way to show the costs and payback for a solar PV system is by example.  Consider a typical residential home in the Eastern Washington area that is consuming about 12,000 KWH of electricity per year and where the homeowner is able to make a 20 thousand dollar investment in a solar PV system.  The homeowner can choose between a system with solar panels and inverters made in Washington State or made outside Washington State.  Let’s look at both cases.

Made in Washington System*
A 20 thousand dollar grid-tied PV system using Washington State manufactured solar panels and inverters can pay for itself in 5 years and return a profit of about $8,000 in 10 years and $14,500 in 20 years.  The amount of electricity produced by the solar system per year would be 4,700 KWH or 39 percent of the home’s annual 12,000 KWH consumption.  This fast payback is largely due to the 54 cent per KWH annual payout from the Washington State Production Incentive.

Made Outside Washington System*
Investing the same $20,000 in a PV system using less expensive solar panels and inverters made outside Washington State results in a system that pays back in 9 years and returns a profit of $400 in 10 years and $10,000 in 20 years.  The amount of electricity produced by the solar system per year would be 7,200 KWH or 60 percent of the home’s annual 12,000 KWH consumption.  The longer payback period is due to a 15 cent per KWH annual payout from the Washington State Production Incentive.  The greater amount of power produced annually (7,200 KWH versus 4,700 KWH for the made in WA system) is a result of being able to purchase a larger PV system with the $20,000 investment.*

*These cost and payback figures are approximate, dependent on site conditions, and intended for systems installed in year 2014 only.