Washington Solar Panel Incentives: Net Metering, Tax Breaks and More

Harnessing the energy of the sun to power your home is a great way to cut down on your eco-footprint. However, while solar panels are more affordable now than ever, the process of switching to solar energy may still be a little expensive for many. Thankfully, there are options. Some areas have community projects you can join. If you’d rather have personal solar panels there are state and federal incentives you should look into to help with that. You’re likely to save money on your energy bill once they’re up and running, which may offset a bit of the cost.

Comparing Washington incentives for solar panels

Washington state solar tax credits, exemptions and loan programs

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

• The state will waive all sales tax paid on the purchase and installation of solar energy systems up to 100 kilowatts in size.
• You can qualify for the tax exemption as long as your solar installer is properly registered with the state.
• Customers can access the tax break by filling out the Retail Sales Tax Exemption Certificate form. 

Washington’s one other big solar rebate 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 taking on new customers. The Washington State Legislature would need to authorize additional funding for the program to open up again.

Local rebates for energy-efficient appliances in Washington

The state, cities and utilities are offering rebates for some energy-efficient, electric appliances that can reduce your bill or make your solar energy go further.

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

The city of Seattle will give residents $2,000 to help switch from heating oil to an efficient heat pump and up to $600 for other heat pump purchases.

A coalition of cities near Seattle will offer up to $1,500 rebates for qualifying heat pump purchases.

Special loans for solar panels in Washington

If you’re planning on financing your solar panels, a couple of loan programs in the state can help make it more affordable.

One offering is the Washington State Housing Finance Commission’s EnergySpark Home Loan.

• Customers buying a home can apply for an EnergySpark mortgage with a reduced interest rate.
• You can qualify if your household makes less than $180,000 per year, and the home you’re purchasing either exceeds Washington state energy standards by at least 15% or can be upgraded for 10% energy savings over its current use.
• The EnergySpark loan gives you a 0.25% interest rate reduction on the mortgage, which can amount to thousands of dollars in savings over time.

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

Federal solar tax credits and incentives for Washington residents

Residents of Washington state can also qualify for the residential clean energy credit offered by the federal government. The program covers up to 30% of the cost of a solar installation made from now through the end of 2032. The credit persists for two years after that, although at a lower rate.

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

Washington net metering rules for solar energy

When you install solar on your roof, you’re most likely going to produce more electricity than you need sometimes. Washington State allows you to send that energy back to the grid and get paid for it, with a program known as net metering.

The state’s three major utilities (Puget Sound Energy, Avista and Pacific Power & Light Corporation) all offer similar terms for net metering.

• When your solar panels produce more electricity than you need, the power gets sent back to the electric utility.
• The value of that extra energy doesn’t come back to you in a cash payment. Instead, the utilities allow you to “bank” extra kilowatt-hour electricity credits that can be applied to future bills.
• The credits, however, don’t last forever. The net metering credits expire on March 31 every year, in accordance with state legislation.

Because the credits expire annually, and can only be used to offset bill charges, the utilities do not recommend oversizing solar arrays for the sake of net metering income.

Community solar projects in Washington

For those residents who can’t install solar on their roofs, Washington state is also home to many community solar installations.

Community solar allows customers to subscribe to a piece of the output of a large solar farm, thereby supporting renewable energy and reducing their power bills.

Washington state residents can subscribe to community solar through their electricity utility. Puget Sound Energy allows customers to sign up for $20 per month, but in return, they get bill credits for the solar energy generated by their share. Community solar doesn’t always save you money. Puget Sound Energy’s page says bill credits will “offset a portion of your monthly subscription cost.”