Federal Income Tax Credit
The Solar Investment Tax Credit (“ITC”) is a federal tax credit for solar systems placed on residential (under Section 25D) and commercial (under Section 48) properties. In December 2015, Congress acted to extend the 30% tax credit through 2019 with a step down in subsequent years: to 26% in 2020, to 22% in 2021, and thereafter it is 0 (zero) for homeowners and 10% for businesses.
For businesses that go solar, this is a method of depreciation for some tangible property for tax purposes. Qualifying solar energy equipment is eligible for a cost recovery period of five years. The market certainty provided by MACRS has been found to be a significant driver of private investment for the solar industry and other energy industries. For equipment on which an Investment Tax Credit (ITC) or a 1603 Treasury Program grant is claimed, the owner may reduce the project’s depreciable basis by one-half the value of the 30% ITC. This means the owner is able to deduct 85 percent of his or her tax basis. The amount of the project cost that is eligible for a Bonus Depreciation is based upon the year of installation described above.
To learn more about Federal Tax Credit click here.
Net metering allows grid-connected renewable energy system owners to receive credit for excess electricity produced by their system. If you’re solar system is grid-tied (most solar systems), there is a good chance your utility provides a cash incentive to support you going solar. These utility cash incentives vary from utility to utility. Net-metered systems that produce more electricity than needed are credited for the excess production at retail electric rates on the next month’s utility bill. Credits carry forward month to month for a year ending annually on April 30. Remaining credits are zeroed out on May 1 with no payment to the customer. Currently in Washington State, net metering is a one-for-one crediting system.
Visit your utility’s website and search on “net metering” to learn about their specific requirements for interconnection to their grid and net metering.
Washington State Renewable Energy System Incentive Program (RESIP)
NOTE: October 9, 2018 the Washington State University Energy Program announced program closure dates. We urge you to go to their website and read it carefully. THIS INCENTIVE ENDED 1/31/2019.
CURRENT LEGISLATURE SUGGESTS THAT THIS INCENTIVE MAY BE RETURNING BUT AT THIS TIME THERE IS NO INFORMATION ON WHEN OR HOW THIS INCENTIVE WILL BECOME AVAILABLE AGAIN.
The program closure is required because of a cap on total dollar amount that can be obligated to this program as determined by the state legislature. If new solar projects are not completed and certified, or approved, before the deadlines, they will not receive incentive payments under this program. Governed by RCW 82.16.165, a Production Incentive is paid per kilowatt hour (kWh) to those based upon the size of the solar system, date of certification/installation and whether or not the solar modules are Made in Washington.
Incentive payments are made annually following the June 30 state fiscal year-end. Payments last for 8 years (at the rate determined by their certification date) or until payments add up to 50% of the total system cost including sales tax, whichever occurs first.
Solar Systems that were installed under the previous incentive program will continue to receive incentive payments through 6-30-2020 as long as they were registered with the WSU Energy Program by April 30, 2018.
To learn more about the WSU RESIP click here.
Washington State Department of Commerce Energy Efficiency and Solar Grants
The State Department of Commerce manages the Energy Efficiency and Solar Grants program. Eligible entities include state public higher education institutions, local government facilities, state agencies and K-12 public school districts. This program focuses on funding the best projects possible to increase energy and cost savings in the publicly-built environment. The grants are awarded through a competitive process and must be used solely for energy and operational cost saving and solar installations. 2018 Grant applications are due 12-31-18.