OLYMPIA, Washington — During its last-minute rush to enact a new state budget, the Washington legislature managed to agree on a new package of incentives for commercial, community, and home solar installations.
The bill provides those businesses with a degree of predictability about how the state will gradually reduce incentives between now and the year 2029 when they will vanish altogether. By that time, it is expected that solar costs will have diminished to the point that incentives are no longer necessary.
The bill also establishes a statewide database that provides transparency on where the incentives are going. It creates a reuse and recycling program for used solar hardware. And it repeals the sales tax exemptions for solar installations.
There are also concerns and unknowns. The statewide incentives pool of $110 million represents a cap that may be reached before some utilities have used up their individual incentive pools. If that happens, projects that are otherwise qualified may not be funded. The bill also repeals the solar sales tax exemption
Finally, the bill makes no provision to help low-income communities benefit from solar, although it does instruct the Housing Finance Authority to study and report by the end of this year on how incentives and other funds can be better used to benefit customers, particularly those of low and moderate incomes and directs Washington State University to report on where incentives are used and the kinds of projects.
Key bill provisions are as follows:
- Utilities can claim a credit against taxes for any incentive payments or fees paid out equaling up to 1.5% of the utility’s 2014 taxable power sales, or $250,000, whichever is greater. The tax credit will end on June 30, 2029.
- The certification for a qualifying installation can be transferred to new owners or participants.
- The statewide cap for all incentive payments is $110 million.
For those who receive incentives:
Existing customers will continue to receive incentives through 2020, as originally established in law, at the rate the incentive was calculated last year.
For new applications that are received after September 30, 2017 and before June 30, 2021,by participating utilities, the bill defines four classes of installations, defined by size:
- Residential – a system of less than 12 KW can receive annual incentive payments, calculated at an annually declining rate, that are capped at $5,000 per year for no more than eight years or until 50% of the system price, including sales taxes, is reached.
- Commercial – a system of more than 12KW can receive annual incentive payments calculated at an annually declining rate that are capped at $25,000 per year and for no more than eight years or until 50% of the system price, including sales taxes, is reached. Also, commercial projects may not consume more than 25% of the available utility incentive pool.
- Shared Commercial – a system owned or administered by an electric utility that is from 1MW to 5MW in size and that serves at least five participants all of whom must be located in Washington. Each participant may receive up to $35,000 per year for no more than eight years or until 50% of the system price, including sales taxes, is reached.
- Community Solar – a system may not exceed 1,000KW (1MW) and may receive up to $5,000 per year for no more than eight years or until 50% of the system price, including sales taxes, is reached. Community solar projects can only be created by utilities, nonprofits or other local housing authorities. Businesses may no longer create community solar projects. Community solar projects will share the available pool of funds with Shared Commercial projects – the total of Shared commercial and community solar projects cannot exceed 50% of a utility’s available funding.
Incentive rates vary depending on customer classification and the size of the installation.
|Fiscal Year||Base Rate (Residential and Community Solar)(per kWh)||Base Rate (Commercial and Shared Commercial)(per kWh)||WA Bonus (additional incentive applicable if solar components were made by a Washington company)(per kWh)|
The reuse and recycling program requires manufacturers to take back their products at end of life. If a national recycling program that is substantially equivalent to the state program is created, the manufacturer may participate in that program instead.
The bill also requires Washington State University to report in November 2019 on how funds are allocated among the various classes of customers.
In the face of the state’s ongoing financial challenge, the retention of solar incentives is a major achievement that required a herculean effort by many legislators. Noteworthy among them are Governor Jay Inslee, Senator Reuven Carlyle, and Representatives Jeff Morris, Gael Tarleton, Jake Fey, and Beth Doglio.