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

Harnessing the sun’s energy to power your home is a great way to reduce your carbon footprint. However, even though solar panels are more affordable than ever, the process of going solar can still be a bit costly for many. Fortunately, there are options. Some areas have community projects you can participate in. If you prefer to have personal solar panels, there are state and federal incentives you should consider to help you out. You’ll likely save money on your energy bill once they’re up and running, which can offset some of the cost.

Comparing Washington’s Solar Panel Incentives

Washington’s incentive	Description	Eligibility	Estimated value
Sales tax exemption	The state will waive any sales tax paid on the purchase and installation of solar panels.	All solar installations below 100 kW are carried out by a qualified installer.	Varies depending on size and cost of installed system.
EnergySpark Home Loan	Reduces mortgage interest rate by 0.25%	Buyers of homes that meet energy efficiency standards.	Thousands of dollars in interest savings over the life of the loan.
Federal Solar Energy Tax Credit	Covers 30% of the cost of a solar installation.	Any solar installation carried out today until 2032. (Reduced rates apply in 2033 and 2034.)	Thousands of dollars off the cost of a solar installation. (For example, $7,200 for a system costing $24,000)
Net counting	Offers customers bill credits for excess solar energy production.	Utility customers with residential solar installations.	Annual savings on your electricity bill, based on consumption and solar production.

Washington State Solar Tax Credits, Exemptions, and Loan Programs

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

• The state will waive all sales taxes paid on the purchase and installation of solar energy systems with a capacity of up to 100 kilowatts.
• You can benefit from the tax exemption provided that your solar installer is properly registered with the state.
• Customers can access the tax relief by completing the Retail Sales Tax Exemption Certificate form.

Washington state’s other major solar cost-cutting measure is known as the Renewable Energy System Incentive Program. While RESIP is still an active program, it reached capacity in 2021 and is no longer accepting new customers. The Washington state legislature would need to authorize additional funding for the program to reopen.

Local Rebates for Energy Efficient Appliances in Washington

The state, cities and utilities offer rebates for certain energy-efficient electrical appliances that can lower your bill or maximize your solar energy.

Puget Sound Energy is offering rebates to eligible customers who switch from an electric forced-air furnace to a heat pump. You can get $2,400 to make 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. Lower- and middle-income customers can get larger rebates.

The City of Seattle will offer residents $2,000 to help them switch from 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 in rebates for qualifying heat pump purchases.

Special Loans for Solar Panels in Washington

If you’re considering financing your solar panels, there are a few loan programs in the state that can help make it more affordable.

One of the offerings is the EnergySpark Home Loan from the Washington State Housing Finance Commission.

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

Special solar loans are available from banks and credit unions in Washington state. For example, Puget Sound Cooperative Credit Union offers an Energy-Smart loan that can be used for solar as well as energy-efficient appliances, such as water heaters. Loan terms vary depending on the county you live in and the size of the project. Click here for more details.

Federal Solar Energy Tax Credits and Incentives for Washington Residents

Washington state residents can also benefit from the federal government’s residential clean energy credit. The program covers up to 30% of the cost of a solar installation completed by the end of 2032. The credit persists for two years after that date, albeit at a lower rate.

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

Washington State Net Metering Rules for Solar Energy

When you install solar panels on your roof, you’re likely to produce more electricity than you need. Washington state allows you to send that energy back to the grid and get paid for it, through a program called 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 needed, the energy is sent back to the electric utility.
• The value of this extra energy doesn’t come back to you in the form of cash payments. Instead, utilities allow you to accumulate electricity credits in extra kilowatt hours that can be applied to future bills.
• The credits don’t last forever, however. Net metering credits expire on March 31 of each year, per state law.

Because credits expire annually and can only be used to offset billing costs, utilities do not recommend oversizing solar panels for the sake of net metering revenue.

Community Solar Projects in Washington

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

Community solar allows customers to subscribe to a portion of the production of a large solar farm, supporting renewable energy and reducing their electricity bills.

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