Now is Go time for Solar in WA state!

What a strange blogpost from an accounting firm you may say. But in this time of climate change and uncertainty in the economic future (i.e. energy prices), we need to protect our children’s dreams and our retirement funds! With the current Federal and WA state incentives, 80% of the cost of solar can be recouped within 8 years. Add in the savings of free electricity, and you will break even at the longest in 8 years. But before we can consider your home as viable for solar, we need to check the following:

• Check your home’s solar access with this website: Project Sunroof
• If your home has enough solar access, next see how many kWh you consume in a given year. If you look at your utility statement (PSE, Seattle City Light, etc.) there will either be a daily kWh or monthly chart of your consumption.
• The goal here is to offset close to all of your consumption with your solar system. Finally, is your roof in good condition and can last another 25 years? If the answer is no, you may have to replace your roof first which may not be financially viable. But if it is, please proceed to understand the cost aspect of going solar.

The Federal tax credit on a solar system is currently 30% which is set to decrease in 2020. The current WA state incentive allows homes to recoup .16 or .21 with WA state-made modules per kWh (up to 50% of the total system cost). This is effective through 6/30/18. After this date, rates will decrease. However, this shouldn’t be a problem since module prices are decreasing while power output continues to increase. The one aspect of the incentive that will need to be monitored is the utility cap. Once a participating utility hits the 1.5% cap in the service territory, applications for the production incentive will cease.

So what does this all mean for me? Let’s run an example:

• 6kWh system will cost about $20,000 after-tax (this is ballpark and pretty conservative…could be lower)
• This system will produce on average 6,000 kWh per year.
• Receive a $6,000 federal tax credit (this is up to your federal tax liability; non-refundable, however it does roll-forward to future years)
• The production incentive fiscal year runs from 7/1 thru 6/30 of each year. If you install a system in April 2018, your first fiscal year will be from April thru the end of June. Then begins the remaining 7 years.
• If you purchased WA-state made modules, you will receive a .21/kWh production incentive.
• • 1st year (Apr – Jun) ~1,000 kWh = $210
• • 2nd year – 8th year ~6,000 kWh/yr = $8,820
• Electricity savings each year. To simplify we’ll use .11/kWh which assumes electricity rates will increase in future years.
• • 8 years ~6,000 kWh = $5,280

Net savings after 8 years =

System cost                     $20,000
Federal tax credit              ($6,000)
WA state incentive              ($9,030)
Electricity savings             ($5,280)

Net savings                       ($310)

Not huge, but using relatively conservative estimates, you broke even at 8 years! And don’t forget that installing solar modules will increase the value of your home! I know that this calculation doesn’t include present value calculations for the time value of money, but think of the intangible joy of using a renewable energy source to power your home! That feeling is priceless!!

Here is a reference to the WA state solar incentive. If you have any questions, please contact us!

WSU Renewable Energy Incentives FAQ