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State Incentive Programs: Washington
Renewable Energy Production Incentives
In 2005, Washington Senate Bill 5101, established production incentives of 15 cents per kilowatt-hour (capped at $2,000 per year, favoring small-scale systems) for grid-connected individuals, businesses, or local governments that generate electricity from solar power, wind power or anaerobic digesters.
This statewide incentive program is first in the nation to financially
reward owners for their system’s energy production. The annual cash
flow improves the lifetime economics particularly for small-scale renewable energy systems, though larger systems are not excluded.
The
incentives vary depending on technology and if the system components were manufactured in Washington. The incentive amount paid to the producer is multiplied by 2.4 for electricity produced using solar modules manufactured in Washington state, 1.2 for electricity produced using an inverter manufactured in Washington state, 1.0 for anaerobic digesters and wind turbines with blades manufactured in Washington State, and .8 for all other wind generators. The production incentives do not impact the customer’s eligibility for net-metering, and the green tags associated with the power produced remain with the customer/generator as well (unless otherwise contracted for sale).
The state's utilities will pay the incentives and earn a tax credit equal to the cost of those payments. However, the credit may not exceed the greater of $25,000 or 0.25% of a utility’s taxable power sales. The incentive amount may be uniformly reduced if requests for the incentive exceed the available funds. More info can be found here.
Sales and Use Tax Exemption
In Washington State, tax does not apply to the sales of equipment used to generate electricity from wind, solar, landfill gas, or fuel cells. As of 2006, solar water heating systems also qualify for the tax exemption. The exemption applies to labor and services related to installation of the equipment, as well as to sales of equipment and machinery.
