New Legislation for Wind and Solar in Washington

solarcitizen-button1-nobrandSince 2006, Washington State has offered electric customers an incentive for producing, clean, reliable renewable energy — such as wind and solar. This program has encouraged over 7,000 residents and businesses to invest in and install solar in their communities. Utilities administer and pay this state incentive to customers. In exchange, the utilities receive a tax credit equal to the incentive payments made. On July 1st 2017, the Washington State legislature overwhelmingly passed Senate Bill 5939, which revised and extended this incentive program. Previously limited to 0.5%, this credit is now capped at 1.5% or $250,000 of a utility’s taxable power sales in 2014. The total cumulative payments to customers are also capped at $110 million throughout all of Washington State. For more details on the program, go here.

We celebrate this success in passing legislation that continues to support customers in their choice to generate renewable energy, but also recognize that changing incentive structures lead to a number of questions and concerns.

What this means for existing customers

Solar has been very successful in Washington State, with 2015 and 2016 as particularly good years for solar energy installation and generation. As a result of this success, many utilities in our state, including Seattle City Light and Puget Sound Energy, reached the initial incentive payment/credit cap of 0.5%, impacting future payments. Once the cap was reached utilities proportionately reduced annual payments to all solar customers to stay under the cap. Several utilities have published their response to the situation, which can be found here:

Under the new SB 5939, existing solar customers who are receiving payments under the previous version of the program will continue receiving incentive payments. However, these customers will be paid at the rate that their utility established for 2016, until their incentive term expires in 2020.

In order to receive this incentive rate for the next few years, existing customers will need to file additional paperwork and system information with Washington State University Energy Office by April 2018. More information will be available in coming months about exactly what information is required and the process to file.

What this means for customers interested in installing solar or wind

The new legislation creates an incentive program that steps down over time, with additional incentives for using equipment made in Washington State, including solar modules and wind towers and generators. If you have been considering installing a renewable energy system, the new program encourages early action!  There are numerous categories based on the size of the project and the year in which the system is installed. For the purposes of the new program, the following general definitions apply :

  • Residential : Systems less than 12kW in generation capacity, installed to meet customer energy use.
  • Commercial : Systems larger than 12kW generation capacity, installed to meet customer energy use.
  • Community Solar – A shared system organized by a utility, non-profit, or housing provider, and with at least 10 participating customers, and at least one participant per each 10kW of project capacity. These systems can be up to 1MW in generation capacity.
  • Shared Commercial solar – A system organized by a utility and shared by at least 5 commercial customers. These systems must be between 1MW and 5MW in generating capacity.

There are additional limitations related to maximum annual payments for each group, but in general, customers are eligible to receive the incentive rates below for a period of 8 years, or until 50% of initial project costs have been recovered, whichever comes first. The fiscal year in which the system is certified locks in the rate for future year’s payments. If the total payments made statewide are anticipated to exceed $110 million, the program administrator has the authority to cease issuing new certifications.

Incentive Rate Structure under SB 5939

Fiscal Year

Base Rate (Residential and Community Solar)(per kWh)

Base Rate (Commercial and Shared Commercial)(per kWh)

Additional incentive for solar modules or wind components made in WA State(per kWh)

2018

$.16

$.06

$.05

2019

$.14

$.04

$.04

2020

$.12

$.02

$.03

2021

$.10

$.02

$.02

Equity and low-income inclusion issues

While the SB 5939 legislation makes mention of creating opportunities for participation by low-income individuals, there are no tools or specific guidelines in the program to ensure this outcome. The bill does include a check-in in 2019 to review whether the incentive has resulted in systems installed in low and moderate income communities, and an evaluation of barriers to deployment. At Spark Northwest, we remain committed to designing programs with equity in mind, and making the benefits of solar energy available to those who need it the most. We hope that we can use this new incentive structure to empower communities to develop projects that meet shared goals.

Next Steps and Updates

As this new incentive structure moves into implementation, there will be administrative rulemaking and hopefully development of new programs by utilities, non-profits, and housing organizations around the State. Spark Northwest will continue to participate and advocate in the development of these programs. To keep updated on our activities, sign up (here).

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For media inquiries, contact our Policy Manager: Jaimes Valdez | jaimes at sparknorthwest.org.

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