Virginia Solar Incentives
Explore Virginia solar incentives – tax credits, SRECs, net metering, and more. Simplified guide for informed choices.
Federal Tax Credit
The single most important incentive available to anyone considering purchasing a solar system is the Federal Renewable Energy Tax Credit. This credit pays new solar owners 26% of the total cost of their systems via a personal income tax credit.
As an example, someone who purchases a $30,000 system will receive an extra $7,800 back on their annual tax refund as long as they paid at least that much in federal income taxes over the course of the year. If the person only paid $7,000 in taxes, that extra $800 would be carried forward to the next year.
Property Tax Exemption
Solar systems have a significant increase on the value of a home, with the largest and most recent study indicating an increase of approximately $30,000 for a 10kW system in VA.
However, counties in Virginia do not reassess properties due to solar installations, so this additional value will not cost you a penny come tax time.
Additionally, Virginia has a property tax exemption for solar systems, which can actually save money on your property tax bill if you live in the following places: Albemarle County, Arlington County, City of Alexandria, City of Charlottesville, City of Fredericksburg, Chesterfield County, Fairfax County, Fauquier County, Loudoun County, Lynchburg, Harrisonburg, Isle of Wight, Prince William County, Pulaski, Roanoke, Spotsylvania County, Winchester and Wise County.
Net metering is a stipulation that requires utility companies to give you credit for any excess electricity your system produces. For example, a home that consumes 20 kWhs of grid electricity during the night and produces an excess of 20 kWhs of solar electricity during the day would register as having used no grid electricity at all. Virginia’s net-metering law applies to residential systems generating up to 20 kilowatts (kW) in capacity.
All surplus generation is applied as a credit to your next bill at the utility’s avoided cost (or other previously agreed upon) rate. All cumulative surplus built during each 12-month billing cycle may be carried over indefinitely, or you can choose to sell the electricity back to the utility at the end of the 12-month period.
In order to sell the electricity to the utility you must negotiate a power purchase agreement prior to starting net metering.
Property Tax Exemption
Solar Renewable Energy Certificates (SRECs) are official documents that serve as evidence that one megawatt-hour (MWh) of electricity was produced from solar resources. In Virginia, utilities are mandated to generate a specific portion of their electricity from renewable sources, as outlined in the Renewable Portfolio Standard (RPS) or solar carve-out.
SRECs can be traded to these utilities to fulfill their renewable energy obligations. It’s important to note that selling these certificates is distinct from the sale or credit of electricity exported to the grid, which is associated with Net Metering (as explained above).
Virginia has some of the easiest solar interconnection rules in the country, outranking even Maryland’s. Interconnection rules get a little technical, but the takeaway is that clear and defined rules for connecting to VA utilities makes our job easier, enabling us to pass savings onto our customers.
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