A 2014 survey by Solar Washington, published by the CleanTech Alliance, states: “Results from the data show that for every dollar of the Washington State solar incentive redirected to PV system owners, the state sees $2.46 injected back into the local economy. Based on data collected reflecting business activity in 2013, $48.2 million would be injected into the economy as a result of the $19.6M that the state will pay out in solar incentives.” In 2013 the production incentives were used to the tune of $2.8 million. Those small businesses and homeowners will receive an estimated $19.6M from their utilities in further incentive payments over the course of the program.
Solar Washington, as an advocacy group, is just one reference point for solar’s returns on public investment. To verify those assertions, tax filings, tax reports, public records, and utility and government data were searched. No single independent, detailed analysis of the solar-related tax incentives was found. What data is available is at least two years old, which does not capture the majority of activity in Washington’s solar market. Tax surveys filed under the B&O and Sales & Use tax incentives shed some light on taxpayer savings and jobs created. Sensibly, if less than three firms file, taxpayer identification becomes easier so firms may be request non-disclosure.
Washington’s solar manufacturing sector is small, with 1-3 firms in each part of the supply chain. Data on production incentives would be most relevant for taxpayers and policymakers, as this proves exactly how much electricity is being generated at the consumer level. Unfortunately the code authorizing utilities to pay incentives and receive a credit to their public utility tax bill does not require any public filing. Though the Department of Revenue may audit utilities to verify that they have not exceeded their cap, have properly calculated incentive payments, and have indeed paid out the amount claimed for credit, there are no scheduled or mandated audits. As this represents the bulk of state spending on solar, it is a notable exclusion in transparency. As explained in blog post 3, a public records request filed for this report showed that over $17 million has been spent in public utility tax credit offsets.
Gaps in Policy
Financing
Washington has no leasing program or purchase power agreements, while 24 other states allow for third party solar power PPAs. Leasing is seen as a key ingredient in increasing access to solar technology, since many homeowners lack the credit history or financial capital to invest $20-30,000 on top of rising home costs. Leasing through utilities, or through nontraditional financing institutions that partner with utilities might help reduce opposition from those who view leasing as a threat to the utility model. Further research is called for and open discussions needed.
One Size Doesn’t Fit All Caps
The current 0.5% and 100 kW net metering caps are one-size-fits-all policies in a market of great heterogeneity. King, Clark, Snohomish, and Pierce counties are experiencing faster population growth than other counties, yet PSE and Seattle City Light – two of the biggest utility firms in those areas – are projected to reach their net metering caps in 2016. New Washington residents will be effectively shut out of the market, as will late adopters. The 100 kW size limit also greatly restricts solar from scaling up. Industry leaders who seek increasing caps advocate for 5MW size restrictions. Advocates for increases to net metering call for up to 5% of peak load be available for net metering. Additionally, advocates ask that the cap be implemented statewide, not per utility.
Scaling
The $5,000 net metering individual cap limits commercial entities from having market choices to invest in multiple solar farms. Unity of ownership restrictions are another significant obstacle for solar’s growth in Washington. Ownership and revenue sharing agreements could exist between utilities and commercial firms or businesses and renters and landlords. Similarly, siting restrictions prevent community solar from being placed on non-government land.
Market choices would bring great innovation and collaboration to solar, allowing for scale and access. For example, a nonprofit organization or church could lease their roof to a community organization for a solar project. At some point in the future when investment returns have been fulfilled, ownership of the community solar would defer to the nonprofit. Initial small payments to the nonprofit for the rooftop space would then turn to lowered electricity bills. Likewise, 10-50 MW utility and commercial-scale solar requires more land that available by current siting requirements. Allowing utilities to divide ownership of assets opens up new possibilities for behind the meter production.
Consistency
Not all utilities have embraced solar, nor do all know how to. Progressive utilities like Snohomish PUD, Avista, Seattle City Light, Puget Sound Energy, and Clark PUD should be acknowledged for their efforts in integrating this new resource into their business models. Some utilities are partnering with the private sector to educate consumers, some offer their own rebates on top of federal and state incentives, and many collaborate in the legislative drafting and norm-setting conversations. For example, in order to reduce the soft costs of solar, streamline permitting, and expand market penetration, Oregon and Washington leveraged DOE funding to create a coalition of utilities, citizen groups, and industry partners called Northwest Solar Communities. Additional efforts should be made to streamline the integration of solar across all of Washington’s 62 utilities.
Conclusion
Regardless of the current system’s capacity or interest in solar, residential PV is coming online at an ever-accelerated rate. Going forward, it is vital for policy makers and utility firms to view these electricity sources as tools with different strengths and weaknesses, rather than mutually exclusive assets. Most important are data on actual, in-state usage of energy sources. This information must become the baseline unit for discussions. Most studies refer to nameplate capacity, not consumption, production, or energy intensity.
For any energy resource, a number of factors (weather, quality of input, age of the site or equipment), can grossly affect an asset’s utilization and performance. As PV modules decrease in price and increase in efficiency, it is critically important to create models and forecasts using present-day, location-specific data. Washington state taxpayers and consumers deserve investment and policy decisions built on updated assumptions, accurate output forecasts, and a shared understanding of what the state’s grid must do in 2040.
This is part of a blog series with five chapters
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Table C – History and Use of Washington’s Primary Solar Incentives |
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B&O Tax Rate Reduction |
Machinery and Equipment Sales/Use Tax Exemption |
Renewable Energy Production Incentive Payment Program |
Net Metering |
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Legislation and Statutes |
SB 5111, 6170, 5882; RCW 82.04.294, 82.32.534 |
SB 5882; RCW 82.08.963, 82.12.963 |
SB 5101; RCW 82.16.110, 82.16.120, 82.16.130 |
RCW 80.60.005 |
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Effective Date |
1-Oct-13 |
1-Jul-09 |
1-Jul-05 |
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Expiration |
30-Jun-17 |
1-Jan-20 |
6/30/2020, unless production caps reached sooner |
No expiration |
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Public Disclosure Required |
Yes, Annual Survey and Reports required. Most recent records date 2013. |
Yes, Annual Survey and Reports required. Most recent records date 2013. Also included in 2012 Tax Report. |
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Most Direct Beneficiaries |
Manufacturers. 7 claimed the tax incentive in 2013. (Source: 2014 Tax Report) |
End consumers |
End consumers. Installers. Manufacturers: Itek Energy, Outback Power, Blue Frog, REC Silicon. End consumers. Installers. |
End consumers, utility firms |
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Spent to Date |
2011-2013 estimated savings to beneficiary $40.8MM. 2014 Tax Report est. tax savings =$514,474 |
2012 & 2013 cumulative: $2,137,987 The 2012 “Taxpayer Savings for 2011-13 Biennium” report estimates taxpayer savings/public revenue loss = $2.113M. |
According to records shared by the Department of Revenue, from 2005 to September 2015, total public utility tax credits filed sum to $17,023,303. The 2012 “Taxpayer Savings for 2011-13 Biennium” report estimates taxpayer savings/public revenue loss over that period of time = $2.413M. |
No data available |
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Jobs Created |
2013 Employment in WA: 516. 99.2% of jobs FT. One-fourth earned $30-60k. Over 68% earned $60,000 or more. (2014 Tax Report) |
No data available |
No data available |
No data available |
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