Washington State's Solar Energy Efforts

Though the State of Washington did not make Home Power magazine’s top ten list, we at Cooler Planet believe our home state deserves an honorable mention.  Washington has a history of adopting innovative legislation.  While Washington laws are not perfect, many of its mandates have inspired other states to adapt and customize similar types of laws for themselves.
 
For example, in 2005, Washington was the first state in the nation to pass a green building mandate.  The legislation requires all major renovation projects and new construction funded with state monies to meet the US Green Building Council’s LEED Silver rating system or higher.  That same year, Washington State passed two laws to advance solar electric use and nurture the solar industry’s development throughout the state.

The State’s two renewable energy bills specifically try to bolster solar photovoltaic manufacturing and wide spread use of solar electric systems.   One law provides tax breaks to the manufacturers of solar photovoltaic modules and components that locate in economically depressed and low population counties within the state. 

The other law, based on a successful program in Germany, provides a tax credit to residents and businesses that have renewable energy systems (which includes solar photovoltaic, wind, and anaerobic digesters).  However, unlike other states that set aside funds to pay property owners an upfront rebate for installing a renewable energy system, Washington law rewards property owners for their system’s production of electricity.

The Washington legislation establishes a $0.15 per kilowatt hour minimum credit for all the energy generated from a resident’s or business’s renewable, on-site power system (with a cap of $2,000 annually for households).  If the solar electric system components (modules, inverters, rack, etc.) come from Washington State manufacturers, then the property owner is awarded additional funds per kilowatt hour (which can amount to roughly $0.54 per kilowatt hour).  The property owner can also take advantage of the state’s net metering laws, thus make additional cents from its system.

Yet because these two solar bills provide complementary approaches to help jump start the nascent solar photovoltaic industry in Washington State, the $0.54 credit is not yet a reality.  Several companies do manufacture inverters in Washington, but no module photovoltaic manufactures currently exist. 

Perhaps the most innovative part of the Washington solar legislation is how the state structured its funding.  All utilities – regardless of this legislation – must pay a “utility use tax.”  The solar legislation enacted in 2005 promises the utilities an equal dollar match for every dollar the utility pays its customers for their own electricity production via renewable energy.  In essence, the tax becomes a closed-loop system:  the state does not set aside additional funds for the program instead it returns potential revenues to the utilities.  The utilities, in turn, get “a wash,” the portion of the utility use tax used for renewable energy is handed back to them.  The utility does incur the adminstration cost to track the funding; the state tried to minimize that cost by requiring utilities to report only once per year.  

Unfortunately, it’s still too early to determine what state’s approach and funding strategy works best to advance renewable energy.  

Washington State continues to move forward and enact legislation aimed at tackling climate change, and to a lesser extent renewable energy.  In March 2008, Washington made headline news again when Governor Christine Gregoire signed a measure that requires both State government and private industries to reduce their carbon emissions to 1990 levels by 2020 and meet further reductions by 2035 and 2050.