The tax credit program increased Washington's solar capacity and met
its solar-related employment target. It did not broaden low-income participation. Solar
installations have continued after the program reached its funding limit.
December 2021
Executive Summary
Utilities earn a tax credit for the amount they pay customers enrolled in the
Renewable Energy System Incentive Program
The Renewable Energy System Incentive Program (RESIP) allows participating
utilities to pay customers for every kilowatt-hour of electricity they
generate from their own renewable energy systems. These include rooftop solar
panels and wind turbines.
Utilities receive a tax credit to offset a portion of the public utility
taxes they owe. The credit is equal to the amount the utilities pay their
customers for the power they generate, regardless of whether they use the
power or it flows back into the power grid.
Customers include individuals, businesses, and community solar organizations.
RESIP is administered by the Washington State University (WSU) Energy Extension
Program, in coordination with participating utilities.
The preference is scheduled to expire June 30, 2030. The Legislature set a
deadline of June 30, 2021 for WSU Energy to certify new systems and also
directed WSU Energy not to certify any new systems that would likely result in
program expenses exceeding $110 million.
Legislature set targets specific to solar energy. They were partially met.
The Legislature established this credit program to encourage production of renewable
energy. It set two metrics in statute specific to solar energy. It directed the
Legislative Auditor to conclude that the credit achieved its objectives if these
metrics are met. The Legislature did not establish targets for other renewable energy
technologies.
Objectives (stated)
Results
115 megawatts (MW) of solar capacity are installed from July 2017 to
June 2021.
Not met. 87% (100.5 MW) of the target has been reached through the
RESIP program. However, installations of solar energy systems have continued
after the program reached its funding limit.
The state's solar-related employment increases, either in jobs per
capita or in national ranking.
Met. Solar-related employment increased by 1,519 jobs, and jobs per
capita increased by 52%. The state's ranking in solar employment remained 21st
in the nation when the program reached its funding limit.
Recommendation
Legislative Auditor's Recommendation: Allow to expire
The Legislature should allow the credit to expire because the objectives are
mostly met and installations have continued after the program reached its funding
limit. If the Legislature wants to broaden low-income participation in the production
and use of solar energy, it should consider other options.
The Commission endorses the Legislative Auditor's recommendation with
comment. Low-income participation in solar programs is problematic because (1)
Low-income households lack money to pay the upfront costs of installing solar; and (2)
many low-income households are renters and, therefore, the decision to install solar
is not theirs to make. As part of their review, the Legislature will want to read the
commentary provided by the Washington Department of Commerce, which highlights the
connection between household resiliency and distributed energy resources.
Committee Action to Distribute Report
On December 1, 2021 this report was approved for distribution by the Joint
Legislative Audit and Review Committee. Action to distribute this report does not
imply the Committee agrees or disagrees with Legislative Auditor recommendations.
21-06 Final Report: Credit for Renewable Energy Program Payments
December 2021
REVIEW Details
1. Utilities receive credit for incentive payments to customers
Utilities receive a public utility tax credit for the amount they
pay customers who generate electricity from their own renewable energy systems
The credit reimburses utilities for payments they make to customers through the
Renewable Energy System Incentive Program
Utilities that choose to participate in the Renewable Energy System Incentive Program
(RESIP) pay their enrolled customers an incentive for producing their own renewable
energy. The state then reimburses the utilities with a credit to offset a portion of
the public utility taxes the utilities owe on their total annual sales.
Utilities must claim a tax credit from the Department of Revenue. Credits are:
Equal to the amount the utilities pay their customers for the power they generate,
regardless of whether they use the power or it flows back into the power grid.
Capped at the greater amount of one and one-half percent of the utility's taxable
power sales in calendar year 2014 or $250,000.
Not intended to compensate utilities for their administrative costs.
Between 2018 and 2020, 48 utilities participated in
RESIP.
Exhibit 1.1: When utilities provide incentive payments to customers, utilities can
receive a public utility tax credit
Source: JLARC staff analysis of Chapter 82.16 RCW.
RESIP replaced the Renewable Energy Cost Recovery Incentive Program (RECRIP) which
was active from 2005 to 2017, and continued paying incentives to system owners until
2020.
Participating customers can receive incentive payments if they install solar or wind
energy systems or anaerobic digesters
Customers can apply to participate in RESIP after they install a renewable energy
system and receive a final electrical inspection. Eligible systems include solar
energy systems, wind turbines, and anaerobic digestersA closed, oxygen-free container where organic materials like
manure decompose, releasing biogas that can be used to generate heat, electricity,
and renewable fuel. .
RESIP is administered by the Washington State University (WSU) Energy Extension
Program. WSU Energy must certify systems in order for them to be eligible for
incentive payments from utilities.
The types of systems that qualify for RESIP vary in scale and project type:
Residential-scale systems have a capacityCapacity is the maximum amount of electricity a generator
can produce, measured in kilowatts or megawatts. of up to 12
kilowatts (kW) of electricity.
Commercial-scale systems have a capacity over 12 kW of electricity.
Community solar projects allow individuals to participate as a group and
share the financial benefit. One entity builds the system and administers the
project on behalf of all the customers.
Shared commercial solar projects allow businesses to participate as a group
and share the financial benefit. A utility builds the system and administers the
project on behalf of the businesses.
The Legislature set a statutory deadline of June 30, 2021 for RESIP to certify new
systems and set a limit of $110 million in payments. Statute also directed WSU Energy
not to certify any new systems that would likely result in program expenses exceeding
$110 million.
WSU Energy announced in February 2019, less than two years after the program began,
that it had fully allocated funding to existing projects, and future applicants would
be placed on a wait list. As discussed in Section
2, all but three of the renewable energy systems that are participating in RESIP
are solar.
The credit is scheduled to expire on June 30, 2030.
Exhibit 1.2: Types of solar energy systems that qualify for participation in the
program
Source: JLARC staff analysis of Chapter 82.16 RCW.
Incentive payments are based on the amount of electricity produced and system
characteristics
Customers receive annual incentive payments from their utility based on the amount of
energy their systems produce, measured in kilowatt-hoursA measure of energy produced over time. One kilowatt-hour is
equal to one kilowatt of power for one hour. (kWh), and several
other factors. The rate is highest for systems certified in fiscal year 2018, the
first year of the program. Residential-scale systems and community solar systems
receive a higher rate than commercial-scale and shared commercial systems. A bonus
rate exists for systems that include components made in Washington.
Exhibit 1.3: Incentive rates depend on the year a system is certified, its size, and
whether components were made in Washington
Source: JLARC staff analysis of Chapter 82.16 RCW.
*No systems were certified using these rates because the program reached its funding
limit by February 2019.
Incentive payments are subject to an annual limit and a lifetime cap
Annual limits on payments depend on the type of system installed:
Owners of residential-scale systems and community solar participants may receive
up to $5,000 per year.
Owners of commercial-scale systems may receive up to $25,000 per year.
Shared commercial participants may receive up to $35,000 per year.
Owners can receive payments for up to eight years, or until the amount is equal to
50% of the cost of the system, whichever comes first.
RESIP is distinct from net metering. Customers may qualify for one or both programs
as well as other state and federal incentives.
RESIP participants may also benefit from net metering, which requires utilities to
purchase any excess power a customer produces but doesn't use at the utility's retail
electricity rate. Unlike net metering, RESIP is optional for utilities and provides an
incentive for all the electricity a customer generates, regardless of whether it is
used by the customer or sold back to the utility.
Customers may qualify for one or both programs depending on the characteristics of
the system they install. For instance, systems capable of producing over 100 kW of
electricity may qualify as commercial-scale under RESIP, but would not be eligible for
net metering. Systems without a meter capable of measuring production may qualify for
net metering, but would not be eligible for RESIP.
Participants may also be eligible for a separate state sales and use tax exemption
for renewable energy systems, as well as a federal income tax credit for a portion of
the amount paid to install renewable energy systems.
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REVIEW Details
2. Statutory metrics focus on solar energy
Washington’s solar capacity increased and met 87% of the target in
statute. While the state added 1,519 solar jobs, it still ranked 21st in the country for
solar employment when the program reached its funding limit.
Legislature identified two solar energy metrics to measure the effectiveness of the
tax credit
When the Legislature amended the tax credit in 2017, it included a performance
statement with metrics that are focused on solar energy systems. The Legislature
indicated its intent to reduce the costs of installing and operating solar energy
systems. It directed the Legislative Auditor to conclude the credit has achieved its
objectives if both of the following occurred:
Install 115 megawatts (MW) of solar capacity through the program between
July 2017 and June 2021.
Increase solar-related employment between 2015 and 2020. This can be
measured either by the number of jobs per capita, or by the state's ranking in a
nationally recognized report.
The Legislature also indicated that the credit was intended to:
Promote installation of renewable energy systems through 2021. By that
time, the state was expected to sustain the growth and vitality of its renewable
energy industry without an incentive.
Create opportunities for broader participation by low-income individuals and
others who may not own the property where a system could be installed.
Balance the mix of community solar and shared commercial solar projects,
and balance the distribution of community solar between utilities, nonprofits,
and housing authorities to support renewable energy throughout the
state.
All but three of the systems participating in the program use solar energy
All new systems certified through Renewable Energy System Incentive Program (RESIP)
are powered by solar energy. There are also three anaerobic digesters and 202 solar
projects that were built prior to 2017, but qualified for RESIP because they had not
been included in the earlier version of the program.
Exhibit 2.1: A total of 7,337 solar energy systems were installed between July 2017
and June 2021. An additional 205 systems were installed earlier and are part of RESIP.
Type of Project
Solar Energy Systems Installed Between 2017 and 2021 (Metric in
Statute)
Systems Installed Before July 2017
Total Systems in RESIP
Number
Capacity
Number
Capacity
Number
Capacity
Residential-scale Solar
6,959
59.8 MW
187
1.2 MW
7,146
61 MW
Commercial-scale Solar
359
11.5 MW
15
1.7 MW
374
13.2 MW
Community Solar
11
1.4 MW
0
0
11
1.4 MW
Shared Commercial Solar
8
27.8 MW
0
0
8
27.8 MW
Anaerobic Digesters
Does not apply
Does not apply
3
2.5 MW
3
2.5 MW
Total
7,337
100.5 MW
205
5.5 MW
7,542
106 MW
Source: JLARC staff analysis of program data from Washington State University (WSU)
Energy Extension.
Solar installations reached 87% of the capacity target
Since the credit was amended in 2017, participants in RESIP have installed 7,337
solar energy systems with a total combined capacity of 100.5 MW. This is 87% of the
legislative target of 115 MW during the time period that the program was open to new
applicants.
The program reached its funding limit by February 2019, 20 months after the program
began and more than two years before the statutory deadline for certifying new
systems.
Exhibit 2.2: Installed solar capacity increased but did not meet legislative
target
Source: JLARC staff analysis of program data from WSU Energy Extension. Program
reached its funding limit as of February 2019.
While the state added 1,519 solar jobs since 2015, it still ranked 21st in the
country for solar employment when program reached its funding limit
The Legislature identified two ways to measure whether the tax credit resulted in an
increase in solar employment: solar jobs per capita and the state's national ranking
for solar employment.
The number of solar jobs increased:
The number of solar-related jobsJobs where at least half of an employee's time is related to solar
energy. grew by 1,519 between 2015 and 2019 according to The
Solar FoundationThe Solar Foundation is a nonprofit
organization that states it is dedicated to advancing the use of solar
technology worldwide. It publishes a national solar jobs census
annually..
The number of solar-related jobs per capitaJobs in the industry as a share of total employment in the
state. grew by 52% during the same time period.
Washington's national ranking remained steady for overall solar employment, but
dropped for solar jobs per capita:
Washington's growth in total solar jobs kept pace with growth nationwide. The
state ranked 21st in the nation in both 2015 and 2019 for overall solar employment.
Washington's national ranking decreased from 29th to 31st for solar jobs per
capita. While Washington's solar-related employment grew from 2015 faster than its
economy in general, other states' solar employment grew even more than Washington's
relative to their state economies.
Exhibit 2.3: Washington solar-related employment grew from 2015 to 2019
Source: JLARC staff analysis of data from The Solar Foundation's annual State Solar
Jobs Census.
Program funds were fully allocated before the capacity target was reached
WSU Energy announced that the funding limit was reached before the program met the
Legislature's goal of installing 115 MW of solar capacity. Because incentive rates
vary depending on system characteristics, the types of systems installed can either
reduce or increase anticipated program costs.
Incentive rates vary from 5 cents per kWh to 21 cents. Residential-scale systems
receive a higher incentive rate than commercial-scale systems.
Incentive rates were highest for systems certified in fiscal year 2018. If the
Legislature was expecting fewer systems to be built in 2018, the program would have
had lower costs.
Systems that were installed before July 2017 were eligible for incentive payments
as long as they did not participate in the prior incentive program (RECRIP). As a
result, RESIP paid incentives for 2.9 MW from solar energy systems and 2.5 MW from
anaerobic digesters that were installed before 2017. These systems cost the program
money but did not count towards the capacity target in statute.
As detailed in Section
4, installation of renewable energy systems has continued after RESIP reached
its funding limit.
JLARC staff identified at least 32 MW of capacity added after the limit was
reached through net metering data from 15 utilities.
When these additional systems are included, over 115 megawatts of solar capacity
have been installed prior to the legislative target deadline of June 2021. However,
some of these systems are not part of RESIP because program funding had already been
allocated.
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Review Details
3. System owners tend to be rural, higher income
Homeowners living east of the Cascades and in rural areas
installed solar at a higher rate than those living west of the Cascades and in urban
areas. Income of system owners was 180% of the median in their area.
Utilities will pay customers with renewable energy systems an estimated $27.4
million in the 2021-23 biennium
A total of 48 utilities participated in Renewable Energy System Incentive Program
(RESIP) and paid incentives to their customers. Based on the amount of incentives each
utility reported paying, the utilities are estimated to receive $27.4 million in tax
credits for the 2021-23 biennium.
Homeowners east of the Cascades installed solar more often than homeowners west of
the Cascades
Relative to the population of Washington's homeowners, regions east of the Cascades
had more systems installed through RESIP than regions west of the Cascades. Counties
east of the Cascades have 21% of Washington's homeowners and 26% of solar energy
systems installed through RESIP.
Systems were also an average of 12% larger on the east side of the Cascades. The east
side generally receives more sunlight than the west, and the eastern systems produced
16% more energy as a result. Because incentive payments are based on the amount of
electricity produced, areas with more sunlight have a greater incentive to build, and
to build bigger systems.
Homeowners in rural areas installed solar more often, and installed larger systems,
than homeowners in urban areas
Homeowners in rural areas, as defined by the U.S. Census Bureau, installed systems
more often than homeowners in urban areas. Rural areas of Washington have 12% of
homeowners and 15% of solar energy systems. Systems installed in rural areas were also
15% larger on average than systems in urban areas.
System owners generally have higher income levels than the median in their counties.
Their income has increased since 2015.
JLARC staff used data from the Department of Commerce to summarize the financial
characteristics of borrowers taking out loans for solar energy systems. The dataset
includes 3,679 loans made by one lender between 2015 and 2020. Not all borrowers are
RESIP participants, but the data provides general characteristics of individuals
borrowing money to install solar energy systems in the state.
According to this lending data, the median income of borrowers increased by $22,500
between 2015 and 2020, from $120,000 to $142,500. On average, borrowers earned 180% of
the median income in their counties. The actual average income of households
installing solar could be higher. This data is based on the primary borrower and may
not include the total household income if other members did not sign the loan. It also
does not include individuals paying cash or using other financial mechanisms to
install solar.
The lender reported that its lending decisions are not based on income from RESIP
participation. Because incentive payments begin after systems are installed, RESIP
does not reduce the up-front cost to install solar.
Community solar projects made up the smallest portion of installed capacity among
RESIP's projects
Community solar projects are intended to facilitate broad, equitable access to solar
power across income levels. Similar to shared commercial solar projects for
businesses, these projects do not require the user to own the solar panels or the
properties they are located on.
The Legislature indicated that one of its goals for the tax credit was to broaden
low-income participation in producing and accessing solar power. Community solar
projects allow individuals to participate as a group and share the financial benefit.
To date, Washington State University (WSU) Energy has certified 11 community solar
projects with several types of owners:
Six are run by utilities.
Four are run by a housing authority.
One is run by a church.
These 11 projects have a total combined capacity of 1.4 megawattsOne megawatt is equal to 1,000
kilowatts., or 1.4% of the total capacity installed through RESIP.
In comparison, shared commercial systems for businesses make up 26.2% of capacity in
the program.
Exhibit 3.3: Community solar projects compose 1.4% of installed capacity through
RESIP
Source: JLARC staff analysis of program data from WSU Energy Extension.
Administrators of community solar projects used several methods to support
low-income customers
The utilities, housing authorities, and church offered varying benefits to low-income
customers.
Utilities: Some set aside a certain number of units within the project to provide
to low-income ratepayers. Others set aside units to provide to organizations that
assist low-income households.
Housing authorities: Did not charge participants for the program, but asked them
to gift back their incentive payments so that the money would benefit the housing
authority's residents. They used savings from reduced electricity costs to benefit
the common spaces in the housing developments.
Church: Allowed participants to contribute whatever they were able to in order to
participate in the program. The project is structured as a loan program to provide a
fixed interest rate for payments back to participants.
Community solar participants may receive different benefits than other users of
solar energy systems
In a survey conducted by2017
Publication by NREL and Portland State University, "A Non-Modeling Exploration of
Residential Solar PV Adoption and Non-Adoption." the National
Renewable Energy Laboratory (NREL), respondents indicated that they installed solar in
order to lower electricity costs, protect against future price increases, and reduce
their environmental impact.
Community solar participants receive all of these benefits, but often in a different
manner than other solar energy users.
Community solar participants may end up receiving financial benefits for a shorter
period of time than individual owners of solar energy systems. Projects in RESIP
have contract terms ranging from 8 to 25 years. When a contract term ends, any
ongoing financial benefits of the system accrue to the property owner rather than
the community participants.
Some utilities offer other programs where they charge their customers a premium to
receive a portion of their power from solar or other renewable energy sources.
Compared to those programs, participants in community solar projects have the
opportunity to financially benefit from their participation in the program.
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4. Likely impact: earlier installations and larger systems
Analysis suggests the incentive likely caused some adopters to
install solar earlier. Installed systems were estimated to be 32% larger as a result of
the incentive.
Incentive may have caused earlier and larger system installations, but likely did
not bring in new solar adopters
JLARC staff used a model developed by the National Renewable Energy Laboratory (NREL)
to simulate the impact of incentive payments on solar adoption in Washington. NREL is
a national laboratory of the U.S. Department of Energy's Office of Energy Efficiency
and Renewable Energy, operated by the Alliance for Sustainable Energy LLC.
NREL has used this model to perform analyses for other states that are considering
policy changes. The model incorporates NREL's existing research on how potential
adopters respond to different market conditions, such as state and federal incentives,
rooftop characteristics, utility electricity rates, and other variables.
JLARC staff ran models simulating Washington's market conditions with and without the
incentive, and measured the difference between the results.
Incentive may have caused a temporary 12% increase in solar installations, but
that increase reversed after the incentive expired. This suggests that the
incentive may have encouraged customers to install solar energy systems earlier than
they otherwise would have, but it did not induce new customers to install solar. The
net increase in installations disappeared over 10 years.
The model estimates that systems were 32% larger on average with the
incentive. Because the incentive pays the same rate for systems up to 12 kW,
it encourages owners to purchase bigger systems. The average installation cost per
kW is lower for larger systems.
The incentive does not reduce up-front costs to install solar
According to NREL survey respondents, the most common reasons for not adopting solar
energy are concerns about initial costs and inability to receive a loan. Washington's
incentive does not reduce the initial costs for installing a system. Incentive
payments begin after the system is installed and is generating power.
A Washington lender who has made 3,679 solar loans in the last five years told JLARC
staff that the incentive does not factor into lending decisions and does not impact a
participant's ability to obtain a loan. As noted in Section
3, loan data shows borrowers who installed solar earned an average of 180% of
the median income in their counties.
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Review Details
5. Washington's solar market has continued after program reached its funding limit
After an initial decline, Washington's solar market has continued
after the program reached its funding limit
To assess the change in solar energy system installations across the state, JLARC staff
analyzed net metering data provided by 15 utilities that serve 70% of all Renewable
Energy System Incentive Program (RESIP) participants. The data includes systems under
net metering agreements that were installed between 2015 and 2020, and systems installed
after the RESIP program ended, to show general statewide trends in monthly installation.
Although this data suggests that installations declined initially when RESIP reached
its funding limit, installations began increasing shortly afterwards. The increase
continued until the beginning of the COVID-19 pandemic, when permit offices closed, and
increased again for the rest of 2020. For the 15 utilities that provided data,
installations increased 30% from the last quarter of 2019 to the last quarter of 2020.
Installations in December 2020 reached their fourth highest month since 2015.
Exhibit 5.1: Solar installations reached the fourth highest number in December 2020
even though the program had already reached its funding limit
Source: JLARC staff analysis of utility-reported net metering data.
The 2020 National Solar Jobs Census indicates Washington solar employment improved
relative to the rest of the country
Data from the Solar Foundation's 2020 National Solar Jobs Census shows Washington solar
employment decreased by 216 jobs from 2019, a 6% decline. However, the state's national
rankings for both jobs and jobs per capita improved in 2020, suggesting Washington's
solar employment outperformed other states. The Solar Foundation attributed national job
losses to both the COVID-19 pandemic and improvements in labor productivity.
One Washington solar panel manufacturer has expanded its business and a new
manufacturer is planning to start production
When the 2017 legislation was enacted, Washington had one manufacturer building solar
panels for rooftop solar energy systems.
Representatives for the manufacturer testified in legislative hearings that the
business was expanding and working to become competitive outside Washington. They
indicated that the Made in Washington bonus would support the business's sales until
that occurred (see Section
1).
Silfab Solar, the current owner of the manufacturing facility, reports that it has
opened a second facility in Washington and grown from 80 employees in 2017 to 240
employees in May 2021. Washington is no longer the primary market for Silfab's solar
panels.
A second manufacturer, Violet Power, has announced plans to begin production in 2021
in Washington.
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6. Applicable statutes
RCW 82.16.130 through 82.16.175 and intent statement
NOTES: Finding—Intent—2017 3rd sp.s. c 36:
"The legislature finds and declares that stimulating local investment in distributed
renewable energy generation is an important part of a state energy strategy, helping
to increase energy independence from fossil fuels, promote economic development, hedge
against the effects of climate change, and attain environmental benefits. The
legislature intends to increase the effectiveness of the existing renewable energy
investment cost recovery program by reducing the maximum incentive rate provided for
each kilowatt-hour of electricity generated by a renewable energy system over the
period of the program and by creating opportunities for broader participation by
low-income individuals and others who may not own the premises where a renewable
energy system may be installed. The legislature intends to provide an incentive
sufficient to promote installation of systems through 2021, at which point the
legislature expects that the state's renewable energy industry will be capable of
sustained growth and vitality without the cost recovery incentive. The legislature
intends for the program to balance the deployment of community solar and shared
commercial solar projects in order to support participation in renewable energy
generation, and that deployment of community solar projects is balanced among eligible
utilities, nonprofits, and local housing authorities, as doing so will support maximum
deployment of renewable energy generation throughout the state."
Renewable energy system cost recovery—Light/power business tax credit.
RCW 82.16.130
(1) A light and power business is allowed a credit against taxes due under this
chapter in an amount equal to:
(a) Incentive payments made in any fiscal year under RCW 82.16.120 and 82.16.165; and
(b) Any fees a utility is allowed to recover pursuant to RCW 82.16.165(5).
(2) The credits must be taken in a form and manner as required by the department. The
credit taken under this section for the fiscal year may not exceed one and one-half
percent of the businesses' taxable power sales generated in calendar year 2014 and due
under RCW 82.16.020(1)(b) or two hundred fifty thousand dollars, whichever is greater.
(3) The credit may not exceed the tax that would otherwise be due under this chapter.
Refunds may not be granted in the place of credits. Expenditures not used to earn a
credit in one fiscal year may not be used to earn a credit in subsequent years.
(4) For any business that has claimed credit for amounts that exceed the correct
amount of the incentive payable under RCW 82.16.120, the amount of tax against which
credit was claimed for the excess payments is immediately due and payable. The
department may deduct amounts due from future credits claimed by the business.
(a) Except as provided in (b) of this subsection, the department must assess interest
but not penalties on the taxes against which the credit was claimed. Interest must be
assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW,
retroactively to the date the credit was claimed, and accrues until the taxes against
which the credit was claimed are repaid.
(b) A business is not liable for excess payments made in reliance on amounts reported
by the Washington State University extension energy program as due and payable as
provided under RCW 82.16.165(20), if such amounts are later found to be abnormal or
inaccurate due to no fault of the business.
(5) The amount of credit taken under this section is not confidential taxpayer
information under RCW 82.32.330 and is subject to disclosure.
(6) The right to earn tax credits for incentive payments made under RCW 82.16.120
expires June 30, 2020. Credits may not be claimed after June 30, 2021.
(7) The right to earn tax credits for incentive payments made under RCW 82.16.165
expires June 30, 2029. Credits may not be claimed after June 30, 2030. [ 2017 3rd
sp.s. c 36 § 4; 2010 c 202 § 3; 2009 c 469 § 506; 2005 c 300 § 4.]
Light and power business—Liability.
RCW 82.16.150
Owners of a community solar project as defined in RCW 82.16.110(2)(a) (i) and (iii)
must agree to hold harmless the light and power business serving the situs of the
system, including any employee, for the good faith reliance on the information
contained in an application or certification submitted by an administrator or company.
In addition, the light and power business and any employee is immune from civil
liability for the good faith reliance on any misstatement that may be made in such
application or certification. Should a light and power business or employee prevail
upon the defense provided in this section, it is entitled to recover expenses and
reasonable attorneys' fees incurred in establishing the defense. [ 2010 c 202 § 5.]
Tax preference performance statement—Joint legislative audit and review committee
review—Washington State University data collection.
RCW 82.16.155
(1) This section is the tax preference performance statement for the tax preference
and incentives created under RCW 82.16.130 and section 6, chapter 36, Laws of 2017 3rd
sp. sess. This performance statement is only intended to be used for subsequent
evaluation of the tax preference and incentives. It is not intended to create a
private right of action by any party or be used to determine eligibility for
preferential tax treatment.
(2) The legislature categorizes the tax preference created under RCW 82.16.130 and
incentive payments authorized in section 6, chapter 36, Laws of 2017 3rd sp. sess. as
intended to:
(a) Induce participating utilities to make incentive payments to utility customers
who invest in renewable energy systems; and
(b) By inducing utilities, nonprofit organizations, and utility customers to acquire
and install renewable energy systems, retain jobs in the clean energy sector and
create additional jobs.
(3) The legislature's public policy objectives are to:
(a) Increase energy independence from fossil fuels; and
(b) Promote economic development through increasing and improving investment in,
development of, and use of clean energy technology in Washington; and
(c) Increase the number of jobs in and enhance the sustainability of the clean energy
technology industry in Washington.
(4) It is the legislature's intent to provide the incentives in section 6, chapter
36, Laws of 2017 3rd sp. sess. and RCW 82.16.130 in order to ensure the sustainable
job growth and vitality of the state's renewable energy sector. The purpose of the
incentive is to reduce the costs associated with installing and operating solar energy
systems by persons or entities receiving the incentive.
(5) As part of its 2021 tax preference reviews, the joint legislative audit and
review committee must review the tax preferences and incentives in section 6, chapter
36, Laws of 2017 3rd sp. sess. and RCW 82.16.130. The legislature intends for the
legislative auditor to determine that the incentive has achieved its desired outcomes
if the following objectives are achieved:
(a) Installation of one hundred fifteen megawatts of solar photovoltaic capacity by
participants in the incentive program between July 1, 2017, and June 30, 2021; and
(b) Growth of solar-related employment from 2015 levels, as evidenced by:
(i) An increased per capita rate of solar energy-related jobs in Washington, which
may be determined by consulting a relevant trade association in the state; or
(ii) Achievement of an improved national ranking for solar energy-related employment
and per capita solar energy-related employment, as reported in a nationally recognized
report.
(6) In order to obtain the data necessary to perform the review, the joint
legislative audit and review committee may refer to data collected by the Washington
State University extension energy program and may obtain employment data from the
employment security department.
(7) The Washington State University extension energy program must collect, through
the application process, data from persons claiming the tax credit under RCW 82.16.130
and persons receiving the incentive payments created in RCW 82.16.165, as necessary,
and may collect data from other interested persons as necessary to report on the
performance of chapter 36, Laws of 2017 3rd sp. sess.
(8) All recipients of tax credits or incentive payments awarded under this chapter
must provide data necessary to evaluate the tax preference performance objectives in
this section as requested by the Washington State University extension energy program
or the joint legislative audit and review committee. Failure to comply may result in
the loss of a tax credit award or incentive payment in the following year.
Definitions—Renewable energy tax incentives.
RCW 82.16.160
The definitions in this section apply throughout this section and RCW 82.16.165,
82.16.170, and 82.16.175 unless the context clearly requires otherwise.
(1) "Administrator" means the utility, nonprofit, or other local housing authority
that organizes and administers a community solar project as provided in RCW 82.16.165
and 82.16.170.
(2) "Certification" means the authorization issued by the Washington State University
extension energy program establishing a person's eligibility to receive annual
incentive payments from the person's utility for the program term.
(3) "Commercial-scale system" means a renewable energy system or systems other than a
community solar project or a shared commercial solar project with a combined nameplate
capacity greater than twelve kilowatts that meets the applicable system eligibility
requirements established in RCW 82.16.165.
(4) "Community solar project" means a solar energy system that has a direct current
nameplate generating capacity that is no larger than one thousand kilowatts and meets
the applicable eligibility requirements established in RCW 82.16.165 and 82.16.170.
(5) "Consumer-owned utility" has the same meaning as in RCW 19.280.020.
(6) "Customer-owner" means the owner of a residential-scale or commercial-scale
renewable energy system, where such owner is not a utility and such owner is a
customer of the utility and either owns the premises where the renewable energy system
is installed or occupies the premises.
(7) "Electric utility" or "utility" means a consumer-owned utility or investor-owned
utility as those terms are defined in RCW 19.280.020.
(8) "Governing body" has the same meaning as provided in RCW 19.280.020.
(9) "Person" means any individual, firm, partnership, corporation, company,
association, agency, or any other legal entity.
(10) "Program term" means:
(a) For community solar projects, eight years or until cumulative incentive payments
for electricity produced by the project reach fifty percent of the total system price,
including applicable sales tax, whichever occurs first; and
(b) for other renewable energy systems, including shared commercial solar projects,
eight years or until cumulative incentive payments for electricity produced by a
system reach fifty percent of the total system price, including applicable sales tax,
whichever occurs first.
(11) "Renewable energy system" means a solar energy system, including a community
solar project, an anaerobic digester as defined in RCW 82.08.900, or a wind generator
used for producing electricity.
(12) "Residential-scale system" means a renewable energy system or systems located at
a single situs with combined nameplate capacity of twelve kilowatts or less that meets
the applicable system eligibility requirements established in RCW 82.16.165.
(13) "Shared commercial solar project" means a solar energy system, owned or
administered by an electric utility, with a combined nameplate capacity of greater
than one megawatt and not more than five megawatts and meets the applicable
eligibility requirements established in RCW 82.16.165 and 82.16.175. [ 2017 3rd sp.s.
c 36 § 5.]
Annual production incentive certification.
RCW 82.16.165
(1) Beginning July 1, 2017, the following persons may submit a one-time application
to the Washington State University extension energy program to receive a certification
authorizing the utility serving the situs of a renewable energy system in the state of
Washington to remit an annual production incentive for each kilowatt-hour of
alternating current electricity generated by the renewable energy system:
(a) The utility's customer who is the customer-owner of a residential-scale or
commercial-scale renewable energy system;
(b) An administrator of a community solar project meeting the eligibility
requirements outlined in RCW 82.16.170 and applies for certification on behalf of each
of the project participants; or
(c) A utility or a business under contract with a utility that administers a shared
commercial solar project that meets the eligibility requirements in RCW 82.16.175 and
applies for certification on behalf of each of the project participants.
(2) No person, business, or household is eligible to receive incentive payments
provided under subsection (1) of this section of more than five thousand dollars per
year for residential systems or community solar projects, twenty-five thousand dollars
per year for commercial-scale systems, or thirty-five thousand dollars per year for
shared commercial solar projects.
(3)(a) No new certification may be issued under this section to an applicant who
submits a request for or receives an annual incentive payment for a renewable energy
system that was certified under RCW 82.16.120, or for a renewable energy system served
by a utility that has elected not to participate in the incentive program, as provided
in subsection (4) of this section.
(b) The Washington State University extension energy program may issue a new
certification for an additional system installed at a situs with a previously
certified system so long as the new system meets the requirements of this section and
its production can be measured separately from the previously certified system.
(c) The Washington State University extension energy program may issue a
recertification for a residential-scale or commercial-scale system if a customer makes
investments resulting in an expansion of the system's nameplate capacity. Such
recertification expires on the same day as the original certification for the
residential-scale or commercial-scale system and applies to the entire system the
incentive rates and program rules in effect as of the date of the recertification.
(4) A utility's participation in the incentive program provided in this section is
voluntary.
(a) A utility electing to participate in the incentive program must notify the
Washington State University extension energy program of such election in writing.
(b) The utility may terminate its voluntary participation in the production incentive
program by providing notice in writing to the Washington State University extension
energy program to cease issuing new certifications for renewable energy systems that
would be served by that utility.
(c) Such notice of termination of participation is effective after fifteen days, at
which point the Washington State University extension energy program may not accept
new applications for certification of renewable energy systems that would be served by
that utility.
(d) Upon receiving a utility's notice of termination of participation in the
incentive program, the Washington State University extension energy program must
report on its web site that customers of that utility are no longer eligible to
receive new certifications under the program.
(e) A utility's termination of participation does not affect the utility's obligation
to continue to make annual incentive payments for electricity generated by systems
that were certified prior to the effective date of the notice. The Washington State
University extension energy program must continue to process and issue certifications
for renewable energy systems that were received by the Washington State University
extension energy program before the effective date of the notice of termination.
(f) A utility that has terminated participation in the program may resume
participation upon filing notice with the Washington State University extension energy
program.
(5)(a) The Washington State University extension energy program may certify a
renewable energy system that is connected to equipment capable of measuring the
electricity production of the system and interconnecting with the utility's system in
a manner that allows the utility, or the customer at the utility's option, to measure
and report to the Washington State University extension energy program the total
amount of electricity produced by the renewable energy system.
(b) The Washington State University extension energy program must establish a
reporting and fee-for-service system to accept electricity production data from the
utility or the customer that is not reported electronically and with the reporting
entity selected at the utility's option as described in subsection (19) of this
section. The fee-for-service agreement must allow for electronic reporting or
reporting by mail, may be specific to individual utilities, and must recover only the
program's costs of obtaining the electricity production data and incorporating it into
an electronic format. A statement of the amount due for the fee-for-service must be
provided to the utility by the Washington State University extension energy program
with the report provided to the utility pursuant to subsection (20)(a) of this
section. The utility may determine how to assess and remit the fee, and the utility
may be allowed a credit for fees paid under this subsection (5) against taxes due, as
provided in RCW 82.16.130(1).
(6) The Washington State University extension energy program may issue a
certification authorizing annual incentive payments up to the following annual dollar
limits:
(a) For community solar projects, five thousand dollars per project participant;
(b) For residential-scale systems, five thousand dollars;
(c) For commercial-scale systems, twenty-five thousand dollars; and
(d) For shared commercial solar projects, up to thirty-five thousand dollars a year
per participant, as determined by the terms of subsection (15) of this section.
(7)(a) To obtain certification under this section, a person must submit to the
Washington State University extension energy program an application, including:
(i) A signed statement that the applicant has not previously received a notice of
eligibility from the department under RCW 82.16.120 entitling the applicant to receive
annual incentive payments for electricity generated by the renewable energy system at
the same meter location;
(ii) A signed statement of the total price, including applicable sales tax, paid by
the applicant for the renewable energy system;
(iii) System operation data including global positioning system coordinates, tilt,
estimated shading, and azimuth;
(iv) Any other information the Washington State University extension energy program
deems necessary in determining eligibility and incentive levels, administering the
program, tracking progress toward achieving the limits on program participation
established in RCW 82.16.130, or facilitating the review of the performance of the tax
preferences by the joint legislative audit and review committee, as described in RCW
82.16.155; and
(v)(A) Except as provided in (a)(v)(B) of this subsection (7), the date that the
renewable energy system received its final electrical inspection from the applicable
local jurisdiction, as well as a copy of the permit or, if the permit is available
online, the permit number;
(B) The Washington State University extension energy program may waive the
requirement in (a)(v)(A) of this subsection (7), accepting an application and granting
provisional certification prior to proof of final electrical inspection. Provisional
certification expires one hundred eighty days after issuance, unless the applicant
submits proof of the final electrical inspection from the applicable local
jurisdiction or the Washington State University extension energy program extends the
certification, for a term or terms of thirty days, due to extenuating circumstances;
and
(b)(i) Prior to obtaining certification under this subsection, a community solar
project or shared commercial solar project must apply for precertification against the
remaining funds available for incentive payments under subsection (13)(d) of this
section in order to be guaranteed an incentive payment under this section;
(ii) A project applicant of a community solar project or shared commercial solar
project must complete an application for certification with the Washington State
University extension energy program within less than one year to retain the
precertification status described in this subsection; and
(iii) The Washington State University extension energy program may design a
reservation or precertification system for an applicant of a residential-scale or
commercial-scale renewable energy system.
(8) No incentive payments may be authorized or accrued until the final electrical
inspection and executed interconnection agreement are submitted to the Washington
State University extension energy program.
(9) Within thirty days of receipt of the application for certification, the
Washington State University extension energy program must notify the applicant and,
except when a utility is the applicant, the utility serving the situs of the renewable
energy system, by mail or electronically, whether certification has been granted. The
certification notice must state the rate to be paid per kilowatt-hour of electricity
generated by the renewable energy system, as provided in subsection (12) of this
section, subject to any applicable cap on total annual payment provided in subsection
(6) of this section.
(10) Certification is valid for the program term and entitles the applicant or, in
the case of a community solar project or shared commercial solar project, the
participant, to receive incentive payments for electricity generated from the date the
renewable energy system commences operation, or the date the system is certified,
whichever date is later. For purposes of this subsection, the Washington State
University extension energy program must define when a renewable energy system
commences operation and provide notice of such date to the recipient and the utility
serving the situs of the system. Certification may not be retroactively changed except
to correct later discovered errors that were made during the original application or
certification process.
(11)(a) System certification follows the system if the following conditions are met
using procedures established by the Washington State University extension energy
program:
(i) The renewable energy system is transferred to a new owner who notifies the
Washington State University extension energy program of the transfer; and
(ii) The new owner provides an executed interconnection agreement with the utility
serving the premises.
(b) In the event that a community solar project participant terminates their
participation in a community solar project, the system certification follows the
system and participation may be transferred to a new participant. The administrator of
a community solar project must provide notice to the Washington State University
extension energy program of any changes or transfers in project participation.
(12) The Washington State University extension energy program must determine the
total incentive rate for a new renewable energy system certification by adding to the
base rate any applicable made-in-Washington bonus rate. A made-in-Washington bonus
rate is provided for a renewable energy system or a community solar project with solar
modules made in Washington or with a wind turbine or tower that is made in Washington.
Both the base rates and bonus rate vary, depending on the fiscal year in which the
system is certified and the type of renewable energy system being certified, as
provided in the following table:
Fiscal year of system certification
Base rate - residential-scale
Base rate - commercial-scale
Base rate -community solar
Base rate - shared commercial solar
Made in Washington bonus
2018
$0.16
$0.06
$0.16
$0.06
$0.05
2019
$0.14
$0.04
$0.14
$0.04
$0.04
2020
$0.12
$0.02
$0.12
$0.02
$0.03
2021
$0.10
$0.02
$0.10
$0.02
$0.02
(13) The Washington State University extension energy program must cease to issue new
certifications:
(a) For community solar projects and shared commercial solar projects in any fiscal
year for which the Washington State University extension energy program estimates that
fifty percent of the remaining funds for credit available to a utility for renewable
energy systems certified under this section as of July 1, 2017, have been allocated to
community solar projects and shared commercial solar projects combined;
(b) For commercial-scale systems in any fiscal year for which the Washington State
University extension energy program estimates that twenty-five percent of the
remaining funds for credit available to a utility for renewable energy systems
certified under this section as of July 1, 2017, have been allocated to
commercial-scale systems;
(c) For any renewable energy system served by a utility, if certification is likely
to result in incentive payments by that utility, including payments made under RCW
82.16.120, exceeding the utility's available funds for credit under RCW 82.16.130; and
(d) For any renewable energy system, if certification is likely to result in total
incentive payments under this section exceeding one hundred ten million dollars.
(14) If the Washington State University extension energy program ceases issuing new
certifications during a fiscal year or biennium as provided in subsection (13) of this
section, in the following fiscal year or biennium, or when additional funds are
available for credit such that the thresholds described in subsection (13) of this
section are no longer exceeded, the Washington State University extension energy
program must resume issuing new certifications using a method of awarding
certifications that results in equitable and orderly allocation of benefits to
applicants.
(15) A customer who is a participant in a shared commercial solar project may not
receive incentive payments associated with the project greater than the difference
between the levelized cost of energy output of the system over its production life and
the retail rate for the rate class to which the customer belongs. The levelized cost
of the output of the energy must be determined by the utility that administers the
shared commercial solar project and must be disclosed, along with an explanation of
the limitations on incentive payments contained in this subsection (15), in the
contractual agreement with the shared commercial solar project participants.
(16) In order to begin to receive annual incentive payments, a person who has been
issued a certification for the incentive as provided in subsection (9) of this section
must obtain an executed interconnection agreement with the utility serving the situs
of the renewable energy system.
(17) The Washington State University extension energy program must establish a list
of equipment that is eligible for the bonus rates described in subsection (12) of this
section. The Washington State University extension energy program must, in
consultation with the department of commerce, develop technical specifications and
guidelines to ensure consistent and predictable determination of eligibility. A solar
module is made in Washington for purposes of receiving the bonus rate only if the
lamination of the module takes place in Washington. A wind turbine is made in
Washington only if it is powered by a turbine or built with a tower manufactured in
Washington.
(18) The manufacturer of a renewable energy system component subject to a bonus rate
under subsection (12) of this section may apply to the Washington State University
extension energy program to receive a determination of eligibility for such bonus
rates. The Washington State University extension energy program must publish a list of
components that have been certified as eligible for such bonus rates. The Washington
State University extension energy program may assess an equipment certification fee to
recover its costs. The Washington State University extension energy program must
deposit all revenue generated by this fee into the state general fund.
(19) Annually, the utility must report electronically to the Washington State
University extension energy program the amount of gross kilowatt-hours generated by
each renewable energy system since the prior annual report. For the purposes of this
section, to report electronically means to submit statistical or factual information
in alphanumeric form through a web site established by the Washington State University
extension energy program or in a list, table, spreadsheet, or other nonnarrative
format that can be digitally transmitted or processed. The utility may instead opt to
report by mail or require program participants to report individually, but if the
utility exercises one or more of these options it must negotiate with the Washington
State University extension energy program the fee-for-service arrangement described in
subsection (5)(b) of this section.
(20)(a) The Washington State University extension energy program must calculate for
the year and provide to the utility the amount of the incentive payment due to each
participant and the total amount of credit against tax due available to the utility
under RCW 82.16.130 that has been allocated as annual incentive payments. Upon notice
to the Washington State University extension energy program, a utility may opt to
directly perform this calculation and provide its results to the Washington State
University extension energy program.
(b) If the Washington State University extension energy program identifies an
abnormal production claim, it must notify the utility, the department of revenue, and
the applicant, and must recommend withholding payment until the applicant has
demonstrated that the production claim is accurate and valid. The utility is not
liable to the customer for withholding payments pursuant to such recommendation unless
and until the Washington State University extension energy program notifies the
utility to resume incentive payments.
(21)(a) The utility must issue the incentive payment within ninety days of receipt of
the information required under subsection (20)(a) of this section from the Washington
State University extension energy program. The utility must resume the incentive
payments withheld under subsection (20)(b) of this section within thirty days of
receiving notice from the Washington State University extension energy program that
the claim has been demonstrated accurate and valid and payment should be resumed.
(b) A utility is not liable for incentive payments to a customer-owner if the utility
has disconnected the customer due to a violation of a customer service agreement, such
as nonpayment of the customer's bill, or a violation of an interconnection agreement.
(22) Beginning January 1, 2018, the Washington State University extension energy
program must post on its web site and update at least monthly a report, by utility,
of: (a) The number of certifications issued for renewable energy systems, including
estimated system sizes, costs, and annual energy production and incentive yields for
various system types; and (b) An estimate of the amount of credit that has not yet
been allocated for incentive payments under each utility's credit limit and remains
available for new renewable energy system certifications.
(23) Persons receiving incentive payments under this section must keep and preserve,
for a period of five years for the duration of the consumer contract, suitable records
as may be necessary to determine the amount of incentive payments applied for and
received. The Washington State University extension energy program may direct a
utility to cease issuing incentive payments if the records are not made available for
examination upon request. A utility receiving such a directive is not liable to the
applicant for any incentive payments or other damages for ceasing payments pursuant to
the directive.
(24) The nonpower attributes of the renewable energy system belong to the utility
customer who owns or hosts the system or, in the case of a community solar project or
a shared commercial solar project, the participant, and can be kept, sold, or
transferred at the utility customer's discretion unless, in the case of a
utility-owned community solar or shared commercial solar project, a contract between
the customer and the utility clearly specifies that the attributes will be retained by
the utility.
(25) All lists, technical specifications, determinations, and guidelines developed
under this section must be made publicly available online by the Washington State
University extension energy program.
(26) No certification may be issued under this section after June 30, 2021.
(27) The Washington State University extension energy program must collect a one-time
fee for applications submitted under subsection (1) of this section of one hundred
twenty-five dollars per applicant. The Washington State University extension energy
program must deposit all revenue generated by this fee into the state general fund.
The Washington State University extension energy program must administer and budget
for the program established in RCW 82.16.120, this section, and RCW 82.16.170 in a
manner that ensures its administrative costs through June 30, 2022, are completely met
by the revenues from this fee. If the Washington State University extension energy
program determines that the fee authorized in this subsection is insufficient to cover
the administrative costs through June 30, 2022, the Washington State University
extension energy program must report to the legislature on costs incurred and fees
collected and demonstrate why a different fee amount or funding mechanism should be
authorized.
(28) The Washington State University extension energy program may, through a public
process, develop any program requirements, policies, and processes necessary for the
administration or implementation of this section, RCW 82.16.120, 82.16.155, and
82.16.170. The department is authorized, in consultation with the Washington State
University extension energy program, to adopt any rules necessary for administration
or implementation of the program established under this section and RCW 82.16.170.
(29) Applications, certifications, requests for incentive payments under this
section, and the information contained therein are not deemed tax information under
RCW 82.32.330 and are subject to disclosure.
(30)(a) By November 1, 2019, and in compliance with RCW 43.01.036, the Washington
State University extension energy program must submit a report to the legislature that
includes the following:
(i) The number and types of renewable energy systems that have been certified under
this section as of July 1, 2019, both statewide and per participating utility;
(ii) The number of utilities that are approaching or have reached the credit limit
established under RCW 82.16.130(2) or the thresholds established under subsection (13)
of this section;
(iii) The share of renewable energy systems by type that contribute to each utility's
threshold under subsection (13) of this section;
(iv) An assessment of the deployment of community solar projects in the state,
including but not limited to the following:
(A) An evaluation of whether or not community solar projects are being deployed in
low-income and moderate-income communities, as those terms are defined in RCW
43.63A.510, including a description of any barriers to project deployment in these
communities;
(B) A description of the share of community solar projects by administrator type that
contribute to each utility's threshold under subsection (13)(a) of this section; and
(C) A description of any barriers to participation by nonprofits and local housing
authorities in the incentive program established under this section and under RCW
82.16.170;
(v) The total dollar amount of incentive payments that have been made to participants
in the incentive program established under this section to date; and
(vi) The total number of megawatts of solar photovoltaic capacity installed to date
by participants in the incentive program established under this section.
(b) By December 31, 2019, the legislature must review the report submitted under (a)
of this subsection and determine whether the credit limit established under RCW
82.16.130(2) should be increased to two percent of a light and power business' taxable
power sales generated in calendar year 2014 and due under RCW 82.16.020(1)(b) or two
hundred fifty thousand dollars, whichever is greater, in order to achieve the
legislative intent under section 1, chapter 36, Laws of 2017 3rd sp. sess.
Community solar programs—Organization and administration.
RCW 82.16.170
(1) The purpose of community solar programs is to facilitate broad, equitable
community investment in and access to solar power. Beginning July 1, 2017, a community
solar administrator may organize and administer a community solar project as provided
in this section.
(2) A community solar project must have a direct current nameplate capacity that is
no more than one thousand kilowatts and must have at least ten participants or one
participant for every ten kilowatts of direct current nameplate capacity, whichever is
greater. A community solar project that has a direct current nameplate capacity
greater than five hundred kilowatts must be subject to a standard interconnection
agreement with the utility serving the situs of the community solar project. Except
for community solar projects authorized under subsection (9) of this section, each
participant must be a customer of the utility providing service at the situs of the
community solar project.
(3) The administrator of a community solar project must administer the project in a
transparent manner that allows for fair and nondiscriminatory opportunity for
participation by utility customers.
(4) The administrator of a community solar project may establish a reasonable fee to
cover costs incurred in organizing and administering the community solar project.
Project participants, prior to making the commitment to participate in the project,
must be given clear and conspicuous notice of the portion of the incentive payment
that will be used for this purpose.
(5) The administrator of a community solar project must maintain and update annually
through June 30, 2030, the following information for each project it operates or
administers:
(a) Ownership information;
(b) Contact information for technical management questions;
(c) Business address;
(d) Project design details, including project location, output capacity, equipment
list, and interconnection information; and (e) Subscription information, including
rates, fees, terms, and conditions.
(6) The administrator of a community solar project must provide the information
required in subsection (5) of this section to the Washington State University
extension energy program at the time it submits the application allowed under RCW
82.16.165(1).
(7) The administrator of a community solar project must provide each project
participant with a disclosure form containing all material terms and conditions of
participation in the project, including but not limited to the following:
(a) Plain language disclosure of the terms under which the project participant's
share of any incentive payment will be calculated by the Washington State University
extension energy program over the life of the contract;
(b) Contract provisions regulating the disposition or transfer of the project
participant's interest in the project, including any potential costs associated with
such a transfer;
(c) All recurring and nonrecurring charges;
(d) A description of the billing and payment procedures;
(e) A description of any compensation to be paid in the event of project
underperformance;
(f) Current production projections and a description of the methodology used to
develop the projections;
(g) Contact information for questions and complaints; and (h) Any other terms and
conditions of the services provided by the administrator.
(8) A utility may not adopt rates, terms, conditions, or standards that unduly or
unreasonably discriminate between utility-administered community solar projects and
those administered by another entity.
(9) A public utility district that is engaged in distributing electricity to more
than one retail electric customer in the state and a joint operating agency organized
under chapter 43.52 RCW on or before January 1, 2017, may enter into an agreement with
each other to construct and own a community solar project that is located on property
owned by a joint operating agency or on property that receives electric service from a
participating public utility district. Each participant of a community solar project
under this subsection must be a customer of at least one of the public utility
districts that is a party to the agreement with a joint operating agency to construct
and own a community solar project.
(10) The Washington utilities and transportation commission must publish, without
disclosing proprietary information, a list of the following: (a) Entities other than
utilities, including affiliates or subsidiaries of utilities, that organize and
administer community solar projects; and (b) Community solar projects and related
programs and services offered by investor-owned utilities.
(11) If a consumer-owned utility opts to provide a community solar program or
contracts with a nonutility administrator to offer a community solar program, the
governing body of the consumer-owned utility must publish, without disclosing
proprietary information, a list of the nonutility administrators contracted by the
utility as part of its community solar program.
(12) Except for parties engaged in actions and transactions regulated under laws
administered by other authorities and exempted under RCW 19.86.170, a violation of
this section constitutes an unfair or deceptive act in trade or commerce in violation
of chapter 19.86 RCW, the consumer protection act. Acts in violation of chapter 36,
Laws of 2017 3rd sp. sess. are not reasonable in relation to the development and
preservation of business, and constitute matters vitally affecting the public interest
for the purpose of applying the consumer protection act, chapter 19.86 RCW.
(13) Nothing in this section may be construed as intending to preclude persons from
investing in or possessing an ownership interest in a community solar project, or from
applying for and receiving federal investment tax credits.
Shared commercial solar projects—Organization and administration.
RCW 82.16.175
(1) The purpose of a shared commercial solar project is to provide an entry point in
solar utilization by large load customers in a manner that achieves economies of scale
and maximizes system performance without limitations posed by on-site systems where
sun exposure is not optimal or structural and other site deficiencies preclude solar
development.
(2) Beginning July 1, 2017, a utility may, at its discretion, organize and administer
a shared commercial solar project as provided in this section.
(3) A shared commercial solar project must have a direct current nameplate capacity
greater than one megawatt and no more than five megawatts and must have at least five
participants. To receive incentive payments under RCW 82.16.165, each participant must
be a customer of the utility providing service at the situs of the shared commercial
solar project and must be located in the state of Washington.
(4) The administrator of a shared commercial solar project must administer the
project in a transparent manner.
(5) The administrator of a shared commercial solar project may establish a reasonable
fee to cover costs incurred in organizing and administering the shared commercial
solar project. Project participants, prior to making the commitment to participate in
the project, must be given clear and conspicuous notice of the fees charged by the
administrator as authorized under this subsection.
(6) The administrator of a shared commercial solar project must submit to the
Washington State University extension energy program at the time it submits an
application allowed under RCW 82.16.165(1) project design details, including project
location, output capacity, equipment list, and interconnection information.
(7) The administrator of a shared commercial solar project must provide each project
participant with a disclosure form containing all material terms and conditions of
participation in the project, including but not limited to the following:
(a) All recurring and nonrecurring charges;
(b) A description of the billing and payment procedures;
(c) Production projections and a description of the methodology used to develop the
projections;
(d) An estimate of the project participant's share of any incentive payment over the
life of the contract;
(e) A description of contract terms that relate to project underperformance;
(f) Contract provisions regulating the disposition or transfer of the project
participant's interest in the project, including any potential costs associated with
such a transfer;
(g) Contact information for questions and complaints; and
(h) Any other terms and conditions of the services provided by the administrator.
(8) If a utility opts to contract with a nonutility administrator to offer a shared
commercial solar program, the utility must publish, without disclosing proprietary
information, the name of the nonutility administrator contracted by the utility as
part of its shared commercial solar program.
(9) In order to meet the intent of chapter 36, Laws of 2017 3rd sp. sess. of
promoting a sustainable, local renewable energy industry, the legislature prefers
award of the majority of the installation of shared commercial solar projects be given
to contractors based in Washington state. In the event the majority of the
installation of a shared commercial solar project is awarded to out-of-state
contractors, the administrator must submit to the Washington State University
extension energy program the reasons for using out-of-state contractors, the
percentage of installation work performed by out-of-state contractors, and a cost
comparison of the installation services performed by out-of-state contractors against
the same services performed by Washington-based contractors.
21-06 Final Report: Credit for Renewable Energy Program Payments
December 2021
Review Details
Appendix A: NREL’s dGen model overview
What is NREL’s dGen model?
JLARC staff used the National Renewable Energy Laboratory’s (NREL) Distributed
Generation Market Demand (dGen) model to estimate the impacts of the renewable energy
tax preference on the adoption of solar energy. NREL is a federally funded research and
development center sponsored by the Department of Energy. It publishes technical
reports, journal articles, and conference papers related to dGen and its predecessor,
The Solar Deployment System model. Multiple state governments and academic researchers
use dGen's results to evaluate the impacts of policy changes.
dGen is open source and highly customizable
dGen is a market-penetration model used to simulate how policy changes might
potentially impact who adopts solar energy systems and where. The software includes
various features that make it particularly useful for analyzing the impacts of the
renewable energy tax preference:
All data used within the model is embedded within a database built by NREL that is
spatially resolved.
In contrast to other modeling software, dGen is fully open source. This permits
users to modify the assumptions within the model to align with state specific
assumptions and needs (e.g., JLARC staff can include all tax preferences related to
solar energy within Washington).
The model can forecast the adoption of solar energy multiple years into the
future.
Model simulates the impact of a policy change
The dGen model estimates the geospatial adoption of solar energy in two-year increments
using an agent-based approach, which allows users to simulate the full impact of a
policy change over time. The adoption is modeled through four steps:
Generates agents, which are a probabilistic representation of individual customer
types. They are assigned attributes such as roof angle (azimuth), rooftop
availability, and estimated energy consumption.
Applies technical and siting restrictions to develop measures of resource
availability and quality. An example of a potential restriction is the proportion of
the roof facing the appropriate direction.
Performs economic calculations using cash flow analysis incorporating project costs,
prevailing retail rates, incentives, and net metering considerations. The adoption of
solar for each agent is only considered if it is a positive financial investment.
Calculates market share of solar energy by simulating technology adoption based on
Bass diffusion models. These are differential equations that model the adoption of a
technology using innovatorsAdopters
who are the first within their geographical area. and imitatorsAdopters who install solar after
an innovator nearby..
The dGen model produces estimates in two-year increments of the total statewide effects
of a tax policy change. Impacts are measured as the change in number of solar adoptions
between:
A baseline estimate assuming there was no tax preference.
The estimated effects of the tax preference after it went into effect.
While the model is complex and forecasting involves some degree of uncertainty, dGen
provides a tool for practitioners to simulate how policy changes may affect Washington’s
adoption of solar energy systems.
21-06 Final Report: Credit for Renewable Energy Program Payments
December 2021
Review Details
Appendix B: NREL's dGen model analysis
dGen analysis shows the potential impacts of the renewable energy
tax preference on the adoption of solar energy
JLARC staff used NREL’s dGen model to estimate the impact of Renewable Energy System
Incentive Program (RESIP), the $110 million tax preference detailed in Section
1. This technical appendix provides context and supporting information for the
analysis and results summarized in Section
4.
dGen methodology
User inputs in dGen
NREL’s dGen model allows users to estimate the impacts of policy changes in local solar
energy markets (see Appendix
A for an overview of the dGen model).
Before modeling policy scenarios, JLARC staff calibrated the model to Washington. This
included:
Adding current and historic solar-related tax incentives to the model.
Modifying the cost of solar energy systems to align with observed data from the
Washington State University Energy Extension Program, the entity that administers
RESIP.
Updating the financing terms to match information provided by a Washington lender.
NREL's dGen model allows users to estimate the impacts of policy changes to the
adoption of solar energy systems by Washington residents.
JLARC staff modeled two scenarios with dGen:
RESIP was in effect.
RESIP was not in effect.
JLARC staff then compared the estimated adoption of solar energy from each of the two
simulations.
Model estimates the impact of RESIP on solar energy adoption in Washington
The modeled scenarios estimate the adoption of solar energy across Washington with and
without the renewable energy tax preference. The outputs include the number of adopters
every two years, as well as the amount of system capacity installed. The difference
between these two estimations is the likely increase of solar adoption due to the
renewable energy tax preference.
In 2018-19, when the model assumed the tax preference was in effect, the model
estimated a 12% increase in new adopters. Each year after 2020-21, the model estimates
that there are fewer adopters with the preference than without. This implies that the
preference is likely incentivizing agents to adopt solar energy sooner than they
normally would have, but the increase is not sustained in future years.
Exhibit B1: Percent modeled increase in new adopters of solar energy systems with the
preference
Year
Percent Increase With Preference
2014-15
0%
2016-17
0%
2018-19
12%
2020-21
0%
2022-23
-6%
2024-25
-3%
Source: JLARC staff analysis using dGen model.
Between 2018-19, the model estimates that the total new capacity for solar energy
systems increased by 47% with the preference. Each year after that, the difference in
new capacity created is negligible. This could possibly mean that the preference
incentivized users to build bigger systems than they otherwise would have. The model
selects system size to maximize the financial benefit, limited by roof size and maximum
annual electricity usage.
Exhibit B2: Percent difference in new solar capacity installed with the
preference
Year
Percent Difference With Preference
2014-15
0%
2016-17
0%
2018-19
47%
2020-21
1%
2022-23
-5%
2024-25
-2%
Source: JLARC staff analysis using dGen model.
JLARC staff explored the possibility that adopters built bigger systems than they
otherwise would have without the preference. We computed the average system size
installed by year with and without the preference. The estimated installed capacity is
essentially the same in each year except 2018-19, where the system size increased by
32%, when the preference was assumed to be in effect.
Exhibit B3: Percent difference in average system size installed with the
preference
Year
Percent Difference With Preference
2014-15
0%
2016-17
0%
2018-19
32%
2020-21
1%
2022-23
0%
2024-25
2%
Source: JLARC staff analysis using dGen model.
21-06 Final Report: Credit for Renewable Energy Program Payments
December 2021
Recommendations & Responses
Legislative Auditor's Recommendation
Legislative Auditor's Recommendation: Allow to expire
The Legislature should allow the credit to expire in 2030 because the
objectives are mostly met and installations have continued after the program reached
its funding limit. If the Legislature wants to broaden low-income participation in the
production and use of solar energy, it should consider other options.
Legislation Required: No
Fiscal Impact: None
21-06 Final Report: Credit for Renewable Energy Program Payments
December 2021
Recommendations & Responses
Letter from Commission Chair
21-06 Final Report: Credit for Renewable Energy Program Payments
December 2021
Recommendations & Responses
Commissioners' Recommendation
The Commission endorses the Legislative Auditor's recommendation with
comment. Low-income participation in solar programs is problematic because (1)
Low-income households lack money to pay the upfront costs of installing solar; and (2)
many low-income households are renters and, therefore, the decision to install solar
is not theirs to make. As part of their review, the Legislature will want to read the
commentary provided by the Washington Department of Commerce, which highlights the
connection between household resiliency and distributed energy resources.
21-06 Final Report: Credit for Renewable Energy Program Payments
December 2021
Recommendations & Responses
DOR & OFM Response
21-06 Final Report: Credit for Renewable Energy Program Payments
December 2021
Recommendations & Responses
Commerce Response
21-06 Final Report: Credit for Renewable Energy Program Payments
December 2021
Recommendations & Responses
WSU Energy Response
21-06 Final Report: Credit for Renewable Energy Program Payments
December 2021
More about this review
Study questions
Click image to view PDF of proposed study questions.
