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Cash for kilowatts
by Becky Brun - 10.31.06

Washington residents and utilities are cashing in on the state’s new renewable energy production incentives.

Over 220 systems, all photovoltaic (PV) installations ranging in capacity of 2-2.5 kilowatts, have qualified for the new incentive program (Washington State Senate Bill 5101) since its implementation rules were approved in July 2006, said Mike Nelson, director of the Washington State University Northwest Solar Center.

“That represents somewhere around half a megawatt worth of systems, or about $1 million of leverage investment by the energy-consuming public,” Nelson said.

Unlike California, New Jersey and Oregon incentives, which residents redeem for investments in renewable energy based on system size, Washington's renewable energy production statute pays for actual power produced. Washington’s incentives reward people for actual results rather than just calculations, Nelson said.

“Washington knows that it’s getting what it’s paying for,” Nelson said of the government’s pay-out to residents.

Residents can receive up to $2,000, dependent on technology type and where equipment was manufactured. The overall incentive amount may be uniformly reduced if requests for the incentive exceed the available funds, which are capped at a percentage of utility sales.

In May 2005, Gov. Christine Gregoire (D) signed Washington State Senate Bill 5101, making production incentives available to Washington residents, businesses and local governments that generate electricity from solar, wind or biomass [see "Washington: the new Sunshine State?," nwcurrent, June 2005].

Under the state’s new renewable energy production incentives, Washington residents can receive 15 cents per kilowatt-hour (kWh) for solar power generated and even higher pay-outs for using Washington-built inverters and modules. Factoring in the additional incentives, residents would receive 54 cents per kWh for solar systems built completely in Washington. Over the life of the program,it would equal $18,000 — at least half the estimated $28,000 to $35,000 cost of a solar system using inverters and panels made in Washington, according to the state’s Department of Revenue.

“At 54 cents an hour, anyone who doesn’t do it is an economic fool,” Nelson said.

Currently, no solar modules are manufactured in the state of Washington, but Nelson noted that a couple of companies are interested in moving to the Evergreen State due to the legislation.

Washington’s production incentives program, the first metered production program in the United States, is modeled after Germany’s highly successful Electricity Feed-In Law. The annual energy production from PV installations in Germany rose from approximately 17 MW in 1999 (the year the law was passed) to 837 MW in 2005, according to Solarbuzz LLC.

Producers of wind power are eligible for incentive payments of 18 cents per kWh if their inverter was manufactured in Washington and another 15 cents per kWh if the windmill blades were manufactured in Washington, for a total of 33 cents per kWh.

According to Mark Bohe, tax policy specialist for the Washington Department of Revenue, there has been some confusion from taxpayers about the new statutes. Many residents are not aware that if their property is connected to the energy grid, they can still collect incentives even if their renewable energy system itself is not interconnected. Also, residents are not required to sell energy to the utility in order to receive paybacks — all production can be used in the resident’s home.

"Further, if a utility does not participate, its customers can't receive the incentive payments," Bohe said.

Jack Brautigam, green power program manager for Seattle City Light, said in the past year he’s fielded more calls from customers seeking information about renewable energy installations than ever before.

“We’re getting a couple calls each month when it used to be a couple a year,” he said.

Under the law, Washington utilities receive a tax credit for the production incentives they pay to their customers. But unlike Washington’s net metering law, in which utilities are required to purchase customers’ excess electricity, the renewable energy production statutes do not require utilities’ participation. Further, if a utility does not participate, its customers can't receive the incentive payments.

“Participation in the renewable energy system cost recovery program is discretionary to utilities,” Bohe said. “We had to work really hard to get them to buy in.”

According to Bohe, all Washington utilities except Inland Power and Light and Pacific Power are currently voluntarily complying with the incentive program.

“We felt it made sense to offer it to our customers,” Brautigam of Seattle City Light said. “It’s going to take a while to work out the bugs, but in the long run we’ll be fine.”