Virginia offers two primary incentive programs for solar energy. You can combine both with the nationwide federal tax credit. The programs are:
- A property tax exemption for the increase in home value after going solar
- Solar Renewable Energy Certificates (SRECS), which are financial incentives for generating clean electricity
The VirginiaSAVES Green Community Program offers low-interest financing for energy efficiency, renewable energy and electric vehicle charging projects. Unfortunately, homeowners cannot apply directly. The program is only available for businesses, local governments and nonprofits.
Residential Property Tax Exemption for Solar
Incentive Value: Equivalent to the property tax rate, which varies by location
Frequency: Annual tax exemption
Like any other home improvement project, solar panels make your property more valuable. Virginia has a property tax exemption specifically for this increase in home value:
- If you own a $350,000 home and you install a solar power system for $20,000, you will still be taxed for a home value of $350,000 (not $370,000).
- For example, if you live in a location with a property tax rate of 0.75%, you are saving $150 per year (0.75% of $20,000).
Before 2023, Virginia’s property tax exemption for solar panel systems was optional for county and city governments. This changed in January 2023, thanks to Senate Bill 686, which makes the tax exemption mandatory for solar energy equipment with a capacity of up to 25 kW.
To qualify for property tax incentives, the local building department or the Virginia Department of Environmental Quality must inspect your home solar system and certify it.
Virginia Solar Renewable Energy Credits (SREC)
Incentive Value: One SREC for every 1,000 kWh generated, which sells for $50 to $70
Frequency: Ongoing incentive for generating clean electricity
Virginia is among the states that have a Solar Renewable Energy Credit (SREC) program. You gain one SREC for every 1,000 kilowatt-hours generated by your solar panels, and you can sell the credits to local electricity providers and other organizations that are subject to renewable energy mandates.
- As of 2023, each SREC can be sold for around $45 to $70.
- If your home solar system generates 10,000 kWh in a year, you can expect to sell 10 SRECs for a total of $450 to $700.
- SREC sales represent additional income beyond the normal electric bill savings, and solar installation costs are recovered faster.
The 2020 Virginia Clean Economy Act established a renewable portfolio standard (RPS) with clean energy targets for local utility companies. If they buy SRECs from small-scale solar owners, the corresponding kilowatt-hours count towards their clean energy goals. For example, if a company buys 100 SRECs, it counts as having generated 100,000 kWh with solar panels (1,000 kWh per SREC).
If a company cannot accumulate the SRECs required to meet its clean energy target, it can make an alternative payment of $75 per SREC. The price will increase by 1% a year, which means SRECs figure to be in high demand, representing an extra income opportunity for Virginia residents with solar panels.
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