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May 18, 2023

Virginia Solar Tax Credits, Incentives and Rebates (2023)

Virginia has more than 4,286 megawatts of solar power capacity, according to the

Virginia has more than 4,286 megawatts of solar power capacity, according to the Solar Energy Industries Association, enough to provide electricity for 476,108 homes. In this article, the MarketWatch Guides Team will discuss the solar incentives available in Virginia.

The federal solar tax credit is a nationwide alternative energy incentive, and its official name is the Renewable Energy Investment Tax Credit (ITC). Homeowners and businesses can claim 30% of their solar investment on their next tax filing, which means you recover nearly one-third of your project costs in less than a year. Some details about the ITC:

The average cost of solar panels in Virginia is $2.85 per watt installed, according to a 2023 survey by the MarketWatch Guides Team. This means you can expect to pay around $17,100 for a 6-kW rooftop system. Thanks to the solar ITC, you can claim back 30% ($5,130) within a year, and your out-of-pocket cost drops to $11,970.

To claim the solar federal tax credit, you must fill out IRS Form 5695, which covers residential energy credits, and attach it to your annual federal tax return.

Virginia offers two primary incentive programs for solar energy. You can combine both with the nationwide federal tax credit. The programs are:

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.

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:

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.

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.

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.

Virginia offers net metering for home solar systems up to 25 kW of capacity. Excess solar generation sent to the grid is measured and credited to your power bill. If there is a month where your generation is higher than your consumption, you can roll over the balance in your favor to the next month and subtract it from the following bill.

Dominion Energy has the largest net metering program in Virginia. If you’re considering solar panels for your home, you can apply for net metering directly through the Dominion Energy website. The main steps are summarized below, and a qualified solar installation company can help you with the paperwork and technical requirements.

As you can see in the World Bank Global Solar Atlas, Virginia receives a fair share of sunshine throughout the year. Assuming you have favorable site conditions, you can expect to generate around 1,500 kWh for each kilowatt of photovoltaic capacity. For example, a 6-kW home solar system can generate around 9,000 kWh per year in Richmond, and you also earn nine SRECs for this electricity output.

Based on the average price of $2.85 per watt, you can expect to pay $17,100 for a home solar system in Virginia. After accounting for the 30% federal tax credit, the net price decreases to $11,970. Considering the combined annual savings and SREC sales of $1,750, the simple payback period is 6.8 years.

The best solar panels come with a warranty of up to 25 years, which means the lifespan of your solar energy system will be much longer than its payback period.

Virginia has abundant sunshine, which boosts the productivity of solar panels. The local SREC program also gives solar owners a chance to make some extra income.

The best solar companies are familiarized with the incentives available in each state and local net metering requirements, and they can make sure your project qualifies. They determine the optimal system capacity in kilowatts that will maximize your return on investment.

Yes. Thanks to the 30% federal tax credit and the Virginia SREC program, home solar systems can achieve a payback period of less than seven years.

No. As of 2023, there are no programs offering free solar panels in Virginia. However, you can complete your solar panel installation with zero upfront costs by taking a low-interest loan. You can then pay off the solar loan over time with electric bill savings and SREC sales, which means your out-of-pocket cost becomes zero.

Virginia has abundant solar resources, as you can see in the Global Solar Atlas. If you have an unshaded roof area or ground space on your property, each kilowatt of solar panel capacity can yield around 1,500 kWh per year.

You can expect to pay around $2.85 per watt of solar capacity. This means a 5-kW system will have a total cost of around $14,250 ($9,975 after the 30% tax credit) and a 10-kW system will cost around $28,500 ($19,950 after the 30% tax credit).

Leonardo David is an electromechanical engineer, MBA, energy consultant and technical writer. His energy-efficiency and solar consulting experience covers sectors including banking, textile manufacturing, plastics processing, pharmaceutics, education, food processing, real estate and retail. He has also been writing articles about energy and engineering topics since 2015.