Ericksen solar-incentive legislation a smashing success, legislative auditors say

Program achieved goals of spurring solar installations, manufacturing, weaning industry from subsidies

  • Ericksen bill extended state subsidies for solar, with eventual phase-out
  • $110 million distributed to homeowners, community organizations
  • Spurred installation of 7,337 solar systems, created 1,519 jobs

OLYMPIA – Solar power incentive legislation sponsored by Sen. Doug Ericksen in 2017 proved such a success that legislative auditors say the program isn’t needed anymore and can be allowed to expire.

A report from the Joint Legislative Audit and Review Committee says the $110 million tax credit program achieved its goals, prompting homeowners and community organizations to install solar-power systems, and encouraging new manufacturing in Washington. The program, which pays homeowners up to $5,000 a year, helped give home solar systems a foothold in the state of Washington. New installations continue even though the door closed to new participants in 2019.

“It’s not often we can say a government program worked exactly as intended,” said Ericksen, R-Ferndale, ranking Republican on the Senate Environment, Energy and Technology Committee. “This program helped turn the corner for solar in Washington state, and got the industry closer to the point that it can stand on its own two feet. When legislative auditors tell us the program did its job so well that it is no longer needed, we know we’ve done things right.”

The Renewable Energy System Incentive Program allows utilities to pay customers for each kilowatt-hour of electricity they generate from their own renewable-energy systems. Qualifying residential customers are eligible for payments of up to $5,000 a year for eight years, whether they use the power themselves or it flows back into the grid. To pay for the program, the state will provide utilities $110 million in tax credits through 2030.

Ericksen proposed the program in 2017 as an earlier state-incentive program was due to expire. “The solar industry kept coming to the Legislature every few years to renew the subsidies we were providing,” Ericksen explained. “We wanted to give the industry a kickstart, but we knew we shouldn’t keep subsidizing it forever.

“So we designed a program with an eventual phase-out in mind, and we set clear goals for what we wanted to accomplish. Here’s the great news. It worked. And now we don’t need it anymore.”

The report from the legislative audit committee says:

  • The incentives sped up the adoption of new technology, prompting customers to install new solar systems sooner. The $110 million in future tax-credit payments were fully allocated by 2019, according to Washington State University, which certified the eligibility of new systems.
  • New systems installed under the program are generating 100 MW of power.
  • The bulk of the payments are going to homeowners to defray the cost of residential solar panels. Some 6,959 such systems were installed.
  • The program also encouraged construction of new community solar systems serving multiple homes, as well as larger commercial systems.
  • The program created 1,519 new jobs in the solar industry.
  • Customers were eligible for larger payments if they purchased equipment from Washington manufacturers. The made-in-Washington bonus helped one manufacturer triple employment from 80 to 240, and another will begin production soon.
  • The program also encouraged construction of new community solar systems serving multiple homes, as well as larger commercial systems. Though other forms of renewable energy were eligible, all new installations under the program were solar.

JLARC concludes that the program largely hit its targets and does not need to be continued. The report notes that the solar industry continues to benefit from other state and federal incentive programs, including an exemption from state sales and use tax for new equipment purchases.