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Despite rapidly falling solar prices across the country and steadily increasing utility rates, Virginia lacks important, forward-thinking policies and incentive programs necessary to make solar a viable energy alternative in the state. That said, the Mother of States has made significant utility grade investments in solar energy and residential installations totally nearly 100 megawatts.
This suggests that while solar in Virginia may not enjoy all the benefits found in other states, the demand for clean, renewable energy in the state is still very high. If demand persists, policies in Virginia could tip in favor of accessible, affordable solar power.
Read on to learn more about the ins and outs of going solar in Virginia.
Here's an at-a-glance description of the current benefits and drawbacks of switching to solar in Virginia:
At just 12 cents per kilowatt-hour, utility rates in Virginia are slightly below the national average, meaning residents may not be as motivated to switch to solar; however, when you compare the levelized cost of traditional electricity to solar power, the savings become all the more apparent:
The levelized cost of solar in Virginia, meaning the total solar PV system costs divided by the system’s output over the course of its 25-year lifetime, is only 6 cents per kWh. Compare that to the levelized cost from competing utility providers, with rates increasing by 3.5 percent every year, or 24 cents per kWh, and solar becomes the clear favorite.
Measuring the upfront costs of solar is a different story. A 5 kW solar energy system in Virginia costs approximately $19,000, which is actually on par with comparable systems across the South and eastern seaboard. Twenty six percent of this price will be credited back to solar buyers by the federal government, and the final price can be influenced by system capacity, energy efficiency, and installation fees.
Virginia only has two financing options available to them: direct purchase and solar loan. Customers do not have the option to rent a solar energy system through a solar lease, or pay for monthly power output through a power purchase agreement. And while both cash purchase and solar loan financing do require a substantial investment, they also yield some of the highest rewards:
Financing a solar panel system out of pocket requires the largest upfront investment, but will also produce the largest long-term gains. A typical 5 kW system goes for about $19,000, less the federal tax credit worth 30 percent, so about $14,000 when all is said and done. Assuming about $1,200 in annual savings, the solar energy system will have paid for itself after about 14 years.
The great news is that once the system is paid off, solar owners will continue to save and even profit from their system. After 25 years, the projected lifespan of the average system, customers will have accrued more than $16,000 in total savings, while home values will have increased by nearly $15,000!
With a solar loan or home-equity line of credit (HELOC), customers can finance an entire solar array for zero money down on 15-year repayment terms. This translates to massive savings upfront, with room for long-term growth once the system is paid off. As a bonus, customers who finance through a third party still qualify for the federal solar tax credit.
Even with a loan, a 5 kW system will still cost $19,000, but because no money is required upfront, the savings begin immediately. By the end of the first year of operation, customers will have saved more than $5,000! These savings will decline every year until the loan is paid off. In fact, by the end of year 15, customers will be paying around $7,000 in loan payments that year than they would traditional utility payments.
But once the loan is paid off, customers will make steady gains over the next decade, culminating in more than $8,000 by the end of 25 years.
Virginia unfortunately offers little solar incentive programs to speak of. The state offers no solar rebates, or state-level tax credits, no sales tax exemptions, or low-income solar programs. Apart from the federal solar tax credit, Virginia residents interested in going solar will have almost no help covering the costs.
The only solar incentive worth mentioning in the state is the locally based property tax exemption that varies with every municipality throughout the state. Customers will need to check their city ordinances to see whether they qualify for a tax break.
Virginia’s solar policies are almost as scant as its solar incentives. The renewable portfolio standard (RPS) for example, is not only unambitious at 15 percent, but is also voluntary, meaning utility providers will not be penalized for failing to comply. A state’s RPS is designed to promote the use of alternative energy sources like natural gas, wind energy, and solar power. Lack of a more ambitious goal speaks to the lukewarm attitude the state has toward clean energy.
However, the state does have a net metering policy that applies statewide, which credits solar customers for the surplus energy their systems pump into the utility grid — but this policy only applies to solar installations of 20 kW or lower, meaning most non-residential builds may not qualify for net metering.
The state’s interconnection rules are a little better. These rules represent the standards solar panel systems must follow before they’re cleared for interconnection. The rules apply statewide, and are consistent from utility to utility.
Although residential solar still has a long way to go in the state, Virginia has invested heavily in utility solar farm projects that number in the hundreds of thousands of megawatts of energy. In 2020 alone, the state has installed more than 200 mW of solar power. Nearly 14,000 solar installations exist in the state, sending clean energy to more than 147,000 Virginia homes. Virginia hosts 175 solar companies employing almost 4,500 people.
Interested in a solar quote? Check out the top-ranked solar companies in Virginia and read reviews from verified solar customers.