Tax credits and incentives for solar water heating are generous in the Pacific Northwest, and can substantially reduce the cost of water heating for your family. When you schedule a free solar evaluation, your technician will explain these savings more fully, as well as go over how much you will save on your electric or gas bill each year. Mr. Sun Solar installed solar water heating systems in 1980 that are still saving money today – long after they paid for themselves. Below are the current incentives that apply to most Oregon and Washington residents.
Federal Tax Credit: 30% of the system cost, minus utility incentives.
Federal Tax Credit: 30% of the overall cost.
You can check the Energy Trust Region Map to see if you are within the Energy Trust incentive boundaries. Please note that incentives and tax credits can change frequently and are generally lowered or eliminated with short notice.
Oregon Residential Energy Tax Credit: $0.60 cents per kilowatt hour saved during the first year of operation ($1,500 maximum). Mr. Sun’s preferred system, the Sol-Reliant, currently qualifies for an Oregon tax credit of $1320 west of the Cascades and $1500 east of the Cascades.
Energy Trust of Oregon utility incentive: $0.40 per kWh of annual savings for customers with an electric backup heater ($1,500 maximum). Customers with natural gas backup receive $0.30 per kWh. The Sol-Reliant 56 sq. ft. system with 80-gallon heat exchange tank would receive an incentive of $1080 (electric) or $720 (natural gas).
Oregon Business Energy Tax Credit Program: up to 50% of the system cost. The credit is filed over 5 years: 10% in the first and second years, and 5% per year thereafter.**
Energy Trust of Oregon utility incentive: $0.40 per first-year kWh savings for PGE and Pacific Power customers using electric water heating. $6.00 per first-year therm savings for NW Natural and Cascade Natural Gas customers using gas water heating. The maximum incentive is 35 percent of project cost (typically 10-15 percent). For more information, see Energy Trust Solar Water Heating for Business.
Sales Tax Exemption (Residential & Commercial)
Solar installs receive a sales tax exemption (8.5-10% savings) through June 30, 2018. This covers the full installed price for solar hot water systems producing less than 3 million BTUs/day (60 times larger than a typical residential system). For larger systems, customers must pay sales tax upfront, but are eligible for a 75% remittance immediately after a system is installed.
**The Oregon Business Energy Tax Credit (BETC) has experienced a number of changes, including legislative modifications in February 2010 that set up a tiered system for renewable energy proposals. These are processed on a first-come, first-served basis, and all funds have currently been allocated.
Many other states offer incentives for residents and businesses to invest in renewable energy projects. You can learn more about renewable energy incentives in other states at the Database of State Incentives for Renewable Energy (DSIRE) website.
Disclaimer: Consult your tax professional to learn how tax credits and rules apply to your project. This information does not constitute tax advice and cannot be used to avoid tax penalties.