Of the more than 40 states that offer some sort of incentive for utility-tied renewable energy systems, Washington is one of only a handful that provides performance-based incentives (PBIs). While other states or utilities that offer PV incentives typically provide a one-time rebate based on a PV system’s rated watts (capacity-based), Washington provides payment, though the utility, for the electricity actually produced by the system. Under the PBI scenario, payment is for every KWH that the system produces, whether it is actually fed to the utility grid or used immediately in the system owner’s home. Most other net metering agreements often involve simply offsetting either monthly or annual electricity use with RE generated electricity. Any excess energy that those systems produce is either sold to the utility at retail rate, avoided generating cost (a fraction of the retail rate), or sometimes nothing at all (the system owner “donates” the excess electricity to the utility).
Although Kathleen received no incentive money up-front from the state to help her pay for her system, under the PBI program, for at least the next seven years, she will receive $0.15 for every KWH her system produces (about twice the utility retail rate). Based on her system’s projected performance, it could earn $3,500 in those seven years. If these PBIs are renewed, Kathleen could expect $15,000 over the system’s assumed 30-year life.
If she is using that PV-produced energy herself, then she’s also offsetting the cost of utility-based electricity. In essence, when she’s using her solar-generated electricity, Kathleen’s PV system is paying for itself at a rate of about $0.22 per KWH. As the price of electricity goes up, the value of her own PV-produced offset goes up too.
In the future, it’s possible that more states will transition to PBI incentive structures, rewarding system owners for their system’s actual output, rather than just their rated potential. This means that more care will be taken to ensure proper system design and installation and more attention paid to properly maintaining the system’s level of performance over its lifetime.