Arlington, VA

Virginia’s Solar Property Tax Exemption allows homeowners to reduce or eliminate property taxes on their solar energy systems. Under this state program, solar equipment is classified as a separate property category, giving local governments the authority to exempt this equipment from property taxation through local ordinances.

For residential systems up to 25 kilowatts DC, the law provides a complete exemption from state and local taxation. For other qualifying solar equipment, the tax benefit is determined by applying the local tax rate to the value of your solar system, then subtracting that amount from your property taxes. This exemption lasts for at least five years and becomes effective in the next tax year after certification. If you obtain certification within one year of installation, some localities may make the exemption retroactive to the installation date and reimburse you for taxes already paid.

To qualify, you must apply through your local building department, which will certify that your equipment meets the state’s requirements for solar energy systems. The value of your solar equipment is typically calculated based on the normal cost of purchasing and installing the system. Check with your local government to confirm they have adopted this exemption ordinance, as implementation varies by locality.

Solar Renewable Energy Certificates (SRECs) in Virginia represent the environmental benefits of solar energy production. When your solar system generates electricity, you earn these certificates which can be sold through the PJM-EIS Generation Attribute Tracking System (GATS). One SREC is created for each megawatt-hour (1,000 kilowatt-hours) of electricity your solar panels produce.

Virginia’s mandatory Renewable Energy Portfolio Standard (RPS) program creates demand for these certificates, as utilities must procure a certain percentage of their electricity from renewable sources. While Virginia doesn’t have a separate SREC-specific market like some other states, homeowners can still register their solar system with PJM-EIS to receive a State Certification Number and sell their SRECs through a broker or aggregator. The value of SRECs varies based on market conditions, but this represents an additional revenue stream beyond electricity savings from your solar installation.

To qualify, your solar system must be located in Virginia or within the PJM region. Note that eligibility requirements change between two distinct periods: 2021-2024 and 2025 onward, with different rules for what qualifies as a Virginia-eligible REC in each period. Homeowners with systems under one megawatt receive special identification in the GATS system, as do low-income qualifying projects.

Virginia’s Net Metering program allows homeowners with solar panels to receive full credit for the excess electricity they generate and send back to the grid. Under this 1:1 net metering policy, for every kilowatt-hour (kWh) of solar energy you export to the grid, you receive a credit for one kWh on your electric bill. This essentially means your utility company acts like a free battery storage system, letting you build up credits when your system produces more than you need and use those credits when your system produces less.

The financial benefit varies by utility company, but all major Virginia utilities offer the same 1:1 credit rate. When you generate more electricity than you use in a month, the excess credits roll over to future months. However, what happens to unused credits at the end of the year differs by utility: Dominion Energy pays for remaining credits at their avoided cost rate (approximately 3-5 cents/kWh), Rappahannock Electric Co-op pays about 2.6 cents/kWh, while other utilities like Appalachian Power allow credits to roll over indefinitely or, in some cases like Northern Virginia Electric Co-op, credits expire after two years if unused.

To be eligible for net metering in Virginia, you must be a customer of a participating utility with a properly installed and inspected solar PV system. There are no specific income requirements or application deadlines, though system size is typically limited to what would offset your annual electricity consumption. Before installing solar, it’s important to check with your specific utility provider about their exact net metering policies, as the treatment of year-end excess credits varies significantly between providers and can impact your system’s long-term financial performance.