Fredericksburg, VA

Virginia’s Solar Property Tax Exemption allows homeowners with qualifying solar energy systems to reduce their property taxes. Under this state program, solar equipment is classified as a separate property class, and local governments can choose to exempt this equipment from property taxation either wholly or partially.

For residential systems up to 25 kilowatts, the equipment is completely exempt from both state and local taxation. For larger systems, the tax benefit is determined by applying the local tax rate to the value of your solar equipment, then subtracting that amount from your property tax bill. This exemption lasts for at least five years once approved. If you install solar and obtain certification within one year of installation, some localities may make the exemption retroactive to your installation date. 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.

Solar Renewable Energy Certificates (SRECs) in Virginia represent the environmental benefits of solar energy production. When your solar system generates electricity, you earn one SREC for every megawatt-hour (1,000 kWh) produced. These certificates can be sold through the PJM Generation Attribute Tracking System (GATS) marketplace, providing additional income beyond your electricity savings.

While Virginia doesn’t have a dedicated SREC market like some states, solar system owners can still register their SRECs through PJM-EIS GATS and sell them through brokers or aggregators. The value of SRECs varies based on market conditions, but they represent an additional financial benefit for solar homeowners. Virginia’s Renewable Portfolio Standard (RPS) program, which requires utilities to source increasing amounts of renewable energy, helps create demand for these certificates.

To participate, homeowners must register their solar system with PJM-EIS GATS to receive a State Certification Number. This can be done directly or through a broker/aggregator who manages the process for you. The eligibility requirements for Virginia-qualifying RECs changed in 2021 when the state transitioned from a voluntary to mandatory RPS program, with different criteria for 2021-2024 and 2025 onward. For the most current requirements, homeowners should consult the Virginia State Corporation Commission website.

Virginia’s Net Metering program allows homeowners with solar panels to receive credit for the excess electricity they generate and send back to the grid. When your solar system produces more electricity than your home uses, your utility meter essentially runs backward, providing you with a credit at the full retail rate (1:1) for each kilowatt-hour (kWh) of excess energy. These credits can then offset the cost of electricity you draw from the grid when your solar panels aren’t producing enough power, such as at night or on cloudy days.

All major Virginia utilities offer net metering, including Dominion Energy, Appalachian Power Company, Northern Virginia Electric Co (NOVEC), Rappahannock Electric Co (REC), Shenandoah Valley Electric Cooperative, and Danville Utilities. Each utility allows monthly carryover of unused credits, but their policies differ regarding what happens to excess credits at the end of a 12-month period. Depending on your utility, excess annual credits may roll over indefinitely, be paid out at a lower avoided cost rate (typically 2.6-5 cents/kWh), or potentially be forfeited after a certain period.

To be eligible for net metering in Virginia, you must be a customer of one of the participating utilities and have a properly installed solar system that meets all local electrical codes and utility interconnection requirements. There is no specific deadline to enroll in net metering, but it’s important to apply for interconnection with your utility before or during your solar installation process.

When considering solar with net metering, be aware that the specific treatment of excess annual credits varies significantly between utilities. For example, NOVEC customers may forfeit unused credits after two years, while Appalachian Power customers can roll over credits indefinitely. Additionally, the program’s structure makes it most financially beneficial to size your solar system to closely match your annual electricity usage rather than significantly overproducing. This ensures you maximize the value of your solar investment while taking full advantage of Virginia’s net metering benefits.