The use of solar panels in Virginia is becoming very popular. With policies aimed at transitioning the state to 100% renewable energy by 2050 and a climate suited for productive solar installations, both homeowners and businesses across Virginia have a tremendous opportunity to invest in solar panels.
This guide will cover everything you need to know about installing solar panels in Virginia, including:
Whether you're looking to reduce energy bills, pay fewer taxes, or invest in a sustainable future, solar energy can pay dividends for decades to come in Virginia. Let's examine the key considerations for making the switch to solar power.
With plenty of sunshine and generous solar incentives, the potential for solar in Virginia is great.
That’s exactly why Virginia is ranked the ninth-best solar state in SEIA’s U.S. Solar Market Insight Report. Over 4,286 MW of solar is installed in the state, equivalent to 476,108 homes supplied by solar energy.
With electric rates rising steadily, combined with declining solar installation costs and generous solar incentives in Virginia, solar is a worthwhile investment for many of Virginia’s businesses, farmers, and homeowners.
If you’re still relatively new to solar panels, getting started may seem like an overwhelming process. Keep reading below to learn more about how to get started and move forward with confidence.
There are a few key steps to get started with a solar panel installation in Virginia.
The cost of installing solar panels in Virginia will vary depending on several factors like the system size, type of installation, installation location, the selected equipment, and utility interconnection costs.
Virginia homeowners looking to invest in solar energy can anticipate a cost of $3 to $5 per watt when opting to partner with a reputable installation company. A homeowner with an average monthly electric bill of $120 per month can expect to invest around $40,080 upfront, with a net cost of $28,056 after factoring in the 30% federal tax credit.
Virginia businesses and farmers should budget around $2 to $3 per watt for a solar panel installation. For a business with an average monthly electricity bill of $1,200, the initial cost before incentives would be approximately $273,300. However, capitalizing on the tax savings would bring the net cost down to $126,845.
Pro Tool: Try our solar calculator for a quick estimate of your installation cost and savings.
There are several options available in Virginia for paying for your solar panel system.
Purchasing the system outright with cash or a loan offers the best return on investment in most cases because you will receive all the incentives (tax credit, SRECS, and electric savings) and own a cost-reducing asset.
If you want to avoid the upfront cost of a solar installation, third-party financing, such as solar leases and power purchase agreements (PPAs), is a possibility. These options allow you to pay little or no upfront cost in exchange for monthly payments. However, the third party will retain ownership of the system and receive all the available incentives.
There are several solar incentives available for Virginia businesses and homeowners.
For homeowners, the 30% federal tax credit and Solar Renewable Energy Credits (SRECs) are the main two incentives. The federal tax credit can be used to offset your owed taxes - this is money saved in year one.
SRECs are a lesser-known benefit available for homeowners and businesses. They pay you for the kilowatt-hours produced by your system. For every 1,000 kWh produced by your solar panels, you’ll receive 1 SREC. In May 2024, VA SRECs were selling for $35. This price can greatly fluctuate depending on market conditions.
The tax benefits for businesses are much greater than those available for residential projects. Businesses that install a system under 1 MW AC can capitalize on the federal tax credit, which can grow from 30% to 60% if specific criteria are met. However, at this time, most businesses will only qualify for 30%. For systems 1 MW AC and larger, the tax credit begins at 6% and can increase to 70% upon meeting requirements for prevailing wages, domestic content, and system location.
Virginia businesses can also take advantage of depreciation, with 60% of the federal depreciation accelerated to year one. The remaining 40%, along with the state depreciation, will follow the five-year MACRS schedule.
Many of Virginia’s rural businesses and farmers may also qualify for a generous USDA grant.
Solar panel systems pay for themselves through immediate tax savings and long-term energy savings. With the tax credit available for use in the initial year to reduce your federal tax liabilities and accelerated depreciation benefits for businesses, a substantial portion of the solar panel investment's returns are front-loaded.
Virginia homeowners can expect an average payback period of 16 years on their solar panels, with an ROI of 9.55%.
Businesses in Virginia that choose to invest in solar panels can expect to recoup their initial investment in around 6 years, with a solid 20% return on investment.
Solar panels typically have a lifespan of 25 to 30 years, backed by a warranty for the same duration. This means homeowners can enjoy over a decade of free electricity, while businesses can benefit for more than two decades.
Ultimately, you must weigh the expected lifespan against your tax savings, projected energy savings, and environmental impact to determine if a solar panel system is the right investment for you. While solar may be a valuable investment for many Virginia residents, it’s not right for everyone.
* Sources: Average Annual Stock Market Return and Average Annual Roth IRA Return
Paradise Energy has helped hundreds of businesses, farmers, and homeowners across the Commonwealth invest in solar. For Virginia residents, solar presents an excellent investment opportunity, offering long-term control over a fixed cost and immediate tax savings.
Here’s what your neighbors are saying about their solar investment.
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Visit our project gallery to view other solar installations in Virginia.
Virginia's strong solar potential, lucrative incentives, favorable policies, and long-term energy savings combine to make a compelling case that going solar is a wise investment for many homeowners, farmers, and other businesses across the Commonwealth.
If you would like to learn more about how solar could help you, click the button to get started. Our team of solar consultants will answer your questions and provide a quote with all the information you need to make an informed investment decision.
If you’re not ready for a quote, visit our learning center for valuable blogs, videos, and guides that will help you on your solar journey.