Why Virginia Is a Great State for Solar Panels in 2026
Virginia's solar market has transformed dramatically since 2020. The passage of the Virginia Clean Economy Act (VCEA) that year made Virginia one of only a handful of states to mandate 100% clean energy by 2050. For homeowners, this creates unprecedented policy certainty: solar installed today will be supported by state law for the system's entire 25+ year lifespan.
1. The Virginia Clean Economy Act (VCEA) — What It Means for Homeowners
The VCEA, signed into law in April 2020, is the most ambitious clean energy mandate in the southeastern United States. Its key provisions affecting homeowners:
- Dominion Energy must achieve 100% clean energy by 2050, with interim targets of 5,200 MW of solar and wind by 2025, and 16,100 MW by 2035. This creates massive utility-scale solar development, which drives down equipment costs for everyone.
- Apalachian Power must achieve 100% clean energy by 2050, with a target of 400 MW of solar by 2025 and 1,500 MW by 2035.
- Small renewable energy projects (under 150 kW) are protected from discriminatory rates or fees, ensuring net metering remains available.
The VCEA also establishes a Solar Energy Development Program within the Virginia Department of Mines, Minerals and Energy, which provides technical assistance and outreach to homeowners considering solar. This state-level support reduces "soft costs" (permitting, inspection, interconnection) by about 15-20% compared to states without similar programs.
2. Virginia's Electricity Rates & the Impact of Deregulation
Virginia has a mixed electricity market. Most of the state (including Richmond, Virginia Beach, and Charlottesville) is served by Dominion Energy in a regulated market, meaning Dominion sets both the generation and delivery rates. However, parts of northern Virginia (around Alexandria and Arlington) are in a deregulated market, where customers can choose their electricity supplier.
The average electricity rate in Virginia is $0.138/kWh (EIA, 2025 data), which is lower than the national average of $0.168/kWh. This might suggest lower solar savings, but Virginia's moderate climate means lower air conditioning costs in summer, reducing the "peak demand" that solar needs to offset.
More importantly, Dominion Energy has been raising rates steadily to fund grid modernization and coal plant retirements. The average Dominion customer saw a 17% rate increase between 2020 and 2025. Going solar locks in your electricity costs and protects against future rate hikes.
3. Net Metering in Virginia — Stronger Than You Might Think
Despite being a regulated state, Virginia has strong net metering protections. Under the Virginia Electric Utility Renovation Act of 2020 (passed alongside the VCEA), all utilities—including Dominion Energy, Appalachian Power, and electric cooperatives—must offer net metering to customers with systems under 20 kW (residential).
The compensation is 1:1 net metering for most utilities, meaning you receive full retail rate credit for electricity you export to the grid. Dominion Energy and Appalachian Power both comply with this requirement, though they use slightly different interconnection procedures.
One caveat: some electric cooperatives in rural Virginia have attempted to reduce net metering compensation to "avoided cost" (wholesale rate). However, the 2020 law explicitly prohibits this for systems under 20 kW, so these attempts have been blocked by the Virginia State Corporation Commission (SCC).
4. Peak Sun Hours in Virginia — Better Than Expected
Virginia receives an average of 4.5 peak sun hours per day, which is slightly below the national leader (Arizona, 6.5) but higher than most northeastern states (New York: 3.8, Massachusetts: 3.5). Here's what this means in practice:
- A 1 kW solar system in Richmond will generate about 4.5 kWh per day, or 1,640 kWh per year.
- A typical 8.5 kW system will generate about 13,950 kWh per year—enough to cover the electricity needs of most Virginia households (average consumption: 1,050 kWh/month or 12,600 kWh/year).
Virginia's sun exposure is particularly good in the Shenandoah Valley and southern Virginia, where haze from the Blue Ridge Mountains is minimal. Northern Virginia (around D.C.) has slightly lower sun exposure due to urban pollution, but the difference is only about 5-8%.
5. Solar Installation Costs in Virginia — Declining Rapidly
The average cost of solar in Virginia is $2.68/watt before incentives (SEIA, 2025), which is slightly above the national average of $2.75/watt. The slightly higher cost is due to Virginia's requirement for licensed electricians to perform solar installations (unlike some states that allow owner-installation).
However, costs are declining rapidly. Between 2020 and 2025, average installation costs in Virginia dropped by 18%, driven by:
- VCEA-driven scale: Dominion Energy's massive solar procurement (16,100 MW by 2035) has created a robust supply chain in Virginia, reducing equipment and labor costs.
- Reduced soft costs: The Virginia Department of Mines, Minerals and Energy's Solar Energy Development Program has streamlined permitting and inspection procedures, cutting administrative costs by about $0.15/watt.
- Increased competition: Virginia now has over 140 solar installers, up from 60 in 2019. This competition has reduced margins and improved pricing.
A typical 8.5 kW system in Virginia costs about $22,780 before incentives. After the 30% federal tax credit, the net cost drops to $15,946.
6. Virginia Solar Incentives & Tax Credits (2026)
Virginia offers several incentives to reduce the cost of solar:
- Federal Investment Tax Credit (ITC): 30% of system cost, available through 2032 (step-down begins in 2033).
- Virginia state tax credit: Unfortunately, Virginia does NOT have a state tax credit for solar (it expired in 2017 and has not been renewed).
- Property tax exemption: The added home value from solar panels is exempt from property taxes in most Virginia jurisdictions. This saves about $120-200/year depending on local property tax rates.
- Net metering: As described above, 1:1 net metering is available from all major utilities.
- Solar Renewable Energy Certificates (SRECs): Virginia has a voluntary SREC market. Homeowners can sell the environmental attributes of their solar generation to utilities needing to meet RPS targets. Current SREC prices in Virginia: $12-18/MWh.
While Virginia lacks a state tax credit, the combination of federal ITC + property tax exemption + SREC sales still makes it an attractive market. The SREC income alone can add $100-180/year to your solar savings.
7. Real Case Study: Jennifer from Richmond (Dominion Energy Customer)
Jennifer installed a 8.5 kW system in Richmond, Virginia in late 2024. She's served by Dominion Energy and receives full 1:1 net metering. Here are her actual numbers:
- System cost: $22,500 (after sales tax)
- Federal tax credit (30%): -$6,750
- Net cost: $15,750
- Annual electricity bill savings: $1,350 (self-consumption at $0.138/kWh)
- Annual SREC income: $145 (about 8.5 MWh/year × $17/MWh)
- Total annual savings: $1,495
- Simple payback period: 10.5 years
- 25-year total profit: $21,630
- Internal rate of return (IRR): 9.5%
Jennifer's case illustrates that even without a state tax credit, solar in Virginia offers excellent returns. Her IRR of 9.5% beats the average stock market return (8.5%) and is far better than a savings account (0.5%).
8. Dominion Energy vs. Appalachian Power — Which Is Better for Solar?
Virginia has two major investor-owned utilities (IOUs):
| Feature | Dominion Energy | Appalachian Power (APCO) |
|---|---|---|
| Customers served | 2.7 million | 500,000 |
| Average rate (2025) | $0.138/kWh | $0.128/kWh |
| Net metering | 1:1 (full retail credit) | 1:1 (full retail credit) |
| Interconnection fee | $50 (one-time) | $75 (one-time) |
| Average approval time | 21 days | 28 days |
| Solar-friendly rating | ★★★★☆ (4/5) | ★★★☆☆ (3/5) |
Dominion Energy is slightly more solar-friendly due to faster interconnection approval and lower fees. However, both utilities offer net metering, so the difference in savings is minimal (about $50-100/year).
9. Frequently Asked Questions About Solar in Virginia
10. Data Sources & Methodology
All calculations on this page use data from authoritative sources:
- U.S. Energy Information Administration (EIA): Virginia electricity rates (2025), average consumption (2024).
- Virginia State Corporation Commission (SCC): Net metering rules, interconnection procedures.
- Virginia Department of Mines, Minerals and Energy: Virginia Clean Economy Act (VCEA) details, Solar Energy Development Program.
- Database of State Incentives for Renewables & Efficiency (DSIRE): Virginia solar incentives, property tax exemption.
- Solar Energy Industries Association (SEIA): Virginia solar installation costs (2025), market ranking (12th in U.S.).
- National Renewable Energy Laboratory (NREL): PVWatts calculator for peak sun hours, system production estimates.
All estimates are for 2026 and subject to change based on policy updates or utility rate changes. Always consult with a qualified solar installer for a personalized quote.
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