The polarizable density embedding (PDE) model is a focused QM/QM fragment-based embedding model designed to model solvation effects on molecular properties. We extend the PDE model to include exchange and nonadditive exchange-correlation (for DFT) in the embedding potential in addition to the existing electrostatic, polarization, and nonelectrostatic effects already present. The resulting model, termed PDE-X, yields localized electronic excitation energies that accurately capture the range dependence of the solvent interaction and gives close agreement with full quantum mechanical (QM) results, even when using minimal QM regions. We show that the PDE-X embedding description consistently improves the accuracy of excitation energies for a diverse set of organic chromophores. The improved embedding description leads to systematic solvent effects that do not average out when applying configurational sampling.