California Solar Incentives
California has long been a frontrunner in adopting solar energy, boasting a rich history of supporting and encouraging solar investments. With numerous incentives and programs in place, the state has become the leading solar producer in the U.S., generating a remarkable 33% of the nation’s solar supply. This article will explore the various California solar incentives that make transitioning to solar power an attractive option for homeowners and businesses.
California Solar Incentives Statewide
From what we learned about state solar incentives, California has the following programs to help people save money installing solar panels.
California used to have a lot of solar reward programmes, but as of 2023, most of them were over. We’ve learned that the solar property tax exclusion is the only state-level benefit that will still work after 2024. There are two incentives: the Self-Generating Reward programme covers energy storage but not solar panels, and the Disadvantaged Communities—Single-family Solar Homes (DAC-SASH) reward is only for specific communities.
One-family Solar Homes for Disadvantaged Communities
$3 per watt of solar power ($3,000 per kilowatt) is the value of the incentive.
How often: One-time use
Low-income households that meet specific standards can get solar incentives through the DAC-SASH program. In California, installing solar panels costs about $2.51 per watt, but this scheme gives you $3 per watt to do it. The DAC-SASH incentive can pay for most solar panel setups in full.
Who Can Apply?
Households that meet the following criteria can get the DAC-SASH incentive:
The home is in one of the 25 poorest neighbourhoods in California, as found by the California Neighborhoods Environmental Health Screening Tool.
Pacific Gas & Electric (PG&E), San Diego Gas & Electric (SDG&E), or Southern California Edison (SCE) serves the homeowner.
The applicant’s family needs to make more than what the CARE Income Guidelines say they should. From June 2023 to May 2024, the most a one- or two-person household can earn is $39,440. The cap goes up for larger households.
How to Fill Out
GRID Alternatives in California runs the DAC-SASH program as part of its Energy for All scheme. You can apply online right away. You can still use this service until 2030.
Self-Generation Incentive Program (SGIP): Small Residential Storage
Value of the incentive: $0.15 per watt-hour (Wh) of battery storage
How often: One-time use
California’s Self-Generation Incentive Program (SGIP) gives rebates for energy storage devices. People can put in battery banks and solar panels to make a power source that works all the time, even at night, on cloudy days, or when the power goes out. You don’t have to combine your battery with solar panels to get the SGIP, but state officials say you should. California has some of the most expensive electricity rates in the country, so it can get pricey to charge batteries without solar panels.
SGIP’s program budget is broken up into steps, and the reward rate goes down as the program budget goes up. As of December 2023, the SGIP dashboard showed that small-scale domestic batteries could get an incentive rate of $0.15 per watt-hour. For example, a $2,025 reward could be given for a Tesla Powerwall that can store 13.5 kWh (or 13,500 Wh).
Who Can Apply?
If you want to get the SGIP energy storage incentive, you must have an account with one of these power companies:
Southern California Gas (SoCalGas) PG&E SDG&E SCE What Are They?
The SGIP bonus is open to homeowners and renters (as long as the landlord agrees).
How to Apply?
SGIP gives rewards to people who store energy through approved installers. You can use an online tool for the program to find and get in touch with approved battery installers in your area.
SGIP: Residential Storage Equity
Value of the incentive: $0.85 per watt-hour of battery storage
How often: One-time use
There is a category in the SGIP called “Residential Storage Equity” for low-income households, people who are medically vulnerable, and towns that are at risk of fire. The reward rate for this group is higher, at $0.85 per watt-hour. This means a 13,500-Wh battery, like the Tesla Powerwall, could get a $11,475 rebate.
Who Can Apply?
The conditions for the Residential Storage Equity incentive are the same as those for the SGIP incentive. But it’s only available to people who need energy, like those who:
Families with low income
Medically at-risk homes
Communities that could lose power because of wildfires
The SGIP residential brochure goes into great depth about all the types of homes that can get the higher incentive of $0.85 per watt-hour. The California Office of Environmental Health Hazard Assessment (OEHHA) also made a map of “disadvantaged communities” that you can look at to see if your area makes you eligible.
How to Fill Out
For the Residential Storage Equity scheme, you can only get it through approved battery installers, just like the regular SGIP incentive. For more information, you can get in touch with the school online.
Solar Energy System Property Tax Exclusion
No property tax is due on the value of a solar energy device.
Repeatedly: Always
California doesn’t charge property taxes on solar energy systems that are put in before 2025. This includes not just solar panels but also lithium-ion batteries and a lot of different kinds of sun heating systems.
Let’s say you own a $700,000 house in California. If the rate is 0.7%, your yearly property tax bill would be $4,900. The value of your home and its property taxes will stay the same if you spend $30,000 on a solar panel and battery setup. If not for the tax break, a $30,000 rise in home value would mean a $210 rise in property taxes.
Who Can Apply?
If you build a solar energy system before January 2025, you can get a property tax break. Energy storage systems are also qualified if they are used with solar panels.
There is no tax break for solar water heaters for pools or hot tubs, passive energy, or wind energy systems.
People who live on their land and homebuilders or owners who plan to sell their property can get a tax break.
How to Fill Out
The tax break for solar energy is applied automatically when you get a building permit.
Federal Solar Investment Tax Credits (ITC)
When considering solar energy for your home or business in California, the Federal Solar Investment Tax Credit (ITC) stands out as a valuable incentive to help you save significantly on installation costs. This federal tax credit allows you to claim a generous 30% of your total solar installation expenses on your federal taxes, effectively reducing the amount you owe in taxes as a credit.
The best part? There’s no cap on the amount you can claim, making the ITC an attractive option for covering a substantial portion of your solar PV system’s installation costs. This incentive is set to remain at 30% until 2032, offering consistent support for those transitioning to solar energy. After that, the credit will gradually decrease to 26% in 2033 and 22% in 2034. However, it’s essential to note that unless renewed by the federal government, the ITC will expire by 2035.
To benefit from this tax credit, you’ll need to claim it on your federal tax return for the year you install the solar system. Download and complete IRS Form 5695 for residential energy credits to apply for the ITC. If the value of your tax credit exceeds the amount you owe in federal taxes, the remaining balance can be carried forward for up to five years, ensuring you use this chance to save money to the fullest.
Embrace the California Solar Incentives and make your solar journey cost-effective and eco-friendly. Take advantage of the Federal Solar Investment Tax Credit and enjoy substantial savings while contributing to a greener, sustainable future for the Golden State
California Solar Rebates and Tax Credits
While the California Solar Initiative (CSI) closed in 2016, other valuable incentives remain. The Self-Generation Incentive Program (SGIP) offers rebates for solar battery installations alongside rooftop panels tailored to battery storage capacity and utility providers. Additionally, the Single-Family Affordable Solar Homes (SASH) program provides solar incentives specifically for single-family homes, facilitating wider solar adoption.
California Solar Property Tax Exclusion
Under the Active Solar Energy Exclusion, new solar panel installations are excluded from property tax assessments until January 1, 2025. This exclusion, which applies to new constructions, helps lower the financial impact of installing solar panels on residential properties, driving further interest in renewable energy.
Local Incentives
California also offers localized solar incentives, mainly targeting low-income communities. Programs like SASH aim to provide skill acquisition training in solar energy to residents in disadvantaged areas, fostering both clean energy adoption and job opportunities.
Net Metering in California - NEM 2.0 and NEM 3.0
Net Energy Metering (NEM) has been a crucial incentive for solar panel owners, allowing them to earn energy bill credits for surplus electricity sent back to the grid. However, in California, a significant change occurred on April 15, 2023, with the transition from NEM 2.0 to NEM 3.0 program impacting solar savings for homeowners.
Under the NEM 3.0 program, the structure is technically called “net billing.” Instead of receiving credits at the total retail rate, customers are credited at the avoided-cost rate for excess energy. The avoided-cost rate represents what the utility would pay to produce that energy, which is substantially lower than the total retail rate. Consequently, homeowners will save less on energy bills than in the previous NEM 2.0 program.
Customers who had asked their utility company for net metering by midnight on April 14, 2023, are grandfathered into the full-rate NEM 2.0 program. However, all other customers are now eligible for the NEM 3.0 program.
To enhance savings under the new NEM 3.0 solar program, homeowners can consider investing in a solar battery. Solar batteries store excess solar energy generated during the day, allowing its use during nighttime, cloudy days, or power outages. By utilizing stored solar energy, homeowners can avoid higher electricity rates during peak hours, making solar energy storage a viable alternative to traditional net metering.
The transition to NEM 3.0 significantly changes the payback period for solar panel systems in California. While the savings might be less under this new program, solar energy storage through batteries presents an opportunity to optimize electricity consumption and offset the impact of the policy change on solar savings.
How To Enroll in Net Metering
A Step-by-Step Guide to Enroll in Net Metering (NEM 3.0)
Enrolling in net metering (NEM 3.0) is a straightforward process your solar installer facilitates. Follow these steps to start earning from the net billing tariff:
Step 1: Interconnection Application
Your solar installer will take care of the paperwork and submit an interconnection application to your utility company on your behalf. This application ensures your solar system can connect seamlessly to the grid.
Step 2: Approval for Interconnection
Once your interconnection application is processed and approved by the utility company, your solar installer can proceed with the installation process. This step ensures your solar system complies with all safety and regulatory requirements.
Step 3: Connecting to the Grid
With the approval, your solar installer will connect your solar system to the electricity grid. This connection allows excess solar energy to flow back to the grid, earning you energy bill credits.
Step 4: Earning from NEM 3.0
Once your solar system is connected, you can benefit from the net billing tariff (NEM 3.0). Under this program, you will receive credits for the excess energy your panels generate and feed back to the grid.
Following these simple steps, you can effortlessly enroll in net metering and make the most of NEM 3.0, turning your solar investment into a rewarding and sustainable energy solution.
Local Solar Incentives in California: Boosting Your Solar Savings
In addition to California’s federal and statewide solar incentives, residents can maximize their solar savings with various local incentives. These localized programs aim to encourage the adoption of solar energy and promote sustainability at the community level. In this article, we present a comprehensive chart of some notable local solar incentives available to residents across different regions in California.
Local California Solar Incentive | Who’s Eligible? | Estimated Savings | Description | Frequency |
Sacramento Municipal Utility District (SMUD) Stipend | SMUD customers | $150 | Customers can get a $150 credit from SMUD to help pay for and set up solar system meter cabinets and tools. | One-time stipend |
Rancho Mirage Energy Authority (RMEA) Rebate | RMEA customers | $500 | RMEA offers a $500 rebate to its customers for installing new solar panels or expanding existing systems. | One-time rebate |
GreenFinanceSF (San Francisco PACE Financing) | San Francisco residents | Varies | This program enables residents to finance solar panels through property taxes, offering convenient payments and lower interest rates. | Even after your solar loan is paid off |
San Diego Green Building Program | San Diego residents | Up to 7.5% of permit fees | San Diego residents can reduce permit fees by up to 7.5% for home renovations involving solar panels or energy efficiency upgrades. | One-time fee reduction |
How to Claim Local Incentives
Taking advantage of these local solar incentives is a straightforward process. Your solar installer will guide you through the application process for federal, state, and local renewable energy incentives you qualify for. Visit the websites of your city’s or county’s utilities and government to learn about other solar benefits available in your area
Is Solar Worth It in California?
Despite the net metering program changes, going solar in California remains a financially and environmentally viable option. Solar energy systems can lead to significant electricity savings and increased energy independence. By evaluating individual circumstances and consulting solar professionals, homeowners can determine the potential benefits of adopting solar energy.
Choosing the Best California Solar Panel Company
With numerous solar energy companies like Solar Earth INC in California, homeowners should conduct thorough research and seek licensed providers with a track record of customer satisfaction, affordability, and long-term maintenance. Seeking recommendations from friends and family who have experienced positive outcomes with PV contractors can be invaluable.
Final Words
California’s commitment to solar incentives has propelled it to the forefront of solar energy production in the U.S. Federal tax credits, state rebates, property tax exclusions, and net metering programs all contribute to making solar power an attractive and sustainable option for California residents. While NEM 3.0 may reduce some financial incentives, the long-term benefits of going solar outweigh the initial costs.
Contact Solar Earth Inc
Reach out to us for all your solar energy needs! Whether you have questions about solar installation, financing options, or available incentives, our team at Solar Earth Inc. is here to assist you. Get in touch today and take the first step towards a cleaner and more sustainable energy future.