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California Solar Incentives

Driving Solar Adoption in the Golden State

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

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.

Solar Energy System Property Tax Exclusion

One of the compelling incentives for adopting solar energy in California is the Solar Energy System Property Tax Exclusion. This valuable initiative ensures that homeowners who install residential solar panels or incorporate a solar panel system in their new construction will experience an increase in their property taxes at the end of the 2024 fiscal year.

A solar system has the added benefit of increasing your property’s value. Recent research by the Appraisal Institute reveals that California homes can see an increase in value of approximately $6,000 for each kilowatt of solar capacity installed.

The Property Tax Exclusion is designed as a “new construction exclusion” and is not considered a tax exemption. Therefore, opting for a solar PV system will not lead to higher property tax payments or alter the assessment of your existing property. Your tax liability remains unaffected, making solar installation a financially favorable choice.

By taking advantage of the California Solar Energy System Property Tax Exclusion, homeowners can enhance their property’s value, contribute to a sustainable environment, and enjoy long-term savings on property taxes, further incentivizing the switch to solar energy.

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



Sacramento Municipal Utility District (SMUD) Stipend

SMUD customers


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


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


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.

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