California Solar Incentives and Rebates Guide

California Incentives for Solar Panels

Self-Generation Incentive Program

The California Public Utilities Commission (CPUC) Self-Generation Incentive Program (SGIP) is available to residential and non-residential consumers
to help them save money on energy storage technology, like a solar battery storage system that can keep the power on
during a widespread outage. The SGIP applies to other types of distributed energy resources as well, including wind
turbines, fuel cells, and waste heat to power technologies.

Depending on the rebate category—either Equity or Equity Resiliency—that the customer is eligible for, the rebate covers
either about 85% of the cost of a solar battery and storage system or nearly 100% of the cost.

According to the CPUC, you are eligible to receive a rebate under the Equity category if you meet just one of these
criteria:

• You live in a single-family home and your home is subject to resale restrictions.
• You live in a single-family home and have already participated in or have reserved incentives in the California Solar Initiative’s Single-family Affordable Solar Homes (SASH) or Disadvantaged Communities – Single-family Solar
  Homes (DAC-SASH) program.
• You live in an apartment that is considered low-income housing and includes at least five rental units, and you
  must either be located in a disadvantaged community or at least 80% of the apartment building residents have incomes
  at or below 60% area median income.
• You live in an apartment and your property has already participated in the Solar on Multifamily Affordable Housing Program (SOMAH) or the Multifamily Affordable Solar Housing Program (MASH).
• You live anywhere in California Indian Country. There are currently 100 separate reservations throughout
  California that adhere to different jurisdictions.

You are eligible to receive a rebate under the Equity Resiliency category if you meet the following criteria:

• You are located in (a.) a high-fire threat district, or (b.) your electricity was shut off during two or more Public Safety Power Shutoff events before the application date.
• You are
  • Eligible for the equity budget, or you are living anywhere in the investor-owned utility service territory but
    must reside in a qualifying multi-family residential deed-restricted building or single-family home that is
    subject to resale restrictions or presumed resale restrictions.
  • Eligible for the state’s medical baseline program.
  • Someone with a serious illness or condition that is life-threatening if electricity is disconnected.
  • Someone who has received an “incentive reserved” status in the SASH, DAC-SASH, MASH, or SOMAH programs.
  • Living in a household reliant on electric pump wells for water supplies.

Note: The value of the rebate varies according to solar battery storage capacity and the local
utility company.

PACE

Property Assessed Clean Energy (PACE) is another state-level program offered by the Department of Financial Protection and Innovation. This program allows solar customers to pay for energy-efficient solar systems through their property taxes. This is not a free solar panel installation program; homeowners need to pay for a PACE contract. This loan is tied to your property tax bill and is transferable if you are eventually looking to sell your property. In addition to the obvious clean energy benefits, such as a reduced carbon footprint, the PACE program is thought to have financial benefits as it seeks to help stimulate economic growth by creating new job opportunities. You do need to be a homeowner to qualify for this program.

Agricultural Incentive

Another California solar power incentive, the Partial Sales and Use Tax Exemption for Agricultural Solar Power Facilities, is offered within the agricultural sector. This program requires that at least half of the electricity produced by the solar system must be used to power agricultural equipment. With over a third of the United States’ vegetables and almost 75% of the country’s fruits and nuts grown in California, agricultural incentives are valued and welcome. The incentive can include leased equipment; the exemption only applies to state taxes though (not sales or local governmental taxes). The state of California includes more information on how you can get your farm solar equipment to qualify.

Low-Income Customers

If you are a homeowner living in one of the top 25% most disadvantaged communities in California, you may qualify for the DAC-SASH program. There are income guidelines and residents must be customers of certain electric providers. Part of this program includes the opportunity to learn about sustainability-focused jobs and take advantage of job-training opportunities within the solar industry.

Property Tax Incentives

Solar advocates may be curious as to the tax impacts of home solar installation. Thanks to California’s Active Solar Energy Tax Exclusion, new residential solar installations will not cause an increase or a decrease in the assessment of your existing home.

Another property tax exclusion includes the Property Tax Exclusion for Solar Energy Systems and Solar Plus Storage System. This property tax exclusion applies to certain types of solar energy systems installed up until the end of 2024.

Local Incentives

Beyond state-level incentives, California includes local, city-wide incentives. For example, the city of Santa Clara Water & Sewer Utility offers a local incentive program for Santa Clara residents’ solar projects called the Santa Clara Water & Sewer – Solar Water Heating Program. It is a leasing program where the Santa Clara Water & Sewer Utilities Department supplies, installs, and maintains solar water heating systems for residents and businesses. For both solar panels and pool heating systems, the installation cost is $4,128 plus $242 per solar panel or solar system used.

Other California solar incentives include county-level benefits such as 7.5% reduction in plan check and building permit fees for San Diego County. Additionally, there’s the CSI-Thermal Program available to customers of PG&E, SCE, Southern California Gas Company, and San Diego Gas & Electric, which provides incentives for solar water heating and other solar thermal technologies. You can find which California solar incentive would best serve your local area depending on where you live.

Federal Incentives

Federal Solar Tax Credit

Part of the Inflation Reduction Act, the Federal Solar Tax Credit for Solar Photovoltaics, or the Residential Clean Energy Credit, is a federal-level tax incentive program that allows homeowners to deduct up to 30% of the cost of their solar energy system from their federal taxes. There are various stipulations that must be met in order to benefit from the federal tax credit program, also known as the Solar Investment Tax Credit (ITC).

For example, your solar system must be installed between January 1, 2017, and December 31, 2034; you must own the solar system; it must be at a residence of yours that is located within the United States; and the equipment must be new. The federal tax credits can only be used for original solar installation.

Net Energy Metering/Equivalent Program and Solar Buyback Plans

Some other common terms within the solar energy community include net metering, solar buyback plans, and Solar Renewable Energy Certificates (SRECs). These incentives are other options solar panel owners can take advantage of to help offset costs.

Net metering is the process of receiving credit towards your electric bill for any excess solar energy generated from your panels. On sunny days, homes will often generate more energy from solar storage than needed. When the solar panel system generates more energy than the home uses, users are charged 0% for that production period. When users consume electricity at night, however, they are still charged at their regular rate, but the credit from earlier that day would be applied to their account.

Solar buyback programs are another way you can get compensated for excess energy use: you can sell excess energy back to your utility company for credit or cash. This method is similar to net metering in that you will still financially benefit from energy you don’t use.

SRECs are offered at the state level and represent the amount of electricity generated by solar panels per megawatt-hour. Solar owners can sell them to their utility company or SREC brokers and receive cash back rather than a mere credit on electric accounts.

Switching to solar energy panels promises sufficient returns on your investment and lower costs in the long run. But when can you expect to actually see payback? Under the Net Energy Metering program (NEM 3.0) solar billing policy in California, residents can expect to see payback anywhere from day 1 to eight or even 10 years. Although years may seem like a long time, the overall lifetime savings are worth it. For example, if you buy a solar panel system with cash, you can expect over $65,000 in lifetime savings, but you might not see those savings until year seven. If, however, you decide on a 10+ year solar loan to finance the cost to install solar panels, you may start seeing savings sooner, with less of an overall lifetime savings. The policy only applies to new solar installations after April 15, 2024.

NEM 3.0 Return on Investment

Source: https://www.utilitydive.com/news/california-rooftop-solar-nem-30-outlook/702498/

Regardless of when you start seeing your savings—and how much you save overall—there are a few different ways to help reduce costs. For example, you can push your electric consumption peak hours to align with your solar production peak hours. If you work from home, that means engaging in your daily activities or chores that may need power and lining them up when your home is most likely to produce solar energy. Another way to help start seeing savings faster is to position your solar panels on roofs that face southwest. This will help move your peak production hours to the evening.