First, tax credits and rebates are only open to those households that own their systems and equipment. So, if you go the lease or PPA route, you can’t take advantage of them.

The Database of State Incentives for Renewables and Efficiency, or DSIRE  (https://www.dsireusa.org/ ) allows you to search for incentives by your ZIP Code and apply filters for things like solar, batteries, and EV chargers to help find all the incentives for which you’re eligible.  

Websites like Rewiring America also provide an online resource for finding incentives for solar, batteries, and further home electrification, including electric heat pumps, heat pump water heaters, and more. Your Enphase installer will also be well-versed in the incentives offered for your state and local region.

But let’s talk about some of these incentives.

Tax credits: Generally, solar tax credits are open to anyone who buys a system (including with a loan) and are usually offered at the federal level, though some states do offer tax credits. The credits help reduce your federal or state tax burden (depending on the source of the credit) for the year you install your system. Again, everyone is eligible for a federal tax credit, but only people in states that offer credits are eligible for those at the state level.

The biggest tax incentive is the 30% federal solar investment tax credit (ITC) from the 2022 Inflation Reduction Act. This is a direct reduction of federal taxes you’ll pay the year you purchase your system.  

For instance, if your system costs $20,000, you’d get a federal tax credit of $6,000, making the actual cost of your system only $14,000 once you file your taxes and you receive the tax credit. However, to take full advantage of the credit, you need to have a federal income tax burden of at least $6,000 for the year. Check with a tax professional to see if you can take full advantage of the federal credit or if you can roll over some of the credit to the following year if your tax burden is less than the amount of the 30% credit. This 30% credit also applies to solar batteries and any other component of your solar energy system.  

To claim the credit, you must file IRS Form 5695 with your 1040 return.

Sales tax exemptions: Some states will waive the sales taxes on solar energy systems.

Performance-Based Incentives (PBI): Some states and utilities will pay you based on the amount of electricity your solar system generates.

Property Tax Exemptions: Installing solar can increase the value of your home, but some states allow property tax exemptions on that added value. And while that doesn’t bring the actual cost of a system down, it does save you money every year on your property taxes.

Rebates: Many states and utilities provide incentives like rebates (and tax credits) for solar and for installing an EV charger at your home. We’ll go into more specifics on EV chargers below. These are direct payments back to you that help reduce the cost of your system components. 

As mentioned earlier, Enphase batteries are usually eligible for the 30% federal ITC. But more and more states are also offering rebates on battery storage, either as upfront rebates or performance-based incentives.

For instance, California’s Self-Generation Incentive Program (SGIP) provides a dollar amount per kilowatt of storage installed. The rebate amount and whether you qualify can vary based on your income level and whether you live in a more wildfire-prone area. So, if you’re in California, check with your installer to see how much you’re eligible for.

New York has a program similar to California’s SGIP, and Massachusetts offers the SMART program, which encourages the addition of storage to solar systems.

In addition, many utilities are offering their own incentives. For instance, customers of Eversource and National Grid in the Northeast can participate in the Connected Solutions program, a demand response-style incentive that pays you annually for access to the stored energy in your battery to help stabilize the grid. These incentives can be significant, covering part or potentially all of the battery’s price over time. Programs typically include provisions that ensure the utility won’t draw power from your battery if there’s a potential for an outage. So, you’ll still have power for your home if your battery is configured for backup.

Consult with your solar installer about potential storage incentives when designing and estimating your system costs. 

Many utilities offer solar production-related incentives as well as incentives for access to battery storage that can help shorten your system payback period and improve your return on investment over time. Here are three common programs:

SRECs: These are offered by some utilities in states that require a specific percentage of their electricity to come from renewable energy sources. Generally, you earn a certificate for every megawatt (1,000 kilowatts) your system produces. Your utility then purchases that certificate from you, most likely through an aggregator or broker. The amount per certificate depends on the state and your utility, and the per-megawatt payout varies widely. For instance, in 2023, Ohio was paying about $5 per certificate, but Washington, D.C., was paying around $480.

Check your utility’s website to find out if they offer SRECs—or a different incentive, like the one we discuss next.

Net Energy Metering (NEM): NEM pays you for exporting your excess solar energy production back to the grid. As we noted earlier, NEM isn’t a new concept. Minnesota was the first state to have NEM, back in 1983, and nearly every state mandates some form of net metering.

California’s NEM program is maybe the best known, partly because California has long been the nation’s largest solar market, and partly because it’s been in the news lately because of recent changes in the program.

California’s NEM program started in 1995 with NEM 1.0. It featured significant incentives to encourage people to add solar to their homes, thus reducing stress on the electrical grid. It included no utility interconnection charges to tie to the grid and paid the retail rate for excess energy returned to the grid, about $0.25/kWh, on average. If you had a 10 kW solar system, this translated into over $240/month in savings and a payback time of just 6 to 8 years for the system.

NEM 1.0 proved to be popular—maybe a bit too popular. As a result, the California Public Utilities Commission (CPUC) rolled out NEM 2.0 for customers applying for NEM after July 1, 2017. It instituted a one-time interconnection fee of $75 and monthly connection fees ranging from $10 to $20. (NEM 1.0 only had a $1 monthly connection fee.) It also added non-bypassable charges of $0.02/kWh if the household didn’t use enough grid power to cover their account. On the positive side, it preserved the retail rate for excess production that returned to the grid. So even with the connection fees and non-bypassable charges, the payback time for a solar-only system remained in the 6 to 8 year range.

NEM 2.0 also succeeded and then became a victim of its own success. Which brought California NEM 3.0 in April 2023 and the introduction of a Net Billing Tariff (NBT). There were two key new features of NEM 3.0:

NBT: Rather than being credited for excess energy at the retail rate (or what you’d pay for grid energy), you get paid based on the utility’s avoided costs (at the wholesale rate, your utility would pay to an outside source for that power).

Time-of-Use (TOU) rate structure: When using grid power, NEM 3.0 follows a new TOU structure that encourages homeowners to shift major power consumption (like EV charging) to off-peak, low-demand hours. These are usually overnight and into early or mid-afternoon. TOU rates help spread out demand on the grid and balance loads to make it more stable.  

People who had their systems installed prior to April 2023 are grandfathered into their current NEM (1.0 or 2.0) for the duration of their original net metering agreement (20 years).

So, what does NEM 3.0 mean for you as a new Enphase solar customer in California?

With utilities adopting the avoided costs calculator, it means that what you get credited on your bill can vary month to month based on the time of day, day of the week, season, and more. But generally, the amount you’re credited could drop as much as 60% to 80% compared to the NEM 2.0 bill credits. As a result, it could also mean a longer payback period, in the 8- to 12-year range depending on the size and composition of your system, as well as how you pay for it.

To help transition from NEM 2.0 to NEM 3.0, residential customers of PG&E, SDG&E, or SCE may be eligible for slightly higher export rates for the first five years of net billing (through April 2028) through the ACC Plus program. ACC Plus allows a small increase (less than $0.01 per kWh) to the value of exports, including higher increases for low-income customers.

What NEM 3.0 really does is incentivize you (and most solar customers) to include battery storage with your system as a way to manage shifting costs based on the time of day and give you more control over your energy sources once the sun goes down. Here’s how:

Cost savings: Solar batteries can help power your home with stored energy during periods of peak local demand and higher grid rates. For example, using your solar battery reserve to run essential appliances once your solar stops generating power (right before sundown) helps you avoid peak electricity prices in most TOU rate structures (usually from about 3 p.m. till midnight). Conveniently, the seasonality of solar production and peak rates align in a way that can help you significantly reduce your annual electricity costs when you store and use excess production onsite.  

Additional credits: When your area has peak energy demand, you can set your batteries to export your stored excess solar power to the grid to receive the highest possible bill credits. To obtain the most value, store the excess power during periods of low energy demand and send it to the grid when export rates are higher.

Regardless of which NEM version you’re on, adding batteries configured for backup can also help with your energy resilience by protecting you from grid outages, so you have the power to keep the essentials going.

Virtual Power Plant (VPP) programs: We already discussed VPPs above in our Grid Services section. But to recap, if you have a solar battery as part of your system, you can participate in a VPP program that gives utilities access to your backup power during high-demand periods. This allows them to maintain a stable grid and keep grid power flowing. The utility pays you for any power they draw in the VPP program.

You can get a breakdown of incentives here: Local and federal incentives  

Federal incentives: Thanks to the Inflation Reduction Act, you may be eligible for the 30% federal Alternative Fuel Infrastructure Tax Credit for EV charger installation. This is a tax credit of up to $1,000 on the purchase and installation of a Level 2 home EV charger, including labor and electrical work.

The federal government uses census tracts to determine eligibility for the AFITC. To qualify, you must live in a census tract designated either non-urban (or rural), or in one designated as a low-income community.

The Argonne National Laboratory, part of the U.S. Department of Energy, developed a helpful mapping tool that enables you to check your census tract to see if you’re eligible.  

You can find it here:  

If you live in an eligible tract and have a charger installed, you’ll need to file IRS Form 8911 to get your 30% tax credit. 

State and local incentives: There’s a good chance your state or other regional entities will also offer rebates or other incentives for EV charger installation. A good place to start is the Enphase EV incentive finder. It allows you to plug in your ZIP Code and utility to find state and local incentives (as well as federal).