As homeowners look for ways to reduce energy costs, cut their carbon footprint, and upgrade their homes, more and more are turning to rooftop solar. In the Golden State, there are several California solar rebates and programs available that can reduce the financial burden for homeowners looking to make the solar swap. This article breaks down the active California solar programs, as well as a few programs for all US residents, that can help save money on photovoltaic (PV) energy systems.
April 2, 2024
California solar incentives, programs, rebates, and tax credits
California solar programs
California is one of the largest and oldest solar markets in the country, and there are multiple programs designed to reduce the financial burden of an expensive green energy installation. Some are loan or financing programs that minimize upfront or system costs, while others are tax incentives that allow solar owners to reclaim cash on their taxes. There are even programs that reward homeowners for the solar energy that they export to the grid.
Here are some of the active solar incentives in California:
Loan and financing programs
Home Energy Renovation Opportunity (HERO)
Available in a few select states, the Home Energy Renovation Opportunity (HERO) financing program allows Californians to finance a solar system through payments on their property taxes. This program uses a Property-Assessed Clean Energy (PACE) program structure, which enables homeowners to go solar without any upfront costs. With HERO, your local government pays for the system on a loan. After that, you pay for the system's costs through installments on your property taxes over about 20 years.
Disadvantaged Communities - Single-family Solar Homes (DAC-SASH)
Solar should be available to everyone. Every year, California provides $8.5 million for the installation of solar systems in disadvantaged communities through the Disadvantaged Communities - Single-family Solar Homes (DAC-SASH) initiative. To qualify, homeowners must be a customer of PG&E, SCE, or SDG&E and live in one of the top 25% most disadvantaged communities according to CalEnviroScreen. Those who qualify are eligible for no-cost solar systems.
For homeowners who qualify but do not have the means to install their own rooftop solar system, the DAC - Green Tariff (DAC-GT) program enables Californians to opt to receive all or a portion of their electricity from renewable resources and save money on their electric bill.
California solar tax incentives
Property tax exclusion
Most major additions on your property result in reassessed property taxes that incorporate the added value of the installation. However, under Section 73 of California’s taxation code, the installation of a solar system is a new construction exclusion, meaning that it will not increase your property taxes. Only active solar energy systems are eligible, which include systems for space conditioning or electricity generation.
Federal Solar Investment Tax Credit (ITC)
Many homeowners in the United States take advantage of the federal solar investment tax credit (ITC), which can deduct 30% of a solar installation's total costs from the energy system owner’s federal income tax liability. This effectively means a 30% discount on your system. Plus, the IRS allows a yearly rollover of any unused portion of the credit for the following five years.
Keep in mind that the ITC is not available to those who lease their solar systems or have a solar power purchase agreement (PPA). After the Inflation Reduction Act of 2022 was passed, the solar ITC was extended for availability through 2032 at 30% of total project costs. The incentive is currently set to completely phase out in 2035 after stepping down in value to 26% and 22% in 2033 and 2034, respectively.
California solar rebates
You may qualify for one of several rebates offered in California based on where you live or the components of your solar energy system:
Rancho Mirage Residential Solar Rebate
Rancho Mirage Energy Authority (RMEA) offers a one-time $500 rebate for residents of Rancho Mirage who install a new solar system or add to an existing solar system on their homes. To qualify, you must own your home, be a customer of RMEA, and participate in RMEA’s Net Energy Metering (NEM) program.
Self-Generation Incentive Program (SGIP)
The Self-Generation Incentive Program (SGIP) is a statewide incentive available to Californians for installing an electric battery as part of a solar panel system. The program has more than $1 billion in funding to lower the costs of solar batteries for both residential and non-residential installations.
To learn more, read our comprehensive guide to California’s Self-Generation Incentive Program (SGIP).
Net Energy Metering
Net Energy Metering (NEM) 3.0, also known as the Net Billing Tariff
Net Energy Metering, also called the Net Billing Tariff (NBT), allows California homeowners to be compensated for the solar energy that they export to the grid. For example, if you’re away from home on a sunny day, your solar system will likely generate energy that you won’t be able to use. Through NEM or NBT, you can exchange that energy for a credit on your electric bill. Participation is non-exclusive, so homeowners can benefit from NEM in addition to any other solar incentives.
After its first iteration, California’s original NEM policies were updated to a 2.0 version in 2016, and then replaced with the Net Billing Tariff (NBT) program for new customers on April 15, 2023. NEM 1.0 and NEM 2.0 participants are grandfathered into their net metering policies. The NBT or NEM 3.0 program is structured so that when solar owners are compensated for the excess electricity they send to the grid, these export rates are 20% to 40% lower than retail rates, also known as grid rates.
Under NBT or NEM 3.0, the value of excess solar is variable and based on the exact time, day, and season the energy was exported to the grid. With utility bill credits less valuable than in NEM 2.0, NEM 3.0 incentivizes battery storage for solar energy system owners. By capturing solar power generated throughout the day, battery owners can gain more control over their property's energy costs and the value of their solar exports.
Go solar in California
For California homeowners looking to go solar, available solar tax credits, incentives, and rebates can help mitigate the installation and equipment costs, while net energy metering and net billing provide ways to be compensated for exported solar energy. With lower cost barriers for solar systems, Californians can enjoy the benefits of reduced energy bills, increased energy independence, and a smaller carbon footprint.
Ready to go solar? Contact Enphase to learn more. See how affordable solar can be with Enphase.
Frequently asked questions
1. What is the California Solar Initiative (CSI) rebate program?
The California Solar Initiative (CSI) is a defunct government rebate program that closed on December 31, 2016. The initiative created several sub-programs that helped lower the adoption costs of photovoltaic (PV) and thermal solar energy systems for select Californians.
2. How to get solar for free in California?
Despite what misleading online ads may claim, there is no way to get solar for free in California, nor in any other state in the country. Instead, there are several tax incentives, rebates, and programs offered at federal, state, and local levels that can help reduce the costs of solar.
3. How much can I save on my electricity bill by installing solar panels in California?
The amount of money you can save on your electricity bills by installing solar panels in California is directly related to the amount of power your property consumes as well as the size of the proposed solar and battery system. Barring unavoidable utility overhead charges, the power produced by your solar panels can completely replace all of your monthly electricity consumption expenses with energy exported to the grid through a net metering or net billing program.
4. Are there still rebates for solar panels in California?
Yes, although some programs (like the California Solar Initiative) have expired, there are still many solar panel incentives in California. These include Single-Family Affordable Solar Housing (SASH) for low-income homes, rebate programs in select Californian cities and utility service areas, as well as the Self-Generation Incentive Program (SGIP) for solar batteries.
5. What is the federal solar tax credit in California?
Available in California and across the United States, the federal solar tax credit is a longstanding and recently extended program designed to help reduce the costs of solar adoption. Currently, the solar tax credit can be redeemed as a dollar-for-dollar reduction against the system owner’s income tax liability for a total of 30% of total system costs.
6. Does California have a solar tax credit in 2024?
No. In 2024, California does not have a state-specific solar tax credit. Instead, eligible Californians may qualify for the federal solar investment tax credit (ITC) equal to 30% of total system costs.
7. How does the California solar tax credit work?
Although California does not have a state solar tax credit, calculating the value of a federal solar tax credit is easy. For example, let’s say that you purchased a solar energy and battery system for a total investment of $30,000. With the solar ITC, you could then claim a $9,000 ($30,000 x 30%) tax credit against your federal income tax liability. Disclaimer: This is a simplified example and is not professional tax advice.
8. Do I qualify for the low-income solar program in California?
If you are eligible for the California Alternate Rates for Energy (CARE) or Family Electric Rate Assistance Program (FERA), you may qualify for a low-income solar program in California.
9. Can I combine multiple incentives and rebates for solar installation in California?
Yes. While there are many homeowners that qualify for the federal solar tax incentive in California, if you live in an area that also offers local solar incentives, you may be able to take advantage of multiple solar rebates and programs at once.
10. How long does it take to receive my rebate or incentive payment after installing solar panels in California?
Depending on the program, your rebate or incentive payment timeline may vary in California. Eligible homeowners applying for the federal solar ITC can apply for the federal income tax credit (with the help of a tax professional) on their tax return for the year the solar installation was complete.
11. What is the net energy metering (NEM 3.0) program in California?
Created and deployed by the California Public Utilities Commission, NEM 3.0 is the current net metering program in California. Under NEM 3.0, solar customers that send excess power to the grid are now compensated with a variable Net Billing Tariff (NBT) that is valued based on the avoided costs of the utility, rather than retail electricity rates.
12. Can I lease solar panels and still qualify for incentives and rebates in California?
No. Although it may be possible in some scenarios, incentives and rebates for solar panels are almost always exclusively for the owner of the equipment. When you lease solar panels, you do not own the equipment. However, your installer may be able to pass the savings from any incentives or rebates onto you as the customer.
13. Are there any limitations on the size of solar systems that qualify for incentives and rebates in California?
Yes, although not directly written into the roles for most solar tax incentives, there is typically a maximum PV system size limit in California’s counties and cities that is locally enforced to qualify projects as residential, commercial, or utility scale. Local building authorities may also limit system size to reflect a percentage (such as 100% or 120%) of a property's electricity usage. Financially speaking, however, there is currently no dollar limit for the potential value of the federal solar ITC, which is valued based on the price of your system and not its capacity.
14. Do solar panels increase property taxes in California?
No, solar panels do not increase property taxes in California. Although adding solar panels may increase the value of your property for a real estate transaction, California’s Active Solar Energy System Exclusion prevents the value of a solar energy system from increasing property taxes.
15. Is it worth going solar in California?
Yes, although there are some expectations, many home and business owners find that it is worth it to go solar in California. As a state that has led the solar energy industry for decades with ample annual sunlight, there are many local resources that Californians can take advantage of to maximize their investment in solar for reduced energy costs, a lower carbon footprint, and more secure access to emission-free power. The solar journey starts with Enphase.
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