California residents have access to a variety of solar rebates, tax credits, and incentives. These include federal tax credits as well as rebates offered by local utility companies. Keep in mind that eligibility for these incentives may depend on factors such as your location, utility provider, income, and interest in battery storage. Note – this is not tax advice and you should always consult a tax pro to see how this applies to you.

Federal tax credits

The Federal Solar Tax Credit, also referred to as the Residential Clean Energy Credit, is available to most California residents. It allows for a deduction of up to 30% of the cost of installing a solar panel system from your federal taxes. This means that if your solar installation costs $20,000, you could potentially receive a tax credit of $6,000 to be used to reduce your federal income tax for the tax year in which the system was installed. Essentially, it acts as a 30% discount on the cost of your home solar installation provided by the federal government.

Low income support

The Disadvantaged Communities Single-Family Affordable Solar Homes (DAC-SASH) Program was established by California to promote the use of renewable energy in disadvantaged communities. The program provides qualified homeowners with fixed, upfront, capacity-based incentives that can help reduce the cost of a solar energy system. Eligible homeowners can receive up to $3 per watt through the program, as per the California Public Utilities Commission. To qualify for the program, homeowners must meet the following criteria:

  • Live in and own the home
  • Receive electrical service from Pacific Gas & Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (SDG&E)
  • Enroll or be eligible for CARE or FERA income-qualified utility bill programs
  • Live in a disadvantaged community (DAC) qualified area

If you believe you meet the eligibility requirements, visit the GRID Alternatives website for more information.

Property tax exclusion

In California, individuals who install a solar or wind-powered system to generate energy for their home or business are eligible for an exemption on property taxes for the added value the system brings to the property. This means that until 2025, property owners who install solar panels or other solar-powered devices on their property will not have to pay property taxes on the increased value of the property resulting from the installation of the system. This is a great benefit, particularly for those who require a larger system to offset their electricity consumption. It is a double benefit where not only you save on electricity bills but also on property taxes.

Net metering program

Homeowners who install solar panels on their property can participate in California’s net metering program. Net energy metering (NEM) is a system where utility companies offer credits to homeowners for the extra electricity generated by their solar panels and added to the electricity grid. Under net metering, homeowners are only billed for their net usage, which is the difference between the total energy produced by their solar system and the total energy consumed by their home. The program is offered by the three major investor-owned utility companies in California: Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E), and is regulated by the California Public Utility Commission.

To participate in the program, there are a few requirements to be aware of:

  • A one-time interconnection fee between $75-$145 depending on the utility company
  • Payment of non-bypassable charges that fund low-income, energy efficiency, and other similar programs
  • Switching to time-of-use (TOU) energy rates At the end of a 12-month billing period, customers may receive compensation for any surplus credits on their account at the “fair market value” through net surplus compensation (NSC) which changes based on the 12-month rolling average of the market rate for electricity and can be found on your utility company’s website.

Similarly, municipalities and other electric cooperatives such as Los Angeles Department of Water and Power (LADWP) also provide net metering credits to residential solar owners in their territories, but the value of the credit is determined by the policies set by the municipal utility company or electric cooperative’s governing board.

In summary, California residents have access to a variety of solar incentives, including federal tax credits, local utility rebates, and programs to offset the cost of solar energy systems for qualified homeowners. Want to learn more? Call 1-844-SUN-EASY to learn what installing solar could do for you!