California, also referred to as the Golden State, has plenty of sunshine, making it an ideal state to install a solar system. Fortunately, there are many solar incentives you can apply to lower the cost of installation. Combined with the 30% federal solar tax credit, you can install a robust system that would have otherwise been impossible.
California Solar Incentives
California Self-Generation Incentive Program (SGIP)
SGIP allows eligible homeowners to benefit from a $0.15 rebate for each watt-hour of your battery storage capacity. The incentive is available to customers of the following utility companies:
- Southern California Edison
- Pacific GAs & Electric
- San Diego Gas & Electric
- SoCalGas
You can install solar panels and storage batteries to store electricity for future use. And for this, the California Public Utilities Commission compensates you handsomely. In fact, if you live in certain areas and meet specific income requirements, you can receive rebates amounting $850 or $1000 per kilowatt hour.
For example, if you install the BLUETTI AC200MAX + 1*B230 home battery backup, which has a 2,048Wh capacity, you would receive $307.2 in rebates.
To qualify, you must be a customer of either of the above utility companies. The best part is it is available to both homeowners and renters. Of course, as a renter, you’ll require your landlord’s approval.
Disadvantaged Communities - Single-Family Solar Homes program
The DAC-SASH seeks to enable low-income customers in disadvantaged communities to install solar systems. With it, you benefit from $3 for every watt of solar capacity, which amounts to $3,000 per kilowatt. Since the average cost of installing a solar system is $2.5 per watt, the incentive literally covers the total installation costs.
The program is made available by GRID Alternatives, which offers up to $8.5 million annual incentives. To qualify, your home should be within the communities the California Communities Environmental Health Screening Tool identifies as disadvantaged.
You should also be a customer of either of the following utility companies:
- Southern California Edison (SCE)
- Pacific GAs & Electric (PG&E)
- San Diego GAs & Electric
Your income should be below the CARE Income Guidelines. The limit is capped at $39,440 as of May 2024. You can apply for the program through GRID Alternatives website.
SGIP’s Residential Storage Equity
Self-Generation INcentive Program (SGIP) also offers Residential Storage Equity, attracting homeowners in low-income homes to install solar battery systems. It has a higher incentive value, offering $0.85 per watt-hour. So, if you were to install the BLUETTI EP800+B500 Home Battery Backup, which has a 9900Wh capacity, your incentive would be worth $8,415.
To qualify for the Residential Storage Equity incentive, you must be a customer of either:
- Southern California Edison
- Pacific GAs & Electric
- San Diego Gas & Electric
- SoCalGas
However, the incentive is only available to households that meet the following criteria:
- Susceptible to power outages due to wildfires
- Low-income household
- Medically vulnerable
These are the basic qualifications. For more information, you can visit SGIP’s website. The California Office of Environmental Health Hazard also provides a disadvantaged communities map.
Property Tax Exclusion
Like most states, California offers property tax exclusion for value added by installing a solar system. In short, you get 100% tax exemption, meaning your property tax won’t increase. The exclusion covers solar panels, solar lithium-ion batteries, and solar heating systems.
For example installing the BLUETTI EP500 Solar Power Station won’t increase your property tax. Instead, it will qualify you for the tax exclusion since it has a capacity greater than 3kWh. What’s more? It is a LiFePO4 battery. The power station is even ideal for off-grid living since it has a 5,120Wh capacity ideal for powering multiple devices simultaneously.
To qualify, your solar system should be installed before January 2025. You should be the owner of the solar system. You’ll still qualify if you intend to sell your building in the future. It does not, however, cover wind energy systems, swimming pools, and hot tub heaters.
Property Assessed Clean Energy (PACE) program
California residents also benefit from the PACE program that provides financing for solar systems installation. It allows you to repay your loan with your property taxes. The loans have a lower interest rate than conventional loans. California is among the three states offering residential PACE programs. The others include Missouri and Florida.
What sets the PACE loans apart is their repayment model. Ideally, a conventional loan requires a down payment and must be repaid in monthly installments. With PACE loans, you don’t need a down payment or monthly payments. Instead, the amount borrowed is repaid through your property tax over a period of 10 to 30 years.
Unfortunately, the financial institution will place a lien on your home. This means you cannot sell your home until you have repaid the loan. And if you have to, the process will be complicated. Some of the financial institutions offering PACE loans include Ygrene Energy Fund and Renew Financial Group.
California Net Metering Incentives
California introduced the Net Energy Metering 3.0, allowing homeowners to sell excess solar energy directly to local utility companies for power bill credits. However, the tariffs you receive after exporting the excess power are lower than normal electricity prices.
To mitigate this, you can opt for a battery storage with a higher capacity. This allows you to store as much electricity as possible for future use, rather than selling it at a throw away price.
The Net Energy Metering 2.0 offered better tariffs, which were slightly lower than normal electricity prices. The NEM 3.0 is almost 75% lower, meaning you get less credits in return. Fortunately, there are some solar advocates fighting back to reinstate the previous NEM 2.0 policy. The switch to NEM 3.0 has led to job losses in the California solar industry.
Local Solar Incentives
Besides state-level solar incentives, many municipalities and towns offer extra incentives. They include the following:
Alameda Municipal Power Income-Qualified Solar Rebate
If you are a customer of Alameda Municipal Power, you can get $500 compensation, if your solar system qualifies. You should however, earn less than $106,000 and your solar system must be installed before January 1, 2020.
Lancaster Energy Power Choice
Tesla, through the Energy Power Choice program, can install solar panels for free if you cannot afford to. Tesla installs rooftop solar panels and a Tesla Powerwall Battery for free. You’ll then pay for storage and usage of the system through your electric bill.
However, customers cannot access tax incentives. And if you are to leave the program, you’ll have to buy out the whole system. Should you sell your home while in the program, you’ll transfer the contract to the new owner.
Sacramento MunicipalUtility District Battery Storage Incentive
The incentive offers homeowners with stipends of up to $2,500 for installing solar batteries. While a generous stipend, the incentive is determined by how much control your utility company has over your battery and the pricing plan.
Silicon Valley Power Low Income Solar Grant Program
Silicon Valley Power offers grants to low-income homes that are enrolled in its Financial Rate Assistance Program. You get a $3.50 grant for each watt produced. The solar system must, however, produce at least 3,800kWh in a year.
Federal Solar Tax Credit
Like other states, residents of California can benefit from the 30% federal tax credit. It allows you to claim 30% of the total solar installation costs on your federal taxes. This significantly reduces the cost of installing panels when combined with state and local-level incentives.
Unlike most state-level incentives, there’s no maximum amount you can claim. Scheduled to run until 2035, the 30% rate will run until 2032, reducing to 26% in 2033 and 22% in 2034. You can claim the credit by filling the IRS Form 5695.
Are Solar Systems Worth It in California?
Yes, they are worth your investment since California has ample sunshine throughout the year. Furthermore, there are many solar companies and installers, making the installation process seamless. Given the long peak sun hours, you can install a small solar system and still produce ample electricity for your home use.
And thanks to the solar-friendly incentives and policies, it is easier for you to switch to green and renewable energy. As you’d know, California has some of the highest electricity prices. By installing a solar system, you save a substantial amount in electricity bills than other states.
Having a solar system in your home will also guarantee electricity in the event of a prolonged power outage. In fact, California is prone to many blackouts, making installation of solar panels a noble idea.
Final Thoughts
California offers some of the best solar incentives in the country. From state-level to local-level incentives, you can apply to several incentives, lowering the cost of installation significantly. With a solar system, you can lower your electricity bills, increase the value of your home, and earn money through net metering.
