California Solar Incentives And Rebates To Help With The Cost Of Going Solar
Updated: Oct 17
In 2018, the State of California created a landmark policy requiring that 100% of its electricity come from renewable or zero-emissions sources by 2045. This is a major undertaking given the size and population of California. If it were its own nation, it would be the fifth-largest economy.
Although the 100% clean electricity goal does allow nuclear power, it will require phasing out fossil fuels over the next couple of decades. However, California already uses a lot of clean energy. For example, in 2020, over 15% of California’s power came from solar energy and more than 7% from wind power.
One of the reasons that renewable power has been so popular in California are policies encouraging solar installations. For example, the California solar mandate requires that all new homes have solar panels, and the mandate will soon expand to new commercial properties. In addition, there are several state incentives that reduce the total cost of going solar.
And don’t forget about the federal tax credit, which can reduce the total system cost of a solar installation by 30% if installed before 2033. To qualify, solar homeowners will need to have a tax liability to the IRS.
Also, the solar investment tax credit is available at the same rate for commercial projects. However, be careful not to give tax advice to residential or commercial customers. Instead, recommend they speak with a tax expert to determine eligibility for the federal solar tax credit.
California has a variety of programs intended to help promote renewable energy development in the state, reduce electric bills for low-income households, and promote resiliency during wildfire season. Some have specific income requirements for eligibility, while others require homeowners to be customers of certain utility companies.
Let’s explore some of the California incentives that are making solar energy so popular in the Golden State.
Self-Generation Incentive Program (SGIP)
This popular rebate program is available for single-family homes, apartments, and critical facilities that install battery storage. The rebate is 15% – 20% of the average battery system cost. The California Public Utilities Commission (CPUC) authorized more than $1 billion in funding for the SGIP through 2024, available for PG&E, SCE, SoCalGas and SDG&E utility customers.
The electric utilities have used Public Safety Power Shutoffs (PSPS) to help prevent wildfires in very high-risk conditions. Although these blackouts are intentional, they can be very disruptive to daily life for commercial and residential customers.
As a result, an energy storage system is a key component in the emergency preparedness strategy for Californians for wildfires. In addition, because solar panels and batteries are an excellent combination, many households use the SGIP rebates to make the cost of installing more manageable.
Property tax exemptions
This property tax exclusion prevents the solar power system from impacting the amount charged on property taxes for homes with solar panels. Thus, the solar energy system doesn’t increase the property value used for tax purposes.
Single-Family Affordable Solar Housing (SASH) Program
Although early solar adoption was dominated by middle- and upper-class households, it is important to promote equity and greater use of solar electricity among low to moderate income households. As a result, the California Solar Initiative (CSI) offers the SASH Program, which provides solar energy incentives for qualified affordable single-family housing.
The SASH program provides partial or full incentives to qualified low-income homeowners. Participants must be Pacific Gas & Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (SDG&E) customers and have an income of 80% or below the area median income (AMI).
Disadvantaged Communities - Single-family Solar Homes (DAC-SASH)
This program enables income-qualified homeowners in qualified disadvantaged communities to receive a rooftop solar panel system at no cost. The DAC-SASH program is managed by GRID Alternatives and runs through 2030.
To qualify, homeowners must live in certain disadvantaged neighborhoods, meet the income requirements, and be a utility customer of customer of Pacific Gas & Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (SDG&E). The program also provides green job training to low-income individuals to help create a more sustainable solar energy industry in the state.
When the solar panels are producing more than the home is consuming, the surplus is fed to the grid. In California, utility companies compensate customers at the retail rate for the excess solar energy they supply. This compensation program is known as net metering or net energy metering (NEM).
When the home needs more power than the solar panels are producing, this electricity is offset by the credits on utility bills. Each month, the electric utility companies provide solar homeowners with NEM statements explaining how many kilowatt-hours of power they supplied and how much electricity the home pulled from the grid.
Many California utility companies offer time-of-use rates where the electricity price varies depending on demand. Typically, rates are highest in the early evening, when electricity use is highest and lowest in the middle of the night, when consumption is low. In addition, rates can vary seasonally by power consumption.
Therefore, when solar customers provide excess power to the grid during peak demand, utility companies compensate them at a higher rate. In addition, solar batteries offer more flexibility to take greater advantage of utility savings.
Property-assessed Clean Energy (PACE)
PACE loans help homeowners finance the upfront cost of clean energy upgrades. Unlike most loans through traditional banks, Californians make payments on solar energy and energy efficiency projects through their property tax bills. PACE financing typically has a 20-year term and low interest rates.
Take Your California Business To A New Level
Although California offers many solar programs and supports solar energy development, many residents will have questions about how each of these programs works. If you are installing solar in the Golden State, it’s really helpful to understand these initiatives, so you can explain them to potential customers. Some incentives, like net metering, are relatively common throughout the United States, whereas some programs, such as DAC-SASH, are more unique.
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