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January 24, 2024

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    California is widely regarded as one of the best places in the country to go solar, and that’s in large part due to the wide array of solar incentives available in the state. The cost of solar equipment in the area is actually higher than the national average, but the incentives available help bring the cost down significantly and almost always lead to an early payoff and net savings.

    I’ve been researching and writing about solar incentives for years, and there has never been a better place for converting to clean energy than California in terms of incentive programs. In this guide, I’ll explain all of the California solar incentives available, how much they can save you, and how to take advantage of them.

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    How Does California Rank for Solar Incentives?

    California is the number one state for solar conversion in the country largely due to the solar incentives available in the area. Photovoltaic (PV) systems are already more affordable in California than they are in most other states, and the plethora of incentives and rebate programs available only serve to make clean energy that much more accessible and affordable.

    Not only do you have access to federal perks like the investment tax credit, but you also have access to more incentives than most Americans, both on a statewide and a local basis. I’ll include a quick breakdown of the solar incentives in California in the table below, and then I’ll go into more detail about each perk and how to file for it in the following sections.

    Solar Incentives Available in CaliforniaWhat Is It?When Can You Get It?How Much Can It Save You?
    Federal Solar Investment Tax Credit (ITC)    Reduces your income tax burden by 30% of your total system installation costs        One time: Gets applied when you file taxes after conversion    $4,914, on average in income tax credits  
    Self-Generation Incentive Program (SGIP)Provides rebates for solar installed with battery storageOne time: Applied once when you file for the rebate$200 per kilowatt-hour (kWh) in your solar battery system
    CaliforniaFIRST Property-Assessed Clean Energy (PACE) FinancingAccessible solar financing with affordable payment optionsOngoing: You continue to save with your financed system over timeVaries
    Renewable Market Adjusting Tariff (ReMAT)Pays you for excess solar energy you send to the gridOngoing: You continue to earn credits as you produceVaries
    Equity Resiliency ProgramProvides rebates for solar batteriesOne time: You get the benefits once when you purchase your batteriesUp to $1,000 per kilowatt-hour ( kWh) of battery you install
    Disadvantaged Communities Single-Family Affordable Solar Homes (DAC-SASH) ProgramProvides close to cost-free installation for eligible homeownersOne time: You get the benefits once when you apply and enrollUp to $3 per watt in upfront solar rebates
    Property Tax Exclusion for Solar Energy Systems and Solar Plus Storage SystemWaives the value of your panels when assessing your property taxesOngoing: Continues to save you money on property taxes each year$2,907, on average, but it varies
    Local IncentivesRebates, tax credits, and other perks based on your specific locationVariesVaries
    Net MeteringProvides energy credits for all overproduction and helps maximize energy savings over time    Continuous: Always in effect          Varies based on system size, energy consumption, and more  

    Featured Video: California Updated Their Net Metering Policy. What Does That Mean For You?

    Want to learn more about this update? Take a look at our guide to NEM 3.0 in California.


    Federal Solar Tax Credit (ITC) – How It Impacts Californians

    My Take: Of all the solar incentives available to you in California, this is the one I believe is the most important. It can effectively save you the most money, and it’s really easy to apply for.

    The federal tax credit is offered by the federal government and is available to all taxpayers in the country, including residents of California. It’s a way for the federal government to incentivize conversion to clean energy and make adopting solar more accessible. Basically, it’s an income tax credit for 30% of your system installation costs, so it can effectively reduce your total system price by 30% if you can take the entire credit.

    The way it works is that once you file your taxes with the appropriate form, your income tax burden is reduced by 30% of your solar conversion costs — an average of $4,914 in California. It’s important to note that this isn’t a rebate, and you’re not guaranteed to get that money back. You have to owe money on your income taxes to claim this perk.

    You can, however, roll forward any unused credit for up to five years, so if you expect to owe an average of around $1,000 per year for the next five years in income taxes, you can likely take the entire credit.

    The federal credit was originally offered in 2005 as a part of the Energy Policy Act, and it offered a 30% credit. That credit amount was reduced in the years following the inception of the original legislation. The rate dropped to 26% in 2022, but the Inflation Reduction Act (IRA) extended the credit and pushed the amount back up to 30%. The current schedule for the ITC rate is as follows:

    • 30% credit for systems installed through 2032
    • 26% credit for systems installed in 2033
    • 22% credit for systems installed in 2034
    • No credit in 2035 or beyond

    To gain a better understanding of the expenses for solar in the state, take a look at our full breakdown of the cost of converting to solar in California.

    Steps to Claim the Federal Solar Tax Credit in California

    One of the best parts about the federal credit is how easy it is to apply for. In many cases, you don’t even have to fill out any paperwork because your installer will do it for you. Just in case, though, you can follow the steps below to make sure you take the federal credit:

    1. Print out IRS form 5695 from the IRS’s website.
    2. Fill out the form using information about your solar installer, the capacity of your solar system, and the address where the system is installed.
    3. File the completed form alongside your taxes, or have your accountant include it in your tax filing.
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    Which Solar Incentives Are Offered at the State Level in California?

    In addition to the federal credit, Californians can take advantage of a few different state-level solar incentives to help reduce their conversion costs and make solar more accessible. Once again, California has more statewide incentives than most other states, so you’re in a really good position to save on your solar system. While the federal credit is, in my opinion, the most crucial incentive to take, the following perks can bring down your conversion costs significantly and are highly beneficial in the long term:

    • Self-Generation Incentive Program (SGIP)
    • CaliforniaFIRST Property-Assessed Clean Energy (PACE) Financing
    • Renewable Market Adjusting Tariff (ReMAT)
    • Property Tax Exclusion for Solar Energy Systems and Solar Plus Storage Systems

    Self-Generation Incentive Program (SGIP)

    My Take: I love to see solar rebates like this because they not only promote clean energy but also help maximize your long-term savings, which is the primary function of solar energy systems for many homeowners.

    The SGIP is a rebate offered to any solar customer in California who couples their panels with solar batteries. Batteries help take the load off the electric grid, which helps reduce blackouts and keep the system up and running, so the state incentivizes residential customers to opt for batteries alongside their panels.

    The current SGIP solar rebate offers around $200 per kWh of battery storage you install with your system. The actual rebate amount depends on the size of your storage system and whether or not you’ve applied the ITC to your batteries.

    For reference, the Tesla Powerwall — the most popular battery in the solar industry — has a 13.5 kWh capacity, which means your rebate would equal $2,600 per Powerwall you install. This won’t cover your battery installation costs, but it does make them significantly more affordable.

    The SGIP was established in 2001 and was scheduled to end about a decade later. The program has since been extended several times and is currently available through January 1,  2026. It was recently re-funded to help prepare for future wildfire seasons.

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    Installing a battery is often worthwhile in California even if you don’t qualify for SGIP. The cost of electricity in California is nearly double the national average, and batteries can help reduce how much electricity you pull from the grid, thereby increasing your savings over time.

    Steps to Claim the SGIP

    Claiming the SGIP is as simple as reaching out to your local program administrator based on your utility company (details below) and requesting enrollment information. You can also apply directly online in most cases by following the directions below:

    1. Go to your energy company’s SGIP page. Some common pages are listed below:
    2. Click on the “Apply Now” (or similarly named) button or link
    3. Fill out the information to check your eligibility.
    4. Fill out and submit the program application.

    CaliforniaFIRST Property-Assessed Clean Energy (PACE) Financing

    My Take: I would recommend not enrolling in PACE financing unless it’s the only way you can afford to go solar. It’s a great option for low-income households, but it’s not nearly as beneficial as other financing options if you can swing them.

    PACE financing is a creative financing solution for solar energy equipment, and it’s specifically targeted to low-income households. Basically, the program provides low interest rates and low down payments to make solar financing more affordable. It also adds the financing costs and system costs to your tax bill instead of having you pay a monthly bill, so it’s more convenient.

    There are a few downsides to PACE financing to consider. First, adding the cost of a solar project to your tax bill isn’t ideal, as it’s technically a lien on your property. However, the program is designed for low-income households, so this could be a positive if the cost of a solar array is outside your budget.

    The second downside is related — it can complicate the sale of your home. Any buyer will have to agree to take on the higher tax bill, and some buyers might shy away from a property with panels financed via a PACE program.

    The PACE program in California can still save you money, as the monthly payment is often lower than what your energy bill would typically be. The specific savings you’ll see depend on your property and system sizes, as well as the local energy price in your area and your rate of consumption.

    The CaliforniaFIRST program was first available in 2012, and the program has remained largely unchanged since its inception.

    Steps to Claim the CaliforniaFIRST Program

    Enrolling in PACE financing is relatively easy, although there are a handful of things you’ll need to provide to your program administrator before you’re approved.

    1. Contact your PACE program administrator. You can find a list of program administrators on the Department of Financial Protection & Innovation’s (DFPI) website.
    2. Provide the required information, which may include your contact information, an income verification letter from your employer, tax returns from previous years, and more.
    3. Connect with a PACE-approved solar panel installation company through your program administrator.
    4. Move through the solar installation process with your installer and then provide the final details to your program administrator.

    Renewable Market Adjusting Tariff (ReMAT)

    My Take: Feed-in tariffs like this help maximize solar savings and makes the ongoing burden of a solar loan less significant.

    They’re are a great solar perk because they provide ongoing savings each month based on your solar energy production. Basically, you get paid for every kWh your clean energy system generates, regardless of where that energy is used. That’s one significant difference between ReMAT and net metering — more on that incentive later.

    The price you get paid per kWh generated varies based on your electric company. According to the California Public Utilities Commission (CPUC), PG&E, SCE, and SDG&E all participate in the program. The dollar amount you earn per kWh is determined based on program eligibility and how many solar customers in the state are already enrolled.

    The ReMAT program was first offered in 2015. It doesn’t appear that much has changed with the policy other than the price per kWh each electric company pays out based on enrollment and demand.

    Steps to Claim the ReMAT Feed-In Tariff

    Claiming the ReMAT tariff is really easy, which makes it all the more valuable to solar customers in California. You can follow the steps below to enroll:

    1. Navigate to the ReMAT page for your electric company.
    2. Click on “Check Eligibility” and fill in your information.
    3. If you’re eligible, click “Apply Now.”
    4. You’ll be prompted for information about your system and your home, and a program administrator should reach out if any additional information is required.

    Equity Resiliency Program

    My Take: This is an incredible battery rebate program that eases the load on the grid and provides close to free backup solar energy storage for income-qualifying households.

    The Equity Resiliency Program is a part of the SGIP program in The Golden State, and it works in much the same way. It’s a rebate for solar battery installation, but rather than $200 per kWh installed, there are two tiers that are four to five times higher. The “Equity” plan provides rebates of up to $850 per kWh, and the “Equity Resiliency” plan provides rebates of up to $1,000 per kWh installed.

    These programs are designed specifically for low-income households, so there are eligibility requirements. With the Equity Resiliency plan, solar batteries, which average around $1,100 per kWh, are close to free.

    The Equity Resiliency Program was first offered in 2020 as a part of the SGIP program. It hasn’t been altered since it was initiated. Funds are currently in place for the program to continue through 2024.

    Steps to Claim the Equity Resiliency Program

    According to the CPUC, the best way to apply for this program is to find an installer in your area that can help you. You can follow the steps below:

    1. Use the “Find an Installer” tool on the CPUC’s website.
    2. Choose an installer in your area that is qualified to help you apply for the program.
    3. Work with the representative to navigate the application process.

    Disadvantaged Communities Single-Family Affordable Solar Homes (DAC-SASH) Program

    My Take: This is a wonderful way for California to promote solar adoption in lower income areas. The application process and eligibility requirements can take a long time to get in order, but it’s well worth it if you qualify.

    The DAC-SASH program is designed to help significantly reduce the cost of going solar in low-income areas and for qualifying individuals who couldn’t otherwise afford to adopt renewable energy. The price reduction is done in the form of upfront solar rebates that total up to $3 per watt.

    In California, where the average cost of solar equipment is around $2.73 per watt, that means eligible homes can effectively get solar for free or close to free.

    The DAC-SASH program was first offered in 2018 as an addition to the Single-Family Affordable Solar Homes (SASH) Program. The SASH program was first available in 2009,  had fewer eligibility requirements, and provided lower rebates for solar equipment.

    Unfortunately, the SASH program is closed and isn’t accepting new applicants. The DAC-SASH program, however, has funding through 2030 as of this writing, after being re-funded in 2015 and extended again in 2021.

    Steps to Claim the DAC-SASH Program

    Enrolling in the DAC-SASH program is a complicated process, in large part because of the eligibility requirements. You can follow the steps below to see if you qualify and then enroll.

    1. Enter your information on GRID Alternatives’ Energy for All site to see if you qualify for the program.
    2. If you do, a program administrator will reach out to you to obtain any documentation required, including an income verification.
    3. The program admin will then walk you through the next steps, which include finding a certified installer and getting your system installed and running.

    Property Tax Exclusion for Solar Energy Systems and Solar Plus Storage Systems

    My Take: The property tax exclusion for solar equipment negates one of the downsides of going solar — increased property taxes — so it’s an excellent perk. Plus, enrollment is automatic, so you don’t have to do anything to apply. There are few things better than automatic savings.

    The Property Tax Exclusion for Solar Energy Systems basically prevents your property taxes from going up after you install solar equipment. Under normal circumstances, your panels and/or solar batteries will add value to your home. Increases in property value typically bump up your assessed value, which causes your property taxes to go up. The exclusion means that the value of your solar array won’t be included in your tax assessment.

    California also has a specific exclusion for solar plus storage systems, so you can also install batteries alongside your panels and still not see a bump in taxes.

    Estimating your savings using this perk is challenging, but based on the average property tax rate of 0.71% in California and the average system value of $16,380, you’re expected to save around $116 per year on your tax bill. Over the expected system lifespan of 25 years, that’s a total of $2,900. If you add in two Tesla Powerwalls, that would equate to an estimated annual savings of $280 or lifetime savings of around $7,000.

    The property tax exclusion in California was first offered in 2001 and is currently set to expire in 2025. No major changes have been made to the policy since its inception.

    Steps to Claim the Property Tax Exclusion

    One of the best parts about this perk is that it’s automatic and takes no time or effort on your part to enroll. When your tax assessor goes to value your property, they will simply ignore the value that your panels and solar batteries add, and you won’t be taxed on those.

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    Which Solar Incentives Are Offered at the Local Level in California?

    The federal and state solar tax incentives in California are the best options for saving money and maximizing your returns with your solar array. However, there are also some local incentives available, depending on where you live and the utility company that services your property. Most of these are super easy and quick to apply for and can save you hundreds or even thousands of dollars, so they’re well worth the time and effort you’ll take to enroll. I’ll list some of the best local financial incentives in California below:

    • Western Riverside Council of Governments Home Energy Renovation Opportunity (HERO) Financing Program: This loan program provides homeowners living within the WRCOG area special financing for solar panels, batteries, and other energy efficiency upgrades. It includes low down payment requirements and low interest rates to help keep solar as accessible as possible.
    • Sonoma County Energy Independence Program (SCEIP): This is PACE financing for residents in Sonoma County. It includes preset loan terms based on the borrowed amount.
    • Sacramento Municipal Utility District (SMUD) Battery Incentive: SMUD offers an incentive in the form of reduced energy costs to solar customers who install batteries. This helps increase the overall savings you’ll enjoy with your solar array. It also helps cut down on climate change and the use of fossil fuels.
    • Rancho Mirage Energy Authority Residential Solar Rebate Program: This solar rebate is for $500 and applies to any new installation or expansion for an existing solar system.

    In addition to these perks, many municipalities also mandate solar installation on new construction and providing the option for solar conversion to homebuyers of pre-existing homes as well. Additionally, most municipalities have an expedited solar permitting process to help avoid delays in pulling and receiving building permits for PV systems.

    Net Metering in California – Can You Profit?

    Net metering is, in my opinion, one of the best solar incentives you can get, although the new net metering policy in California is not as good as it used to be.

    Net metering, also called net energy metering or NEM, works by crediting solar customers for excess production and allowing them to use those credits to offset electric bills when they’re forced to pull power from the electric grid. When the sun is shining, and your panels are pumping out electricity, any excess production that you don’t use gets sent to the grid, and you earn credits. Then at night — or during cloudy days — when your panels aren’t producing sufficient power, you’ll be able to call on those credits for free instead of paying for electricity from the grid.

    The net metering policy in California mandates that solar customers be credited for each kWh they export. The credit rate is now well below the retail rate, unfortunately, as net metering (NEM) 3.0 reduced the export rate. That means every kWh you export will offset much less than one kWh you import, so you “lose” energy in the process, which cuts into your savings. With this policy in place, it’s still possible to eliminate your energy bill in California, but a partial offset is more common.

    Net metering was originally offered in CA in 2000, at which time the policy had caps for how many customers could enroll. The policy was updated in 2017 to NEM 2.0 to remove those caps, making the solar program even more beneficial for the state. NEM 3.0 reduced the export rate in April of 2023.

    Net metering is a big part of why solar is so popular in California. It can help maximize your energy savings over time, often helping customers pay off their systems in just eight years — far faster than in most states — and then save an additional $30,000 or more, even though the program was downgraded in 2023.

    Steps to Enroll in Net Metering in California

    Enrolling in net metering is a pretty straightforward process, and a lot of the time, your solar installer will fill out the paperwork for you. I’ll include a quick breakdown of what you need to do below, just in case your installer doesn’t handle it for you:

    1. Reach out to your electric company and request an interconnection application.
    2. Fill out the application. You’ll need info about your system capacity, the expected generation, and contact information for your installer.
    3. Pay the interconnection application fee. This might be included in your solar installer’s estimate, so check before paying it separately.
    4. Submit the application and proceed with your rooftop solar installation.
    5. Once your system is installed and connected, your utility provider will likely need to inspect the connection before approving you for net metering.
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    Watch Out For Solar Incentive Scams in California

    With California being the number one state in the country for solar adoption, it probably comes as no surprise that it’s also one area where solar scams are popular. Unfortunately, scams surrounding solar incentives are prevalent and can lead to major financial losses.

    One thing to watch out for — which may or may not be a scam, depending on the knowledge of the installer that offers it — is misrepresentation when it comes to incentives. I’ve heard about Californians being told that the ITC is a guaranteed rebate, even though it’s not a rebate at all. I’ve also heard about flat-out lies from some disreputable installers about solar rebates that just don’t exist, all made up to entice customers to convert to solar.

    In some cases, scam solar companies will advertise appealing incentives that require a small application fee, and once they get your money, you never hear from them again. The state actually created a $4 million fund to help victims of solar scams, which just goes to show how prevalent they are.

    In 2021, one of the largest solar scams in the entire industry was uncovered in California when the owner of DC Solar in California was sentenced to 30 years in prison for a solar Ponzi scheme.

    The best way to avoid these scams is to educate yourself about the solar incentives in California and how each of them works.

    Bottom Line: Do the Incentives in California Make Going Solar Affordable?

    Solar power systems are less expensive in California than in most other states to begin with, and the solar incentives available make going solar even more enticing. With all of the perks available, most customers entirely pay off their solar panel systems — called the payback period — in just eight years and then enjoy 17 or more years of energy savings thereafter, often amounting to over $30,000 in net savings.

    When you’re ready to convert to solar and enjoy those savings, you can use the tool below to get connected with reputable installers in your area that can help you file for all available incentives and help maximize your returns.

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    I get questions all the time about the solar incentives in California. Below are some of the questions I see most often, along with answers.

    FAQs About California’s Solar Rebates and Incentives

    Does California offer any incentives for solar?

    Yes, California offers many incentives for solar arrays that make going solar far more advantageous than it is in many other states. Among these incentives are the federal investment tax credit to bring down upfront costs, a good net metering program to boost long-term savings, a few solar financing programs to help make solar more accessible, and a property tax exemption to prevent your system from causing your property taxes to go up.


    Is there a state tax credit for solar panels in California?

    There is no state tax credit for solar equipment in California, but all California residents are eligible for the federal investment tax credit, which provides an income tax credit in the amount of 30% of your entire installation cost. On average, this tax credit alone can effectively save you just under $5,000, provided you owe enough in taxes to take the entire credit. The state also offers other solar incentives — like net metering and solar financing programs — to help maximize returns on solar installation.


    What is the solar rebate in California?

    There is no statewide solar rebate in California, and according to the Database of State Incentives for Renewables and Efficiency, there are few local rebates for solar equipment as well — currently, only residents in Rancho Mirage appear to have access to a local rebate. However, you might be eligible for solar battery rebates, like the SGIP and Equity Resiliency programs. Additionally, CA has quite a few appealing solar incentives aside from rebates, including the federal tax credit, a net metering policy that is better than it is in most states, and solar financing programs that help keep the long-term cost of a solar loan as low as possible.


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    Dan Simms

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    Dan Simms worked in real estate management for five years before using his experience to help property owners maintain their own homes. He got his master’s degree in English Literature and Creative Writing, and he now enjoys sharing his knowledge about homeownership and DIY projects with others on Today’s Homeowner. When he’s not writing, he’s usually outdoors with his wife and his dog, enjoying mountain biking, skiing, and hiking.

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