With more than a million solar installations across the state, California is one of the top leaders in the American solar industry. The passage of recent legislation mandating the addition of solar panels to all newly constructed homes and buildings will only increase the number of photovoltaic (PV) systems in California.
In addition to being a leader in solar panels installed, California is also home to some of the most generous solar incentives and rebates for property owners anywhere in the world. Plus, the rise in energy prices worldwide should only remind you of the importance of producing your own electricity. A solar power system in your home can ensure minimal initial costs and steady savings for decades to come.
For these reasons and more, it is a great time to buy a new solar energy system in the state. Keep reading to learn about the California solar incentives available to help you afford going solar and find the best possible system for your home.
The Best Solar Incentives, Tax Credits, and Rebates in California
There are several public and private incentives in California that help you save on your purchase of solar panels:
|Federal Solar Tax Credit (ITC)||California residents can take advantage of the Federal Solar Tax Credit and get a discount of 30% applied to their tax returns. Read More||2032|
|California Solar Property Tax Exemption||California will exempt property taxes on the added value to your home that comes with installing a solar energy system.||None|
|Net Metering||Net metering allows homeowners that create excess energy to use it as a credit on their next electric bill. All energy providers are required to offer this option to homeowners.||None|
|Self-Generation Incentive Program (SGIP)||If you buy a home solar battery and rooftop panels in California, you can get a rebate for installing the energy storage system. The rebate can be as high as $1,000 per kilowatt-hour. Read More||None|
|Single-Family Affordable Solar Housing (SASH) Program||Low-income households in California can get a one-time, capacity-based incentive of $3,000 for each kilowatt of home solar installed through the SASH program. Qualifying recipients must have total incomes of 80% of the area median income or below. Read More||None|
|Sacramento Municipal Utility District (SMUD) Solar Rebate||Residents of Sacramento can receive a solar incentive of $300 to install a new rooftop solar system. Read More||None|
|GoSolarSF Solar Rebate||Residents of San Francisco can receive a cash incentive of $100 to $2,000 per kilowatt of home solar installed for up to 4 kilowatts. The incentive will vary by system size, location, and applicant income. Read More||None|
|USDA REAP GRANT||REAP helps agricultural producers and rural small businesses reduce energy costs and consumption by providing financing and grant funding to purchase and install renewable energy systems. Eligibility for the REAP program depends on you being an agricultural producer, with at least 50 percent of your gross income coming from agricultural operations and small businesses in eligible rural areas.||None|
|Solar Sales Tax Exemption||Although a sales tax exclusion doesn’t apply to all purchases of solar energy equipment, some solar power facilities may qualify as farm equipment and be eligible for a partial sales tax exemption. This means you could gain a tax exclusion of 5.25% on renewable energy equipment and machinery primarily used in agricultural activities.||None|
Federal Solar Investment Tax Credit (ITC)
The Federal Solar Investment Tax Credit (ITC) is a 30% federal tax credit available for home solar systems purchased and installed by the end of 2032. This is a significant chunk of money taken off their income taxes. Plus, the ITC has done a great job expanding the country’s solar industry. It has helped create hundreds of thousands of jobs while bringing billions of dollars into the economy since being enacted in 2006.
California Solar Property Tax Exemption
California will exempt property taxes on the added value to your home that comes with installing a solar energy system.
California Net Metering
Electricity companies in California have all adopted net energy metering, a policy that ensures your solar panels will be connected to the public-utility power grid and that surplus power created by your panels will be transferred to the grid. You can offset the cost of power drawn from the electricity grid due to net metering and become a zero net energy residence.
The minimum compensation you’ll receive is the avoided-cost rate, which is below the retail rate. While the policy specifics of net metering programs will vary among providers, it remains hugely beneficial for owners of solar energy systems.
Self-Generation Incentive Program (SGIP)
Californians that buy a home solar battery along with rooftop panels can get a rebate for the installation costs of the energy storage system. The rebate program may be as high as $1,000 per kilowatt-hour.
Single-Family Affordable Solar Housing (SASH) Program
If you belong to a low-income household or a disadvantaged community in California, you can get a one-time, capacity-based incentive of $3,000 for each kilowatt of home solar installed. Eligible recipients must have total incomes at 80% of the area median income or below.
Sacramento Municipal Utility District (SMUD) Solar Rebate
Residents of Sacramento can receive a solar incentive of $300 to install a new rooftop solar system. Unfortunately, you are ineligible for this incentive if you don’t live in Sacramento.
GoSolarSF Solar Rebate
Residents of San Francisco can receive a cash incentive of $100 to $2,000 per kilowatt of home solar installed for up to 4 kilowatts. The incentive will vary by system size, location, and applicant income. Again, this is a location-specific incentive that only benefits residents of San Francisco.
Commercial California Solar Incentives
Solar Incentives for Nonprofits and Businesses in California
Unfortunately, few other incentives are available specifically for nonprofits and businesses in California. However, the federal ITC provides for a 30% reimbursement for commercial installations for non-tax-exempt companies. This program was extended through 2032 via the Inflation Prevention Act.
USDA REAP Grant
The United States Department of Agriculture (USDA) has launched a program designed to increase investments in clean energy called the Rural Energy for America Program (REAP). REAP helps agricultural producers and rural small businesses lower energy costs and consumption by financing loans and grant funding to purchase and install renewable energy systems.
You are eligible to participate in the REAP program if you are an agricultural producer with at least 50 percent of your gross income coming from agricultural operations or a small business in eligible rural areas.
State Sales Tax Exemption
Although a sales tax exemption doesn’t apply to all purchases of solar energy equipment, some solar power facilities may qualify as farm equipment and be eligible for a partial sales tax exemption. This means you could exempt a tax of 5.25% on renewable energy equipment and machinery primarily used in agricultural activities.
Why Go Solar in California?
California is a hotspot for solar energy production thanks to its incredibly sunny climate, abnormally high electricity costs, and commitment to reducing carbon emissions. With an average of 248 sunny days per year in Los Angeles, California, it is no wonder that solar panels line the roofs of homes across the golden state. Compared to the American average of 205 sunny days per year, California is well-positioned to produce large amounts of solar power.
View our list of the most solar friendly states ranked.
California is also a great place to invest in solar energy because of the preexisting availability of local solar providers throughout the state. These providers offer customers the opportunity to entertain a variety of competing quotes while ensuring they receive the best quality service and equipment.
Finally, solar panels can dramatically increase your home’s value. According to Zillow, the average home experiences a 4.1% increase in value after adding a solar power system. The average home value increase from solar panels in California will be close to $18,324.
Sold on solar for your home? Get a free quote from local solar installers.
California Solar Cost
The total cost of solar installations in California ranges from $11,815 to $15,985. On a cost-per-watt basis, solar panel installation in California is $2.78. These costs have come down significantly in recent years. If you purchase a larger system (more watts), your cost will increase in addition to your energy production. With energy bills increasing amid high oil and gas prices, the relative cost of solar is bound to decline further.
How Much Can You Save on Solar in California?
Despite the upfront cost of purchasing and installing your solar system, you can save lots of money annually with solar, thanks to your system’s electricity. When solar panels produce electricity for your home, they reduce the energy you pull from the grid, thus lowering your utility bills.
California homeowners can save as much as $2,000 per year on electricity bills after paying off the cost of their initial purchase. With a payback period of 4 to 4.9 years, you can save thousands of dollars annually in almost half a decade. Over the 20 to 25-year lifetime of your photovoltaic (PV) equipment, you will experience net savings between $68,120 and $83,258.
Final Thoughts: The Best California Solar Incentives
California is one of the best places to invest in residential, commercial, or industrial solar energy systems. With plenty of sunlight to power your systems and a government that offers tons of tax incentives to install solar panels, what more could you ask for? There is no reason not to buy a solar energy system, especially with variable energy prices worldwide and climbing utility bills at home.
If you are interested in purchasing, here are some of the best solar companies in California based on our in-depth research and review:
California Solar Incentives FAQs
Is solar worth it in California?
Yes, we highly recommend solar energy systems in California. Solar can save you tons of money on your utility bills and help reduce your production of emissions and your carbon footprint. Plus, various federal, state, and local financial incentives are available in California to purchase solar panels accessible to anyone.
How much will my electricity bill go down with solar in California?
People living in California save as much as $2,000 per year on electricity bills after paying off the cost of their initial purchase. With a payback period of 4 to 4.9 years, you can save thousands of dollars annually in almost half a decade. Over your PV system’s 20 to 25-year lifetime, you will experience net savings between $68,120 and $83,258.
How much does it cost for solar panels in California?
The total cost of solar installations in California ranges from $11,815 to $15,985. On a cost-per-watt basis, solar panel installation in California is $2.78. These costs have come down significantly in recent years.
Can you get solar panels for free in California?
Although you won’t find ‘free’ solar panels in California, residents of California are lucky to have the support of numerous federal, state, and local financial incentives that will help to minimize the costs associated with purchasing a new solar energy system.
What solar rebates are available in California?
California has many federal, state, and local financial incentives for purchasers of solar energy systems. These include the federal government’s Solar Investment Tax Credit (ITC), the California Property Tax Exemption, and many local and private incentives.
How many homes in California have solar panels?
There is enough solar installed in California to power over nine million homes, which accounts for 25.29% of the state’s electricity production.
Do solar panels increase property taxes in California?
No, your taxes won’t increase. California will exempt property taxes on the added value to your home that comes with installing a solar energy system.
How much can you write off for solar panels on taxes in California?
California taxpayers can write off many costs associated with purchasing new solar panel systems. Check out the California government’s website for more information about incentive programs. Both homeowners and business owners are eligible to receive a rebate of 30% of the total cost of their solar system installation through the ITC. As of August 2022, this program was extended through 2032.
Today's Homeowner’s Solar Ranking and Review Methodology
At Today's Homeowner, transparency and trust are our most important values for the reader. That’s why we took the time to create an objective rating system and score each solar energy company/service according to our methodology.
Our research team dug deep into the fine print of contracts, combed through more than one hundred customer reviews, and thoroughly investigated each solar energy company’s services, costs, and products. We’ve done the homework for you by researching nearly all the solar energy companies on the market so you can have the information you need to make the best choice for your home.
We developed a formula to objectively determine the finest solar energy companies and give each a score out of 10 based on the following criteria:
- Services Offered (2.0): What does each solar provider offer as a basic service with any solar installation plan? In-house labor led to companies being ranked higher than those that contracted their labor out to third parties. Similarly, battery installation and panel monitoring were key factors that we looked for in each provider.
- Warranty Period (2.0): Solar warranties can cover labor, components, or both. The length of these warranty plans is of chief importance. Companies that offer 25-year warranty coverage got our highest score in this category.
- Other Offerings (2.0): Solar companies that provide secondary services are rated highly. These include obtaining permits to operate (PTO), providing financing and price matching options, and mobile performance tracking options.
- Company Reputation (1.5): Our main metrics for rating company reputation were BBB accreditation and rating and complaint response rate. These are reliable indicators of quality. Many of our best providers have a 100% complaint response rate.
- Customer Service (1.5): Availability via phone and online is key for modern home service providers in any niche. Those that offer both, along with clearly posted business hours and in-person estimates, are rated highly.
- Availability (1.0): Companies with availability in more than 40 states received our highest score in this category. We rated providers with a more limited presence progressively lower, depending on exact reach.