California Solar Incentives and Tax Credits (2023)
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California is known for being an environmentally conscious state and is committed to aggressive clean energy goals over the next 20 years. Officials plan to achieve carbon neutrality by 2045, one of the most ambitious renewable energy goals in the United States. With one of the country’s largest solar markets and several cost-saving solar incentives. California is an ideal place to go solar.
If you’re considering a move to solar, this guide can help you find the best statewide solar incentives to lower your investment costs. We also offer recommendations for the Golden State ’s best solar companies.
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Overview of California Solar Incentives
The chart below outlines the available federal, state, and local solar incentives for residential customers :
California Solar Incentives, Tax Credits, Rebates
California offers several solar programs and incentives for homeowners. These programs help lower the cost of solar panels and add-on battery storage. California also has programs designed to make solar more affordable for low-income households. Beyond financial incentives, the state protects homeowners ‘ right to own solar panels. Our team spent more than 80 hours researching applicable federal, state, and local incentives and laws that support residential solar owners. Below is an overview of California ‘s solar incentives. programs, and laws.
Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH)
- You’re a current utility customer with Pacific Gas and Electric ( PGE ), San Diego Gas and Electric ( SDGE ), or Southern California Edison ( SCE ).
- You live in a qualifying low-income area, own your home, and live there full-time
- You live in affordable housing as outlined by Public Utilities Code 2852
- Your household income falls within or below 80% of your area’s median household income
You’ll begin by applying on the GRID Alternatives website. If approved, you could receive up to 3 per watt in solar rebates for a new system. If we apply those savings to an average 5 kilowatt-hour (kWh) system, you could save up to 15,000 on installation.
Our team reviewed the application process and learned that it requires several steps and significant paperwork. Some steps involved include verifying qualification, homeownership, income, and affordable housing status. Although you may feel discouraged by the lengthy process, it’s worth it to lower initial solar costs and benefit from long-term energy savings.
Additional resources: You can begin your application at the GRID Alternatives website.
Self-Generation Incentive Program (SGIP)
SGIP rewards homeowners for adding battery storage to their home solar system. California is prone to outages due to rolling blackouts or natural disasters, and solar batteries can help power your home in these emergencies. Created by the California Public Utilities Commission ( CPUC ), this program provides a one-time rebate of up to 200 per kWh of solar battery storage capacity. Adding high-capacity energy storage. such as the Tesla Powerwall. will extend your solar system’s energy efficiency. leading to more electricity bill savings.
The SGIP is a tiered-block program, meaning its value gradually decreases as more customers sign up. If you’re considering applying, you should act fast. Eligibility requirements include the following:
- You must be a PGE. SCE. SDGE. or Southern California Gas Company (SoCalGas) customer
- Your installation must be completed by an approved SGIP installer
- Your home must be located within the eligibility area
Most of the paperwork is handled by your battery installer, making this application process much easier than other incentive programs.
Additional resources : Check the CPUC website for further details.
Equity Resiliency Program
Another SASH program. the Equity Resiliency Program (ERP) offers energy storage rebates. The program is geared toward low-income families who live in high-risk fire areas or have experienced two or more Public Safety Power Shutoffs (PSPS). A PSPS, or deenergization, occurs when utility companies shut down electrical power to reduce electrical infrastructure fire risk. This may happen during natural disasters, such as wildfires or flooding.
SASH program participants can also qualify for ERP. Under this program, you could receive a rebate of 450,000 per kWh—almost enough to cover an average solar battery ’s cost.
Our team discovered that the ERP application was similar to the DAC-SASH programs. If approved for SASH. you won’t have to start the application from scratch, but you must supply additional paperwork detailing your installation address, professional installer, battery cost, and storage system capacity. Despite the tedious paperwork, this program nearly eliminates solar battery costs and helps you save even more on energy bills.
Additional resources: Review the Equity Resiliency Program (ERP) for more details.
Active Solar Energy System Property Tax Exemption
This tax exemption applies to all California solar residents and removes the burden of added property tax. Most home improvement projects result in a property value boost. A move to clean energy has the same effect, with solar panels raising your home value. As home value increases, so do your property taxes. However, in California. you’ll benefit from higher property value without the extra taxes.
There is no application process required. This is an automatic benefit for residential solar owners.
Additional resources : Complete tax exemption details are on the California State Board of Equalization website.
California’s SGIP – Self Generation Incentive Program
Homeowners in California who install battery storage systems smaller than 10 kW on residential property are eligible for the state’s Self Generation Incentive Program (SGIP). This program pays an incentive of
California’s DAC-SASH Program
California state has approved and funded the DAC-SASH program through to 2030. DAC-SASH stands for Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH) and is a program designed to incentivize home solar in disadvantaged communities. The program is modeled after the successful SASH program (see below), which is now closed to new applicants.
Qualifying DAC-SASH homeowners must live in one of the state’s top 25% disadvantaged communities as per CalEnviroScreen. They must also be serviced by Pacific Gas Electric (PGE), Southern California Edison (SCE), or San Diego Gas Electric (SDGE) and meet certain income qualifications.
Interested homeowners can apply through GRID’s Energy for All Program, which combines state, local, and private funding for home solar installations.
A note on California’s SASH and MASH
California offered the SASH and MASH programs for more than a decade, with the last spots in the programs reserved at the end of 2021. Under these programs, low-income households could get an upfront incentive of up to 3 per watt of solar installed. This helped to pay for the entire installation cost of a 6 kW system in some cases.
SASH stands for the Single-Family Affordable Solar Homes (SASH) program, while MASH is for multifamily properties. Both programs expired at the end of 2021, with the last few qualifying projects built in 2022. So far, there’s no indication of plans to provide additional funding for SASH and MASH.
.25 per watt-hour of storage installed and is available for properties serviced by PGE, SCE, Southern California Gas, or SDGE.
For most customers (not low-income), the rebate works out to 15-20% of the average battery cost. Higher rebates are available in low-income areas and areas affected more frequently by blackouts and brownouts. Rebates of up to 450.00/Wh are available through this Equity Resiliency arm of the SGIP. For some homeowners, this could offset around 85% of the cost of battery storage.
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Funding for the program has been approved through to the end of 2024. SGIP also offers an additional incentive of 20% if you install battery equipment manufactured in California. As an example of SGIP, a family installed a Tesla Powerwall with a 13.5 kWh capacity may be eligible for an incentive rate of
State property tax exemptions in California
California offers a property tax exclusion for value added by solar. Qualifying technologies include solar water heat, solar space heat, solar thermal electric, solar thermal process heat, and solar photovoltaics. This exclusion is set to expire in January 2025, so take advantage now and lock in the exclusion until the end of 2024.
Note that this is an exclusion, not an exemption. As such, the assessed value of your home will not increase or decrease by adding solar panels. In contrast, the Appraisal Institute estimated in 2014 that homes in California increase in value by around 6,000 for every kilowatt of solar capacity added.
.20/Wh, working out to a substantial rebate of 5000,700.
Storage incentives are based on the system’s energy capacity (kWh), its power capacity, and other factors. Your solar installer should be able to do these calculations for you and fill out the necessary paperwork for the rebate. The first step is to submit a Reservation Request Form (RRF) with documentation showing plans to install an eligible system. Upon approval of the RRF and installation and interconnection of the approved system, the installer or homeowner then submits an Incentive Claim Form (ICF).
The great thing about SGIP is that homeowners can still access the program even if they installed solar panels a while ago. The rebate is only for solar storage, so as long as you’re adding a battery to an existing system, you should be able to apply.
Note, though, that the value of the incentive depends both on the size of your battery and how many batteries have already qualified for the program. As with many solar rebates and incentives, it pays to be an early adopter. You can see the current incentive rates at the SGIP metrics dashboard.
Net metering in California
Net metering is, for now, still available in California, despite attempts by utilities and some lawmakers to get rid of it.
Under California’s original net metering policy, homeowners with solar energy equipment received one-to-one bill credits for energy exported to and drawn from the grid. In 2016, however, California approved a revised version of net metering, with all new solar homeowners eventually moving to a time-of-use (TOU) rate. This means that the cost and credit of every kWh varies depending on what time of day you send or draw energy to and from the grid.
If your utility has already switched to a TOU rate and you don’t have a solar battery installed, consider installing one and applying for the SGIP rebate before 2025. That way, your battery can store the energy your panels generate during the day and you can use that energy at night or on less sunny days. This will save you the difference in cost between the electricity you export and buy.
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California Solar Storage Rebates Incentives
If you invest in solar energy for your home, you are using technology to harvest the energy from sunlight and convert it to electricity. But unless you have a way to store that energy, the usefulness you get from solar isn’t necessarily at 100% unless you add a way to save that energy for later.
Fortunately, there are options such as the California Public Utilities Commission (CPUC) Self-Generation Incentive Program that can help homeowners offset the cost of investing in a solar battery system.
California Solar Storage Rebates Incentives: SGIP
The Self Generation Incentive Program (SGIP) mentioned above is one of the longest-running solar programs offered to help those interested in going solar. SGIP offers rebates for solar storage technology for both residential and commercial properties, and state funding for this project was expected to exceed 450 billion USD through the year 2024.
That should give current and future homeowners an idea of how committed the State of California is to weaning itself off fossil fuels for home electricity. Combine that with other state mandates such as new residential construction including solar, and you have the makings of a serious move away from gas and oil for residential power.
Some Renters Included
You do not necessarily have to be a homeowner in order to claim SGIP incentives. Some renters qualify (see below) depending on the nature of the housing and other factors.
Time Counts
SGIP offers rebates for solar, but California residents don’t have an unlimited amount of time to access those options. It’s a “tiered-block” program, and over time the amount of the incentives will go lower as more and more people add solar storage to their homes.
Early adopters stand to benefit the most, while procrastinators may encounter smaller rebates depending on how long they wait to apply. At press time, thousands of dollars in savings were still on the table.
Some SGIP Funds Reserved For High-Risk Homes
A portion of SGIP funding is set aside for high-risk areas such as those prone to wildfires, and those that have experienced a qualifying number of “Public Safety Shut-Off Events”. Low-income and medically vulnerable citizens are also included in certain priority funding.
Claiming SGIP
The California Public Utilities Commission official site advises homeowners to reach out to a solar installer and ask for that vendor’s help to apply for the rebates. While the Commission site does provide a search tool to locate an installer, these vendors have not been vetted by the state, choose at your own risk.
Some encourage you to use a vendor marketplace to compare offers; in such cases, you may be able to find a more competitive offer that could save you a percentage on the install. But comparison shopping is key.
Who Qualifies For SGIP
According to the CPUC, “Any residential customer” of the following utility companies may qualify for a “General Market SGIP rebate”:
- Pacific Gas and Electric Company (PGE)
- Southern California Edison (SCE)
- Southern California Gas Company (SoCalGas)
- San Diego Gas Electric (SDGE)
This offer covers about 25% of the average cost for a solar energy storage system. Residential customers may also qualify for two other SGIP options: Equity and Equity Resiliency.
SGIP Equity Rebates
Equity rebates provide as much as 85% of the cost of adding a solar storage system. To qualify for SGIP Equity rebates, you must meet one of the following criteria:
- You live in a single-family home subject to resale restrictions, or;
- You live in a single-family home and have already, or;
- You have participated in or have incentives in qualifying solar installation programs.
- You live in a low-income apartment that includes five rental units, and you are located in a qualifying community, or;
- You live in an apartment and your property has already participated in qualifying solar installation programs.
SGIP Equity Resiliency Rebates
This program covers nearly 100% of the cost of installing a solar storage system in a residence. The qualifying criteria for this program include having experienced at least two Public Safety Power Shut-Off events or living in a qualifying High Fire Threat District. One of the additional requirements must also apply:
- You live in multifamily deed-restricted housing, or;
- You live in a single-family home subject to resale restrictions, or;
- You are currently enrolled in a utility Medical Baseline Program, or;
- You have notified your utility of serious illness and/or life-threatening condition, or;
- You have received or reserved other solar-related, or;
- Your home relies on electric pump wells for water.
Federal Tax Benefits For Solar Storage
What follows is not tax advice. This is an explanation of a federal tax credit that has been offered in the past for qualifying homeowners. The Federal Investment Tax Credit has allowed homeowners to claim up to 26% of the cost of a solar battery as a write-off on federal income taxes, which could be worth up to 4000 in savings depending on circumstances.
The caveat? You cannot get the tax credit simply for buying a solar battery system. It must be paired with a solar rooftop system. Those who power their battery using electricity pulled from the electrical grid cannot claim this tax incentive.
Tax laws are subject to change. Last year’s deductions may not be allowed this year depending on the nature of those deductions. Always consult a tax professional about the current year’s tax laws for best results.
Solar Energy System California Property Tax Delay
One basic perk of installing a solar battery system? You may not have to pay higher property taxes right away for installing that improvement.
If you add solar to your home in California, you may be eligible for a property tax exclusion that delays an increase in those taxes; some vendors estimate that adding a solar system to your property values may increase up to 4.4% depending on circumstances.
Any delay in having to pay the increased property taxes could help you better offset the cost of installing a solar battery system.
Energy Misconceptions
Misconception: It takes more energy to heat up the house again than just keeping it at a constant temperature. Or It takes more energy for light/computer/TV to turn back on than you saved by turning it off.
Truth: It is always better from an energy standpoint to turn things off
Misconception: Now that I have solar, it doesnt matter how much electricity I use, because it is all free.
Truth: The solar panels will only produce a certain amount of electricity, and the homeowner will still pay for the rest. So, if they use more, they will pay for it, and if they save more energy, they save more money.
Misconception: Weatherizing a home can lead to health problems because no fresh air will be able to get in the house.
Truth: This can be a problem in new, tight houses. It is important to have some air circulation to prevent odors and harmful gases to build up. However, most old houses are so leaky that doing standard weatherizing measures, like caulking and weather-stripping, will just reduce the drafts, but there will still be plenty of fresh air to prevent health problems.
Misconception: I shouldnt use CFLs because they have mercury.
Truth: CFLs do contain small amounts of mercury, which is toxic. However, the amount of mercury emissions that a CFL will offset during its life is greater than the amount of mercury in the CFL. Due to the mercury, it is important to learn proper disposal measures of CFL bulbs. Burned out bulbs should be recycled and broken bulbs should be handled with care (ventilate area and do not directly touch broken pieces). Recycle at your local hardware store.
Misconception: Now that I have solar, I will save money by switching to an electric dryer.
Truth: Heating (air or water) with electricity is expensive and should be avoided.
Misconception: I have solar and decided to put in a pool. My electric bill should not increase.
Truth: The solar panels will only produce a certain amount of electricity. Depending on the size of the system, adding more items that use electricity, like a pool, might not be covered by the amount of electricity produced. Therefore, you will have to pay for the gap in electricity that will occur.