REAP Solar Grants & Your Rural Business
California Solar Incentives You Need to Know in 2022 — and Beyond
With California’s year-round sunny skies, ambitious climate change goals. and a selection of financial incentives and benefits to choose from, going solar might be more affordable than you think.
The exact cost of your PV system (and how much you’ll save on your energy bill) depends on a list of factors. Some include the size of your PV system, which installer you choose, eligible solar incentives, which utility services your region and their electricity rate structure. and how much electricity you use.
Regardless of where you live in California, there are a few solar incentives and savings benefits for you, including property-assessed clean energy (PACE). property tax exemption for PV systems, and net energy metering (NEM). Another solar tax incentive that is quite substantial is the federal solar tax credit—also known as the investment tax credit (ITC).
It is worth highlighting that incentives are also a huge benefit in other states, like Texas. which is one of the most deregulated electricity markets in the country.
Continue reading to find out more about these offerings and more.
California Tax-Based Solar Incentives
Property-Assessed Clean Energy (PACE)
PACE —known as the Home Energy Renovation Opportunity (Hero)— is a loan option that allows property owners to finance their qualified solar energy and energy efficiency projects through their property taxes. Local or state governments, working with traditional financiers, fund the upfront cost of the project, and homeowners pay back their local authority via an increased property tax bill, usually over a period of 20 years. PACE programs are currently operating in 20 states. including California.
Property Tax Exclusion for Solar Energy Systems
There are two main ways a reassessment at full market value of your property can be triggered in California—when you sell or buy a house and when there’s new construction or major house renovations. Section 73 of the state’s revenue and taxation code allows a property tax exclusion for qualifying new solar installations. Meaning, your property taxes will not increase if you install solar on your property. This tax exclusion was set to expire in 2016, but is now extended through January 1, 2025. Find out more about the active solar energy system tax exclusion and what qualifies here.
The Investment Tax Credit
Though not a California-specific solar tax incentive, the federal ITC provides additional and significant savings for solar installations. Every homeowner who buys and owns their PV system can claim and deduct 26% of their solar installation costs from their federal taxes (tax liability) this year. For example, if you install a PV system that costs 20,000, and you owe 6,000 in taxes, you can reduce your tax liability from 6,000 to 450,200 by applying your 5,200 (20,000 x.26) solar installation tax credit.
If the value of your tax credit exceeds your tax liability, you can apply the unused credit to the following year’s taxes. Using the same example above, if your tax liability was 3,000 instead of 6,000, you can roll over the unused 5000,200 (5,200 – 3,000) to next year’s taxes.
Note: You can only roll over any unused credit once, and the ITC is in addition to all state and local solar rebates and incentives you receive. Also, the value of the ITC stepped down from 30% to 26%; it will drop to 22% in 2023, then to zero for residential installations in 2024 unless Congress renews it.
Here’s an in-depth guide about the ITC for homeowners from the Department of Energy.
Net Energy Metering
Net metering (also called Net Energy Metering or NEM) allows utility customers to get credit for the extra energy they produce and give to the utility. NEM has become the dominant approach in the U.S. for compensating solar customers for the energy they contribute to the grid. NEM is mandatory in California and it increases the value of rooftop solar.
New participating PV systems must be sized to meet customers’ demand—not higher, and switch to a time-of-use electricity rate. If you choose to participate in NEM, you will receive a bill credit for the excess solar energy your PV system produced and exported to the electric grid. How much credit you’ll receive (and save on your monthly energy bill) will depend on when you installed solar.
We’ve written extensively about NEM and what its changes will mean for solar savings ; learn more about California’s latest NEM policy here: NEM 2.0. (Note: The California Public Utilities Commission (CPUC) is currently in the process of developing a successor to the existing NEM tariffs.)
Solar for Affordable Housing
California’s Single-Family Affordable Solar Housing (SASH) program provides incentives to qualifying low-income single family homeowners to help offset the upfront costs of installing solar. The program offers one up-front incentive level of 3/Watt to all qualifying applicants to eligible households within the PGE, SCE, and SDGE territories. SASH is overseen by the CPUC and administered by GRID Alternatives.
The state’s Multifamily Affordable Solar Housing (MASH) program, which is now closed to new applicants but may have a waitlist, provides incentive rates of 450.10 to 450.80/Watt for qualifying multifamily affordable housing. It is administered by PGE, SCE, and the Center for Sustainable Energy in SDGE territory.
Clean energy incentives and programs
A clean energy system has many benefits, including saving you money. Several PGE and non-PGE incentive programs exist. Each program is specific to the renewable energy technology you plan to install and has its own eligibility rules.
We can also help you find a contractor who will help you to understand the incentives and which program is right for your needs. Visit Find a Contractor.
COMPARE INCENTIVE PROGRAMS
Disadvantaged Communities Single-Family Affordable Solar Housing (DAC-SASH)
The Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH) program is administered by GRID Alternatives, a nonprofit that works to provide solar to customers who are in economically or environmentally disadvantaged communities and are under certain income thresholds. GRID provides incentives to cover the full cost of solar panels on customer homes and enables customers to save on their bills every month. To learn more, visit GRID Alternatives.
Wind, fuel cell and other clean energy
Self-Generation Incentive Program (SGIP)
Install alternative energy technologies in your home to receive an incentive. Some examples include wind, fuel cells and battery storage combined with heat and power systems. To learn more about this PGE program, visit Self-Generation Incentive Program (SGIP). To learn more about the battery storage technology and evaluate if it’s right for your home, visit Battery Storage for Residential Customers.
Solar on Multifamily Affordable Housing (SOMAH)
The SOMAH program provides financial incentives for installing photovoltaic (PV) energy systems on multifamily affordable housing. To learn more, visit the SOMAH website.
California Solar Initiative (CSI) thermal program
The final date to submit new solar water heating applications to the CSI-Thermal program was July 31, 2020. Remaining applications must be completed and receive incentive payment(s) before the program closes on October 31, 2024.
NOTE: Incentive program applications are typically completed by your contractor. If you receive incentives, your contractor may discount your up-front costs with your incentive amount for immediate savings.
4- Government Grants and Utility Rebates For Solar Energy
Net Energy Metering Aggregation Program
The PGE Net Energy Metering Aggregation (NEMA) program may be a good option for customers looking to utilize a renewable energy system to serve the load of multiple meters on the same property, or on adjacent or contiguous properties. To learn more about NEMA, visit Discover Net Energy Metering Aggregation.
The PGE Virtual Net Energy Metering (NEMV) program allows an individually metered multi-unit property to use the output from a renewable generator (e.g., solar panels) account to provide bill savings to individual units. To learn more, visit Virtual Net Energy Meting Overview.
Solar Energy System Property Tax Exemption
Add a new rooftop solar panel system to your home in Texas and your property taxes won’t go up. 8 Installing a photovoltaic (PV) system in Texas could also help you build home value.
If you’re an American Electric Power (AEP) Texas, 9 Austin Energy, 10 CPS Energy, 11 or Oncor residential customer, 12 you may be eligible to get a cash incentive of 5000,500 to 8,500 for the kW of solar power installed in your home. This varies by electric provider, solar PV system size, location, and applicant income.
Texas’s Solar Potential Is at Reach
Aside from these excellent state incentive programs, our home solar and energy storage plans in Texas start at down. If you’re interested in creating and storing your own solar energy in Texas, our team is here to answer all your solar questions. Rest easy knowing that we’re one of the best solar installers in Texas. Discover if Sunrun is right for you and your family’s energy needs.
DISCLAIMERS:
Consumer’s ability to monetize rebates, incentives, and tax credits depends on several factors, including, without limitation, continued state subsidization of these policies, the applicable Sunrun product type, and whether a consumer purchases or leases a home solar system from Sunrun.
We recommend contacting a tax professional to most accurately determine the impact tax credits may have on your federal taxes.
- Texas annual sunshine state rank
- Texas solar price drop
- Texas carbon dioxide (CO₂) emissions
- Texas electricity costs
- Sunrun ranked as leading residential solar-plus-storage vendor
- Federal Solar Investment Tax Credit (ITC)
- TXU Energy Home Solar Buyback Plan
- Texas solar property tax exemption
- American Electric Power (AEP) solar rebate
- Austin Energy solar rebate
- CPS Energy solar rebate
- Oncor solar rebate
- Texas solar panel costs
- TXU Energy and Sunrun partnership
- TXU Energy company facts
- TXU Energy Home Solar Buyback FAQs
How Does USDA REAP Grant Scoring Work?
The scoring criteria for applications have changed slightly in 2023 for these six new rounds. Your application will be evaluated and ranked based on the following:
- Environmental Benefits (5 points). You’ll receive points if your project has a positive effect on resource conservation, public health, and/or the environment.
- Energy Generated, Replaced or Saved (25 points). You’ll receive points depending on how much or the percentage of energy you’re generating, replacing, or saving.
- Commitment of Funds (15 points). The higher the percentage of funding for the project you have, the more points you’ll receive.
- Previous Grantees and Borrowers (15 points). You’ll get the most points if you’ve never received the grant. You’ll receive none if you received this grant less than 2 years ago.
- Existing Business (5 points). You’ll get points if you meet the definition of an existing business.
- Simple Payback (15 points). The shorter your system’s payback, the higher the points.
- Size of Request (10 points). You’ll get points if you request 250,000 or less for RES or 125,000 or less for EEI
- State Director and Administrator Priority Points (10 points). You can get additional points depending on veteran or socially- or economically-disadvantaged status, the type of technology used, geographic diversity, and more.
If you’re interested in learning more about the criteria, check out the USDA’s rubric here.
How Do You Apply for a USDA REAP Grant?
The grant application process is typically done by your solar installer or a third party. However, it does require a fair bit of input from you. This will include providing various financial information, information about the proposed solar energy system, and your approval and signature for multiple documents.
They’ll take on the nitty-gritty work, and they’ll do their best to ensure your application stands a good shot at earning the coveted grant. At Paradise Energy, we have grant writers on staff who have helped secure over 12 million in grant funds for our customers.
The Safer Option: 25%
We expect these six rounds of the USDA REAP Grant will be extremely competitive. If your project likely won’t score well, or if you’d feel better going for the sure thing, you can always instead opt to apply for a 25% grant. Also through the USDA via the Inflation Reduction Act, this program acts to provide grants for other efficiency-related projects for farmers and rural businesses. Because of its lower amount, we expect this to be much less competitive than the 50% REAP Grant.
There’s no doubt that a grant covering 50% of your system’s installation costs is huge. Coupled with other widely available incentives, 80% or more of your installation costs could be covered within the first year.
But there’s no guarantee the USDA REAP Grant will stay at this 50% level, and it’s not something you’ll want to miss. The current program only extends through the fall of 2024.
The best time to get the ball rolling on your solar system and grant application process is now. The sooner you submit your application, the more chances you’ll have of getting this grant.
That’s where we come in! Our team of grant experts has helped our customers secure over 12 MILLION in USDA funds. We’re ready to help you achieve the same. Contact us today to get started.