California Solar Panel Incentives: Tax Credits, Rebates, Financing and
Net metering rules have changed, but the Golden State still offers residents additional motivations for going solar.
Sunny weather and a long history of supporting solar energy make California a leader in solar panels. But does the state encourage residents to convert to solar with financial incentives? Its recent decision to lower its net metering rates has some critics questioning the state’s commitment to residential solar systems.
California dominates the American solar energy market, deriving 28% of its electricity from solar. However, its current incentives for solar panels lag behind several other states.- California doesn’t make CNET’s list of states with the best incentives for solar panels.
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All Americans who purchase solar panels are eligible for the federal tax credit for renewable energy, but state and local incentives for solar vary across the country. Here are the local and state incentives for solar projects in California.
Note: These California incentives are for residential electric customers only. California has additional incentives for organizations, businesses and farms. The solar panel incentives listed below are also accurate as of May 26, 2023. Local government and utility programs change regularly, so check program websites to make sure they are still active.
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Interested in understanding the impact solar can have on your home? Enter some basic information below, and we’ll instantly provide a free estimate of your energy savings.
California state solar tax credits and incentives
Several incentives, credits and rebates are available to all Californians who invest in solar energy systems. Other incentives in this list apply to multiple California counties or to lower-income energy customers.
Property tax exclusion for solar energy systems
California is one of 32 states that provide protection against property tax increases for homeowners who install solar panels. Under California law, all qualifying active solar energy systems will be excluded from the assessment of your property, meaning that installing solar panels will not impact your property taxes one way or another.
This property tax exclusion is currently scheduled to expire on Jan. 1, 2025.
California Self-Generation Incentive Program
Utility customers of the four major investor-owned utilities.- San Diego Gas Electric, SoCalGas, Southern California Edison and Pacific Gas Electric.- are eligible to receive rebates for installing solar batteries using California’s Self-Generation Incentive Program. The California Public Utilities Commission offers a 200 rebate for each kilowatt-hour of your solar storage system.
A fairly midsized battery like the LG Resu 16H Prime, one of the top picks in CNET’s list of best solar batteries, provides 16kWh of storage, which would result in a 3,200 rebate under the current rules in California. The battery itself will cost about 10,000 to 13,000 with installation, per CNET’s sister site SaveOnEnergy.
Disadvantaged Communities – Single-Family Solar Homes program
California’s DAC-SASH program provides solar incentives for low-income customers in disadvantaged communities. Administered by GRID Alternatives, the program offers Californians 8.5 million in incentives annually.
The California Public Utilities Commission says that eligible customers can receive up to 3 per watt in incentives for solar installations. The current cost per watt of solar panels in California is 3.93, so DAC-SASH participants could save about 75% on solar installations.
California net metering incentives
Net metering allows homes with solar installations to receive money back for contributing surplus solar energy to the broader electricity grid. New rules for net metering reduce the amount of money back for excess energy by 75%. While earlier net metering participants earned about 30 cents per kilowatt, new participants will get about 8 cents per kilowatt.
The new net metering plan comes with higher electricity rates for times when demand is high and access to renewable energy is low, making solar batteries more valuable.
PACE financing for solar panels
Property Assessed Clean Energy programs provide financing for solar installations that allows residents to pay back loans for solar panels with their property taxes. While commercial PACE loans are common throughout the US, only three states.- California, Florida and Missouri.- offer residential PACE programs.
Unlike mortgage loans, PACE loans usually require no down payment or monthly payments. Instead, borrowed money is repaid through homeowners’ property tax bills over a term of 10 to 30 years. However, a lien is placed on your home until the loan is fully paid off, which makes selling a home more complicated. Some lenders may not want to provide a mortgage for a home with an attached PACE lien.
Local communities may provide PACE-style financing of their own. The Sonoma County Energy Independence Program functions similarly to state-licensed PACE programs, letting participants pay back solar installations via their property tax bills over 10- or 20-year terms at 7.49% interest.
Local solar tax credits and incentives in California
Beyond the solar incentives at the state level, many cities, towns and municipalities offer additional incentives for residents who invest in solar energy projects.
Alameda Municipal Power income-qualified solar rebate
Residential customers of Alameda Municipal Power can get a small rebate for installing solar panels. You’ll get 500 back for any qualifying solar installation if you earn less than 106,000 and your home was built before Jan. 1, 2020. This incentive is designed to offset any fees involved with installing solar panels.
CleanPowerSF Solar Inverter Replacement Program
The San Francisco Public Utilities Commission and CleanPowerSF are currently running a program to help customers replace old, damaged solar inverters. The program is only available to existing GoSolarSF customers with a solar installation that’s at least 10 years old and no longer covered by warranty.
If your solar inverter needs replacing and you use a participating installer, you can receive up to 3,000 to cover the cost of the replacement.
While the solar inverter replacement program appears to be still active, the CleanPowerSF fact sheet notes that participating installers are current as of May 2022.
Texas Solar Incentives 2023
Lancaster Energy Power Choice
Residential customers of Lancaster Energy who can’t afford solar panels or don’t want to pay for them can get them installed for free by Tesla with the electric company’s Power Choice program. Tesla will install rooftop solar panels and a Tesla Powerwall Battery for no money at all, and customers will pay for energy usage and storage via their usual electric bill.
However, customers don’t get the tax incentives from the solar panels and can only leave the program by buying out the solar equipment and battery. Also, if a home in the Power Choice program is sold, the contract transfers to the new owner, which could make selling more complicated.
Los Angeles Department of Water and Power Solar Rooftops Program
LADWP’s Solar Rooftops Program gives its customers another way to contribute to solar power generation without spending anything for solar panels. LADWP installs, connects and maintains the solar panels on a homeowner’s property at no cost, and gives the homeowner an annual payment of 240 to 600 each year for 20 years. Customers’ electric bills are otherwise unaffected.
Sacramento Municipal Utility District solar stipend
Along with 7.4 cents per kW back for your surplus solar energy, SMUD also provides a 150 stipend for solar panel installations. The money is targeted to pay for the production meter and other solar equipment for the interconnection, but you’ll need to act quickly. The solar stipend expires on May 31, 2023.
San Diego Green Building Incentive Program
The city of San Diego will waive building permit fees and plan check fees for the installation of residential solar panels.
Silicon Valley Power Low Income Solar Grant Program
Publicly owned Silicon Valley Power.- which mostly serves the city of Santa Clara.- provides grant money for solar panels to residential customers enrolled in its Financial Rate Assistance Program. Eligible customers who own their own solar installations can get 3.50 per watt for solar systems up to 3 kilowatts of power. Solar systems must produce at least 3,800 kWh annually.
SoCalGas Solar Thermal Water Heating System Rebate
SoCalGas customers in Central and Southern California can get a rebate of 5000,500 to 4,000 on qualifying solar water heaters. Your system must have a Solar Uniform Energy Factor of 1.8 or higher, and you’ll need to install a new Energy Star certified water heater along with your solar installation.
Residential Solar Power Incentives in Tennessee
On top of the environmental impacts and opportunities to save money, state incentives make residential solar power an attractive option. Although each state offers different incentives and rebates, solar panels are a worthwhile investment for your home that will save you money in the long run. Here are some of the residential solar power incentives in Tennessee:
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Green Energy Property Tax Assessment
Tennessee offers a property tax assessment for certified green energy that is proportionate to the facility’s value. For solar panels, the incentive has a maximum return of 12.5% of the initial installed cost. Simply put, your property appraisal will tell you the worth of the facility based on the clean energy technology and the energy produced, giving you a return on a percentage of its deemed worth. To get this certification, you can’t install a battery with your solar system.
Federal Solar Investment Tax Credit
This incentive is a federal one, meaning that you can receive it regardless of the state you live in. The federal solar investment tax credit (ITC) returns up to a certain percentage of your solar panel purchase, reducing the cost.
Currently the ITC for solar panel systems has increased to 30%. The percentage off is for the entire cost of the system, including the flat rate of the solar panel equipment, labor costs and permit requirements.
Sales Tax Exemptions
When purchasing a solar panel system to install in Tennessee, it is exempt from all sales tax. Depending on the sales tax where you reside, this exemption can reduce the starting cost by about 7%.
Dispersed Power Production Program
Tennessee currently doesn’t have a net metering program where utility companies credit solar energy system owners for the electricity they do not use and instead add to the grid. However, the Tennessee Valley Authority (TVA) offers a similar program but with less of a return.
While not exactly net metering, this TVA solar incentive allows residential customers to earn money from any unused renewable energy they produce, which the TVA buys. The TVA sets its rates annually and offers five-year agreements. Since this program costs homeowners more to participate than it awards, we don’t recommend choosing this option.
Manufacturer Rebates
Although Tennessee does not offer rebates from the state for solar panel installations, they do not prohibit manufacturers from offering rebates. You can look for a solar energy system that has discounts or money-back incentives.
Commercial Tennessee Solar Incentives
There are also benefits directed toward commercial businesses installing solar panels. Some of the commercial solar power incentives in Tennessee include:
Green Energy Property Tax Assessment
The Green Energy Property Tax Assessment works in the same way for multiple facility sectors, including residential, commercial, industrial and municipal utilities. While this solar power tax incentive amount depends on the building’s sector, it has a maximum of 12.5% of the installation cost.
Sales Tax Credit for Clean Energy Technology
Sales tax is Tennessee’s primary source of state tax revenue. Use tax, the counterpart to sales tax, is what the state requires you to pay when the seller doesn’t collect the sales tax or you have other taxable items shipped from out of state. However, clean energy technology is exempt from these taxes.
If your company wants to install solar energy equipment, you, along with your solar panel contractor, must file a tax-exempt application to become a certified green energy production facility, which will reduce the tax cost of your installation to zero.
United States Department of Agriculture Rural Energy for America Program Grants
The U.S. Department of Agriculture (USDA) offers financial incentive grant programs and loans to encourage commercial and agricultural businesses to implement renewable energy systems into their facilities. Their Rural Energy for America Program (REAP) provides this financial aid to eligible businesses and projects.
As of the 2018 fiscal year, the USDA had a budget of 600 million, allowing them to offer renewable solar panel grants between 5000,500 and 500,000, efficiency grants of 450,500 to 250,000, and a loan and grant combination with an amount exceeding 450,500 for the grant portion. The maximum incentive you can receive within this range is 25% of the total project cost and is anticipated to increase in the near future to 50% of allowable project costs per updated federal programs.
Cost of Solar Panels After Tennessee Incentives
These incentives and rebates can help you exponentially reduce the cost of your solar panel installation. Because of the increasing need for green energy and renewable resources, many state and federal resources exist to aid in the transition from traditional electric to solar panels.
For example, if you plan to install a 15,000 solar panel system on your residential home, you won’t have to pay sales tax because it’s green energy equipment. Then, qualifying for the federal solar investment tax credit, you can get 30% back, significantly reducing your overall cost.
Between these incentives and any additional rebates or programs you elect to participate in, you significantly reduce the overall cost of your solar panel installation. These panels can pay off themselves in about seven to 20 years and enable you to profit, helping you earn money in a way that also conserves the environment.
Since Tennessee does not implement net metering, there is a need for systems designed for profitability rather than all-out performance. Paying attention to these details allows for a cost-effective system. If you live in Knoxville, Tennessee, we can provide you with a profitable system to produce power for your home.
Get Started With Solar Power
If installing solar panels on your home or business seems like the right thing for you, check out Solar Alliance. Serving the southeastern United States, we are happy to help you with any of your commercial, industrial and residential solar needs.
At Solar Alliance, we take pride in being a fully licensed solar energy company that you can trust. We offer affordable pricing to give you the best value on your solar panel system. Our top priorities are helping you save money, increasing your property value and providing you with eco-friendly power.
Every state is different, and every utility is different. Understanding the rules is the first step to successfully installing a profitable solar system — so check references carefully when you’re choosing a solar installer and, hopefully, you’ll pick us.
Contact us today to learn more about our solar solutions for your home or business.
Texas Solar Panel Costs
As of May 2022, the average solar panels cost in Texas is 5000.69/W, according to EnergySage. The average solar panel cost varies by system size—more panels means a higher equipment and installation cost—but panels can be purchased at a bulk price, resulting in a lower cost per watt.
Given a solar system size of five kilowatts (kW), the average installation cost in Texas ranges from 11,432 to 15,468. Note that your net price will likely drop by thousands of dollars after factoring in the Federal Investment Tax Credit and other state and local incentives.
Beyond the equipment and installation fees, the cost of solar additionally includes permitting costs, inspection costs and installer profit margins, which will vary by region and company.
Federal Solar Investment Tax Credits
Tax credits undoubtedly make investing in solar energy systems more affordable and beneficial for homeowners. Under the Federal Solar Investment Tax Credit (ITC), eligible taxpayers can claim a credit on their income tax return for qualified solar energy systems made during the taxable year.
This tax credit enables Texan homeowners to claim a credit that matches 30% of the overall costs they have incurred for solar equipment, which includes expenses for materials, labor and installation. Therefore, the ITC allows individuals to recover a substantial portion of their solar energy system investments.
Texas Solar Rebates and Tax Credits
Texas residents are eligible for a number of solar benefits. but most of them are hyperlocal rather than statewide policies.
In lieu of a statewide net metering policy, utility companies in the state have policies that credit owners of solar energy systems for electricity their panels produce that is not used. Texans can then use those credits — instead of buying electricity from the utility — if their panels aren’t producing enough electricity to meet their usage needs, such as at night or during a cloudy season.
A short list of utilities in the state that offer net metering benefits include:
- El Paso Electric
- The City of Brenham
- CPS Energy
- Green Mountain Energy
Additionally, residents in neighborhoods governed by a homeowners’ association, or HOA, need not worry about HOA regulations that would keep them from installing solar on their property. Texas has a solar rights law that prevents HOAs from banning solar energy systems on individual properties.
Texas Solar Property Tax Exemption
Thanks to the renewable energy property tax exemption. residents of the Lone Star State don’t have to worry about extra taxes as a result of the property value increase added by going solar.
Texas doesn’t have a statewide solar tax credit or rebate program, but a number of local governments and utility companies (large and small) offer incentives to homeowners going solar.
Residents of the state capitol, Austin, are eligible for Austin Energy benefits. You’re eligible for a rebate of 5000,500 plus Austin Energy’s Value of Solar Tariff, which pays you
Solar Buyback Programs
Solar buyback programs are a crucial piece of the puzzle regarding encouraging the adoption of solar energy. Not only do they make it financially viable for homeowners to invest in solar panels by providing an incentive, but you also save on your electricity bills and generate revenue from surplus power. However, these programs vary by region and utility company, with different rates and terms of compensation.
In Texas, net metering is not mandated statewide, but utilities can offer voluntary net metering programs. These programs allow customers who generate electricity from renewable sources, such as solar, to receive credits for excess power exported to the grid.
The compensation rates and terms vary depending on the utility, with credits typically applied to future bills or carried over to subsequent months. Therefore, it’s essential to do your research for the latest information on net metering policies and programs in Texas.
.097 for every kilowatt-hour (kWh) your solar panels can generate.
CPS Energy customers can receive 5000,500 for installing solar panels on the roof of their home. Choosing to install locally-sourced solar panels means you’re eligible for an additional 500.
Guadalupe Valley Electric Cooperative and the City of Sunset Valley offer additional rebates to homeowners in their areas.
Additional solar incentives may be available from and specific to your city, county or power company.
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How do solar tax credits work?
While the incentives behind solar right now are indeed generous, they’re not going to come in the form of cash or check. Instead, these rebates offset the taxes you owe to the state or federal government.
Can solar panels save you money?
Interested in understanding the impact solar can have on your home? Enter some basic information below, and we’ll instantly provide a free estimate of your energy savings.
So very basically, if you put solar on your house, and you own the solar system, you qualify for a tax credit. So that’s a credit on the cash you would otherwise pay on your taxes the following year, said Greg Fasullo, CEO of Elevation, an Arizona-based residential energy technology and solar company.
You’re eligible for the tax credit for the year that you installed the solar panels. This type of rebate.- which takes a chunk out of your tax bill.- is just one of many. Some states also offer sales tax exemptions on the cost of the solar system, and others exempt homeowners from property tax increases that could arise from a higher home value post-solar installation.
How does the federal solar tax credit work?
The US government offers some of the best tax incentives for solar panels. As of 2022, you can now qualify for up to 30% of the total cost of your solar system as a tax credit.
Virtually any solar installation completed between 2017 and 2034 is eligible, but you can read detailed guidelines here. There are no income limits for the program, but because this incentive will come as a tax rebate, you do need to have taxable income to benefit from the credit, Fasullo said.
The total cost of the solar panel system, for the purposes of this program, includes not just the panels themselves, but also labor, installation and energy storage equipment.
What states have the best solar incentives?
Each state has a different mix of tax credits, rebates and net-metering policies that can offset the cost of a solar installation.
The economics, even without the tax credit, makes sense, Fasullo said of installing solar on your home. But these programs can sweeten the pot even more.
Here are the top seven states for solar incentives.
New York
Residents in New York can access a few different incentives. On the tax credit side, customers qualify for 25% of the solar system cost, up to 5,000. They can also qualify for sales tax exemptions, and if your solar panels generate excess power, net metering will pay you about
Why are some states more solar-friendly than others?
The solar tax credits that are available in your state depend largely on the utility companies.
Solar panels, because they allow you to generate your own electricity and rely less on the grid, have forced utilities to reshuffle their decades-old business model of building power plants and sending energy to households, Fasullo said. Not to mention the fact that, if your solar panels generate excess electricity, the utility has to start paying you.
All the utilities are scrambling because their business model is under attack, he explained. The less progressive utilities view [solar panels] as a threat.
So, in the states where utilities are still resisting solar panels, the incentives are likely to be less generous.- or just totally nonexistent. And in states where utilities have embraced solar, the rebates will be a lot stronger, Fasullo said.
Educate yourself on your utility, he advised. That could translate to rebates at the Hyper-local, municipal level, too. If your state doesn’t offer rebates, sometimes your town or city might step up to fill the gap.
.69 to 450.09 per kilowatt per month.
Idaho
Homeowners in Idaho can qualify for some significant rebates. The state offers a tax deduction of 40% of the cost of a solar system applied the year of installation, then a 20% deduction the following three years. Net metering policies will vary by utility, but the state also offers low-interest loans to help fund solar installations.
Illinois
Illinois is another state where, if you fall into the income requirements, you could qualify for a free solar installation. Other incentives include renewable energy credits that could cover about a third of the cost of a system, and property tax adjustments to lower your tax bill.
Maryland
Maryland residents have a few solar tax incentive options. Lower income customers can have the total cost of a solar installation covered by grants. The state also offers exemptions from sales tax and property tax increases. Net metering and solar renewable energy certificates in the state allow homeowners to gain extra income from the energy their panels generate, too.
Oregon
In Oregon, the incentives you can expect depend somewhat on your utility provider. Anyone in the state can access up to 5,000 off the cost of qualifying solar systems. But utility companies also offer rebates of as much as 450,500, as well as net-metering opportunities. Customers building new homes can also get an incentive to throw solar on the roof.
South Carolina
The South Carolina Solar Tax Credit is one of the most generous out there. It offers a tax credit of 25% of the cost of a solar panel system, up to 35,000 or 50% of the taxpayer’s tax liability for the year. The state also offers some property tax exemptions and net metering programs. Plus, Santee Cooper customers can qualify for another 5,700 rebate.
Texas
The state of Texas has a big range of solar incentives that depend a lot on where you live and who your energy provider is (the state’s energy system is deregulated, meaning customers can choose their utility). Some of the available rebates include a 5000,500 credit for customers in Austin, as well as net metering programs that vary by utility.