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.
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.
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.
Changes coming to California solar owners
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 lowers incentives for rooftop solar panels
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.
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.
Local solar attic fan rebates in California
Many local energy providers offer rebates for energy-efficient appliances, including solar attic fans. These fans usually connect directly to dedicated solar panels to power themselves and cool down attics. Here are the publicly owned electric utilities that are currently offering rebates for solar attic fans.
Azusa solar fan rebate: Customers of Azusa Light and Water can get up to 150 as a credit on their electric bill with the purchase of a qualified solar fan for their attic or home using this application (PDF).
Glendale Water Power solar attic fan rebate: GWP customers who install solar attic fans can get 100 for each, or 125 if the fans were purchased in Glendale. Customers are limited to two rebates every 10 years at the same residence, and can apply for the rebate online.
Gridley solar attic fan rebate: The City of Gridley Electric Utility gives customers
Federal solar tax credits and incentives for Californians
The federal solar tax credit might be more valuable than any of the state and local incentives currently offered in California. It gives you 30% back in tax credit for expenses related to installing solar panels and batteries.
The official name of the federal solar tax credit is the Residential Clean Energy Credit, and though it was expected to expire in 2022, the Inflation Reduction Act extended the tax credit until 2035.
Applying for the federal solar tax credit is simple. Fill out IRS Form 5695 and include it with your tax return for the year in which you installed your solar system, or let the best tax software handle it for you.
The Inflation Reduction Act of 2022 keeps the federal solar tax credit at 30% until 2033, when it will drop to 26%. The credit will further decrease to 22% in 2034 and expire completely in 2035.
The solar tax credit is nonrefundable, meaning the credit you receive cannot be more than the amount you pay in taxes. You can, however, carry over any additional credit beyond your tax burden into future tax years.
.45 per cubic feet per minute back for solar attic fans as a rebate. Fill out the application (PDF) and mail or email it to the electric department.
Imperial Irrigation District solar attic fan rebate: Residential electric customers can get a 125 rebate for solar attic fans using this application (PDF).
Lodi solar attic fan rebate: The Lodi Electric Utility offers a rebate for solar attic fans that’s based on the capacity of your fan.-
Comparing California solar incentives
Values of incentives are based on a national 24,000 solar installation average (5000.99 per watt for a 8kWh system). State property tax is estimated at 1% of home value.
.15 per cubic feet per minute. You’ll need to complete this form (PDF) to apply for the rebate.
Modesto Irrigation District solar attic fan rebate: Residential customers of MID can get some money back (PDF) after purchasing a solar attic fan.- 100 for appliances with 20 watts of power or greater; 50 for fans with 10 to 19 watts. The application form (PDF) must be snail mailed back to the electric company.
Pasadena solar attic fan rebate: If you’re a Pasadena Water Power customer, you can get 80 back on a rebate for solar attic fans, plus another 20 if you purchased the fan in Pasadena. You’ll need to sign into your online account to apply for the rebate.
Riverside solar attic fan rebate: The electric company of Riverside provides a number of rebates for energy-efficient appliances, including solar attic fans. To claim the 100 rebate for a solar attic fan, complete and mail or email this form (PDF).
Ukiah solar attic fan rebate: Ukiah also provides a rebate for solar attic fans based on the capacity of the appliance. The city utility pays
California power purchasing agreements
If you don’t want to install solar panels yourself, a solar power purchasing agreement lets another company install solar on your property then charge you a predetermined amount for that solar energy.
Solar power purchasing agreements are an easy way to get solar power at no cost upfront, but you won’t get any of the tax incentives related to solar panels, and you’ll need to watch out for potential rate hikes over time.
Here are a few of the local public solar power purchasing programs available in California.
Santa Barbara Home Power Program
All Santa Barbara County residents can now get solar power installed in their homes at no cost upfront and without a lien on their property. Instead of paying for solar installations, participants in the Santa Barbara Home Power Program have solar panels installed for free and then pay for the energy generated by them.
The program is only available to residents without existing solar systems. Customers currently pay 24 cents per kWh for the first year of service, with rates increasing 2.9% annually.
Santa Clara Solar Water Heating Program
For homeowners who don’t want to install their own solar water heaters, the city of Santa Clara leases and maintains solar water heating equipment for its residents. Homeowners pay an installation fee and a monthly utility fee for the equipment, and the city takes care of the rest.
.20 per cubic feet per minute. Residential customers can apply for the solar attic fan rebate with this form (PDF).
Introduction to solar incentives
As the need for climate action has become ever more urgent, lawmakers across the country have stepped up to support solar power: the best form of energy generation there is (we had to say it). This support has come in many forms but is usually the result of legislative action.
Many state legislatures have passed laws called renewable portfolio standards (RPS) that require utility companies in the state to get a certain amount of the energy they sell from renewable sources. These laws often include funding for incentive programs to help home and business owners adopt solar. State public utilities commissions are often charged with designing these programs to meet the requirements outlined in the RPS law.
Solar incentives come in one of three major types:
- Tax breaks. Income tax credits are the most popular kinds of tax breaks, but state and local governments also commonly offer sales and property tax exemptions.
- Rebates. Usually offered directly to solar installers by utility companies using a pool of ratepayer funds specifically set aside to encourage solar development, rebates generally reduce the up-front cost of going solar.
- Performance payments. Performance payment programs offer a way for solar panel owners to make additional income based on the amount of energy their solar systems generate.
Here’s a bit more on each of the three main types of solar incentives:
Solar tax credits
People and businesses who purchase solar panels have long enjoyed tax credits that help ease the financial burden of going solar. Both the federal and state governments offer solar tax credits.
All federal and state income tax credits can be claimed when filing taxes in the year after installation. We’ve developed a helpful guide to claiming the federal solar tax credit using form 5695. State tax credits are usually fairly simple, and your tax software or preparer should be able to guide you through claiming them.
The federal solar tax credit
The current federal solar tax credit offers 30% of the costs of installing solar back to taxpayers in the year after the installation is completed. The federal tax credit is based on the purchaser’s income, and the credit can’t exceed the total tax owed in one year, but unclaimed credit can be carried forward to future years.
Say your solar installation costs 18,000 total. You are eligible for a federal tax credit of 5,400. Remember, the solar tax credit is non-refundable, so you can only claim the full 5,400 if you owe at least that much in taxes. If you owe less than that, you can claim the remaining tax credit value the following year.
This is where it gets complicated because the amount of tax you owe depends on your income, deductions, and other credits you qualify for.
Here’s a quick example: A married couple filing jointly with an income of 76,367, who take the standard deduction of 27,700 and qualify for no additional credits or deductions, will owe 5,400 in tax in 2023. Again, that tax changes based on whether the couple has dependents or qualifies for any other deductions and tax credits.
State tax credits
Many states also offer solar income tax credits, sometimes adding up to over half the cost of the system when combined with the federal credit.
Here’s a breakdown of the states that offer solar tax breaks, with links to each state’s incentive page on our site:
Find out what solar tax credit you qualify for
States and municipalities also offer sales and property tax exemptions for solar power. Sales tax exemptions reduce the upfront cost of going solar, and property tax exemptions prevent solar owners from paying more based on the value a solar installation adds to a property.
Tax exemptions differ from tax credits in that your eligibility is pretty much automatic if your state offers these incentives.
Your installer will take care of any necessary paperwork for sales tax exemptions, and property tax exemptions just mean the county assessor won’t be knocking on your door after you get solar installed.
States with tax exemptions
The subsidy levels show that the government is very keen on battery installations. One of the main reasons for this is the grid’s struggle to accommodate new renewable power capacity.
Greece’s distribution grid operator, Hedno. has stopped accepting new requests to connect plants to its network since last year, and this is not set to change any time soon. The only exceptions to this are net-metering installations, for which Hedno has freed up about 2 GW of grid space. The 2 GW of grid space is available for small PV systems up to 10 kW in size, and will be offered on a first-come, first-served basis. About 40 of this will be offered to residential net-metering systems, while 30% of it will be given to small commercial PV systems. The remaining 30% will be allocated to agricultural PV projects.
pv magazine print edition
The April issue of pv magazine, due out in a week’s time, takes a look at how the long-established link between solar and cannabis cultivation can help improve margins as medicinal and recreational use of the drug comes out of the weeds. We take a trip Down Under to examine why communities are rebelling against planned renewable energy zones perceived as being railroaded through without sufficient local consultation, and we consider the “solar crime” wave sweeping the UK and Europe.
Another reason for the scheme’s lavish support for batteries is the government’s aim to maximize the self-consumption element of net-metered systems. Solar-plus-battery systems will only be able to inject power to the grid when both the site consumption and the charging of the battery are met. Similarly, the government says if a solar system does not generate enough power to cover a site’s needs, the user will only be able to buy power from the grid when the battery is empty. All solar-plus-storage systems supported by the new subsidy scheme will be obliged to operate under this business model for the first five years.
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Greek-born Ilias has written for pv magazine since 2012, reporting on renewable energy news, electricity market developments and energy policy. His geographic area of expertise includes Europe and the MENA region.
Solar for Your Home
Join the more than 25,000 Oregonians already making their own solar power. You can reduce your home’s impact on the environment and take control of your energy costs with clean, renewable energy from the sun.
For even greater control and peace of mind, consider solar storage (you can also add storage to existing solar systems). Battery storage makes your home energy resilient by providing emergency backup power. Stored solar power can keep lighting, refrigeration, medical equipment, well pumps or other essentials operating during an outage.
Energy Trust incentives, Oregon rebates and federal tax credits can reduce solar or solar storage costs by about one-third. We also offer increased incentives for income-qualified homes.We can connect you with a qualified solar trade ally contractor to get your project started.
Establish your eligibility.
You must be an Oregon customer of Portland General Electric or Pacific Power and working with an approved Energy Trust solar trade ally contractor to be eligible for incentives.
Get proposals from Energy Trust solar trade ally contractors.
Systems must be installed by an approved Energy Trust solar trade ally contractor. Compare two or more bids to make the best choice for your home. Request proposals
Select your contractor.
See our FAQ on choosing a solar trade ally and comparing bids. Your trade ally contractor will handle all the paperwork for your system, prior to installation. Your Energy Trust cash incentive will be paid directly to your contractor, who will deduct the incentive amount from your invoice, reducing the upfront cost of your solar installation. Your trade ally can also help you apply for any other incentives you may be eligible for, like the Oregon Solar Storage Rebate.
Allow the professionals to install and verify your system.
Energy Trust helps protect your investment by reviewing the plans for your system before construction. Once it’s complete, we also verify that it meets our rigorous technical standards. In many cases, we will stop by in person to verify your system was installed properly.
Energy Trust incentives
Your Energy Trust cash incentive amount depends on your household income and your electric utility. Incentive offers are subject to funding availability and may change at any time. Check with your contractor.
Your solar electric system produces Renewable Energy Certificates as well as clean electricity. Learn more about Renewable Energy Certificates.
Note: Energy Trust provides technical assistance and financial incentives but does not develop, sell or install energy systems or equipment. This work is done by independent businesses that are solely responsible for the quality and performance of their installations.
Additional solar options
- Solar Within Reach offers increased incentives for income-qualified households.
- The Oregon Community Solar Program offers subscription options if you rent, live in a condo or if your roof doesn’t have enough sun exposure.
- Considering building a new home with solar? Learn about EPS homes.
- Get tips on choosing a solar trade ally contractor and comparing bids.
- Attend a free educational workshop to learn more about solar.
- Use our solar calculator to estimate the benefits of solar.
- Learn how your electric bill is calculated with net metering.
- Learn about Renewable Energy Certificates (RECs).
Federal solar tax credits
The federal residential solar tax credit covers 30% of the out-of- cost of a solar or solar storage system installed by Dec. 31, 2032. It is a dollar-for-dollar reduction of the income tax you owe. You must pay taxes to claim the credit. Learn more about federal solar tax credits.
Consult your tax professional to learn how tax credits and rules may apply to you. This information does not constitute tax advice and cannot be used to avoid tax penalties.
Oregon Solar Storage Rebate Program
Oregon offers rebates to homeowners who install solar electric systems or paired solar storage systems. Homeowners with low or moderate incomes qualify for higher rebates. The rebates are issued to approved contractors, who pass the savings on to their customers. Learn more about the Oregon Solar Storage Rebate Program.
There are several financing options available to help make installing solar electric systems more affordable.
Cash and loans
If you have the savings available, paying for your solar installation with cash will typically provide the highest return on investment and the quickest payback. A solar contractor can provide you with a proposal with specific figures.
Many homeowners use a loan to pay for some or all of their solar project. The loan could come from your existing bank, a financial institution that offers solar-specific loans, your solar contractor or even from the equipment manufacturer. Some lenders will allow you to pay down your loan principal when you receive your tax credit. With a loan, you benefit from significantly reduced utility costs and own the system outright at the end of the loan term.
We recommend exploring multiple financing options to find the solution that best fits your needs and budget.
Leases and Power Purchase Agreements
With a lease or power purchase agreement (PPA), you pay little or nothing upfront and the system is installed, owned and maintained by a solar service provider. You make lease payments or purchase the electricity produced by the system on a monthly basis.
The rate you pay for the solar electricity may or may not be less than your current electricity rate. When your agreement ends, usually after 20 years, you have the option to remove the system, renew the agreement or purchase the system. If you move, there are usually options for buying out the system or transferring the agreement to the new homebuyer.
If you choose a lease or PPA, Energy Trust will pay the incentive to your solar service provider, and you’ll receive a more affordable lease or power purchase price.
The solar service provider owns the Renewable Energy Certificates produced by your solar electric system. Learn more about Renewable Energy Certificates.
Read this guide to solar leases and loans for more information about your financing options.