California Solar Incentives

Last Updated: August 9, 2023

If you live in California, you may have noticed all that glorious sunshine. Why not make that sun work for you by using solar power for your home? And it’s not as expensive as you would think to go solar, especially because there are several California solar incentives available to homeowners that make the choice easier. Do acronyms like IRA, ITC, NEM 3.0 and CPUC make your eyes glaze over? Don’t worry, as one of the top solar installers in the nation ADT Solar has mapped the ins and outs of California’s regulations and offerings.

In this guide, we will go through every solar incentive in California and what it means for you, a homeowner interested in going solar.

Here’s what we’ll cover:

• Why California is the best state for solar
• California’s many solar incentives explained
• Federal solar tax credit
• Tax credit for battery storage
• Net metering explained
• What NEM 3.0 means for you
• What is the SGIP?
• DAC-SASH program
• California’s property tax exemption for solar panels

Ready to dive into all the incentives for going solar? Let’s get started.

California is also a national leader in blackouts, crowned the ‘Blackout Queen’ in 2018 by Eaton’s Blackout Tracker research. (3) This was thanks to the over 4,297 blackouts within the previous decade.

If you live in California and have been wondering if switching to clean, renewable solar energy is right for you, you’ve come to the right place. We answer all of your questions and help you decide if solar panels are right for you.

California has always been a leader in renewable energy, and especially solar power. For more than a decade, it has led the country in solar energy adoption and provides a range of incentives to support homeowners in their transition to solar power. Here’s an overview of the various solar incentives available in the state:

Federal solar tax credit for California solar panels

To put it simply, if you qualify for the federal solar tax credit, you can claim up to 30% of your solar system’s cost as a credit. The federal Investment Tax Credit is set up to reward homeowners for going solar all the way into 2032.*

Here’s how it works: For a qualified solar energy system that costs $30,000, you would receive $9,000 as a tax credit. If that credit is larger than your federal tax obligation for the year, the remainder can be carried over as a credit for the next tax year.

Eligible costs associated with going solar include:

• Cost of solar panels
• Supporting equipment costs, such as microinverters, necessary wiring, mounting hardware, etc.
• Installation and labor costs, including inspection and permitting fees, as well as developer fees
• Solar battery backups or other energy storage systems with a capacity rating of at least 3 kilowatt-hours (kWh)
• Sales taxes that were paid for any eligible solar-related expenses

Tax incentive for solar batteries in California

Solar backup batteries make great sense for Californians and with the Clean Energy Tax Credit, they’re more affordable than ever.

California has more blackouts than almost any other state in the country, and a backup battery can help you manage your power needs even when the grid goes dark. And with California’s onerous peak-usage pricing, being able to store your clean abundant solar power for use when the rates are high means even more savings.

Peak usage pricing means that utilities charge different prices for energy at different times of the day. Usually, that means that electricity costs you the most just when you need it. With a solar backup battery, you can store your energy during the day when it’s inexpensive and use it at peak times, saving you real money. And you help the environment by drawing less power when the grid is struggling to meet demand.

Along with a tax incentive for solar panels, the Residential Clean Energy Tax Credit covers solar storage too. Thanks to the passing of the IRA, homeowners can now claim the 30% tax credit on stand-alone battery installations, even if they have already claimed credit for their existing solar system.

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Net metering in California

Net energy metering has been an important part of solar’s growth in California and across the country.

Once you have a solar energy system installed, it’s common for your solar panels to generate more electricity than your home is using. For example, when you’re at work during a sunny, cool day, your home won’t use much energy at all, but your solar panels will be very productive.

Under an NEM program, you can send that energy into the grid and your electric company will give you credits that will offset the cost of electricity you use when the sun is down.**

Different states and utilities give credits at different rates. One of ways that California promoted solar energy over the years was to base that rate on the retail price of electricity, so it was close to the price a homeowner would pay for electricity at night. That was known as NEM 2.0, and if a homeowner had a solar energy system in place before April 14, 2023, they will still be paid at that rate in the future. They can even add a solar backup battery to their system, qualify for the federal Residential Clean Energy Tax Credit and keep their NEM 2.0 rate.

What NEM 3.0 means for you

On April 15, 2023, California rolled out a new net metering program, NEM 3.0, to reflect a net billing system. Under the new policy, solar panel owners can still sell back any unused energy to their utility company, but with a few major changes. The biggest difference is that credit for unused energy is now determined with an avoided cost calculator. That means that the utility will pay the same price for the energy you send into the grid as they would pay for energy from other sources, including big generating plants.

Those rates are usually low during the day when the sun is shining and your solar panels are generating energy, but higher when the sun is low.

With a solar battery added onto a solar panel system, homeowners are able to store excess energy for later use. This allows them to bypass high time-of-use rates because they’d be using the stored energy that their system generated.

For more information and updates on the policy, see the California Public Utilities Commission website.

California’s Self-Generation Incentive Program (SGIP)

California’s Self Generation Incentive Program, or SGIP, provides perhaps the best state-based incentive for California homeowners to install a solar energy storage system. One of the first incentives of its kind in the U.S., the program has been extremely successful in helping California lead the nation in the adoption of home battery technology. The program is available to the ratepayers of SDG&E, SoCal Gas, SCE and PG&E.

There’s more than $1 billion in rebates available for SGIP through 2024, with nearly 60% of that dedicated to “equity resiliency” projects.

If you’re a homeowner that meets certain qualifications, such as living in a high fire risk area, the Equity Resiliency projects portion of the SGIP could work for you. All of this can be a bit overwhelming, so we’d be happy to have one of our experts help you navigate the SGIP process – it’s part of what we do!

Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH) program

California Public Utility Commission doesn’t think the benefits of solar energy should only go to the wealthy—that’s why the state implemented the DAC-SASH program in 2018 and has committed to funding it through 2030 with $10 million annually. DAC-SASH subsidizes installation of solar energy systems of 1-5 kilowatts for homeowners who might not be able to afford solar otherwise.

The program is tailored for residents of qualifying disadvantaged communities who meet specific income guidelines. The program is limited to customers of the largest investor-owned utilities: Pacific Gas & Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (SDG&E).

To apply, go to the Energy for All Program website. For more information, check out the program’s administrator, Grid Alternatives.

California solar panel property tax exemption

Investing in a solar energy system can be a great way to increase your home’s value while also saving on your utility bills. It’s natural to assume that an increase in property value would lead to higher property taxes. However, here’s where California stands out. In addition to other solar incentives, California excludes solar energy systems from property tax evaluations. This means that homeowners who install solar panels can enjoy the full benefit of their system’s value without any increase in property taxes. In simpler terms, you get the added value without any additional tax burden. It’s just one of the many ways California supports and encourages homeowners to embrace solar energy.

All that being said, it’s pretty easy to see why going solar in California is worth it. Not only do you get to power your home with all that sunshine, but you also get more control over your home’s energy and rising electricity costs. Not just now, but forever!

ADT Solar: Empowering California homeowners with solar energy

Now you know why California has long been the leader in solar. With the state’s plentiful incentives, California homeowners have every reason to use the sun’s energy to generate energy. From saving money on your electricity bills to making a positive impact on the environment, going solar is a smart choice. At ADTS olar, we’re here to be your trusted partner throughout the entire process, helping you unlock the full potential of solar energy.

Don’t miss out on the financial rewards and environmental benefits that solar incentives offer. Take the first step towards a brighter future today! Simply click the button below to get a free quote from ADT Solar. Let us show you how solar power can transform your home and your life.

Start your solar journey with ADT Solar and experience the power of clean, renewable energy. Get your free quote now!