2020 has been a year of huge changes for residential solar energy programs in California.
On this page, we cover all of the solar and battery incentives, rebates, and tax credits available for your California home solar installation. We also provide guidance on how low-income solar power programs work.
On this page:
Image source: California Clean Energy
Overview of California solar incentives
Here are all of the details on solar energy incentive programs for your California home:
Federal solar investment tax credit
The largest solar incentive to take the most money off the cost of your solar system in California by far is the federal solar tax credit.
This clean energy credit is commonly known as the ITC, short for “Investment Tax Credit”. If you install your photovoltaic system in 2020, the federal tax credit is 26% of the cost of your solar panel system.
Example: If your solar energy system costs $20,000, your federal solar tax credit would be $20,000 x 26% = $5,200.
The federal tax credit falls to 22% in 2021. Unless new legislation is introduced in Washington D.C., this program will be gone in 2022.
Learn more: Federal tax credit: all your questions answered
California solar tax credits
While some states still offer their own state tax credits for solar energy, California doesn’t anymore.
However, Golden State policymakers have enacted a property tax exemption for solar PV which is still going strong. This is a great perk, since solar panels will increase the value of your home by roughly 70% of system costs. This means that while the value of your home will go up, your property taxes won’t.
Example: If your solar system costs $20,000, your estimated property value increase of $14,000 will be tax-exempt.
Net energy metering in California
With net metering, or “net energy metering” (NEM), you get near-full retail rate credit for the amount of electricity you send back into the grid with your solar panels. The reason why it’s near full retail rate credit instead of full retail rate credit is because California recently amended their NEM to NEM 2.0.
As part of that change, the energy you buy from your utility company comes with a small “non-bypassable charge” of 3 cents per kilowatt hour (kWh). Under NEM 2.0, when you send your solar electricity back to the grid, you don’t get this 3 cents as credit in addition to your retail rate. The difference is negligible, and long term benefits of NEM 2.0 are still enormous as a solar owner.
You’ll also need to sign up for a time-of-use billing plan (TOU), where your energy costs change based on what time of day it is. Evening has the most demand, so your energy prices will be higher at this time.
While that may sound bad, you can do very well to offset TOU billing changes by installing a solar energy storage system. You can charge the battery during the middle of the day with your free solar electricity, and discharge in the evening, when purchasing from the grid would be more expensive.
Learn more: California net metering 2.0 and time of use billing
With NEM, the amount of kilowatt hours (kWh) you send to your local utility and pull from it are “netted” monthly. If you use more than you send to the grid at the end of the year, you pay for the balance.
Net metering in California can be extremely valuable over the life of your solar system. When paired with TOU billing and the ability to send power to the grid during off-peak hours, your savings are enhanced even further.
Luckily, your solar installer is a net metering expert. They will help you design a solar system to maximize your savings.
California solar rebates
California used to have a robust solar rebate program called the California Solar Initiative (CSI). The available rebates were fully used up by 2014, but the program succeeded in driving 3 terawatts of solar energy capacity to the grid.
Rebates live on for Californians with low-income, however. Check out the SASH and MASH programs outlined in the California solar incentives for low-income households section below.
Manufacturer direct California solar rebates
Some solar manufacturers, like LG, have their own solar rebate programs. They are normally time sensitive. For 2020, LG has announced a $600 solar rebate, which your installer can help you redeem.
Solar rebates for California municipalities
If you are fortunate enough to live in the following service areas, these are the current solar rebate programs which still are active:
|Utility Company||Rebate Amount||Program|
|PG&E||$3,000 / kW||SASH program|
|SCE||$3,000 / kW||SASH program|
|SDG&E||$3,000 / kW||SASH program|
|San Francisco||$200-$2,550 per kW||Varies by system size and location|
|SMUD||$300 per installation||Handled by installer|
|Ukiah Utilities||Currently revising||TBD|
SGIP – California’s battery storage rebate program
California is not only a national leader in solar, it is also a leader in solar battery storage, thanks in part to the Self Generation Incentive Program (SGIP).
If you install a battery storage system on your property that is serviced by PG&E, SCE, Southern California Gas, or SDG&E, you can take advantage of the SGIP incentive.
Battery storage systems that are smaller than 10 kW and are installed on a residential property are eligible for an incentive of $0.25 per watt hour of storage installed.
We outline how much you can save on battery storage when you use the SGIP incentive program in our breakdown of the SGIP rebate.
The SGIP equity budget for home battery storage
SGIP also has what is known as the “equity budget”. This budget has money set aside for solar batteries that are installed in low-income and disadvantaged areas.
The goal of the residential equity incentive is to catalyze more battery storage deployment in low-income areas.
Residential equity systems will receive a rebate of $0.85 per watt hour installed.
Low-income homes that are located in either a Tier 3 or Tier 4 fire district, or that are in areas that have experienced two or more planned safety power shutoff (PSPS) events can qualify for an even higher incentive when they install battery storage on their home – this is known as the equity resilience incentive.
Projects that qualify for the equity resiliency incentive program will receive a rebate of $1.00 per watt hour of storage installed.
This covers almost the entire cost of a solar battery system. Check out our blog on SGIP’s equity resiliency program for more information.
California solar incentives for low-income households
Throughout the US, solar is adopted more in areas that have higher incomes even though low-income communities have the most to gain from the benefits of solar power.
Low-income solar incentives have the ability to spur solar development in disadvantaged communities.
California has two types of low-income solar programs which are aimed for single-family homeowners and owners of multi-family properties:
- The Single-Family Affordable Solar Homes (SASH) program
- The Multi-family Affordable Solar Homes (MASH) program
The Single-Family Affordable Solar Homes (SASH) program
The California SASH solar program provides huge solar money to single-family homeowners. The program is administered by the non-profit organization Grid Alternatives. They help provide green job training in low-income areas to help people secure good-paying green energy jobs.
SASH program requirements
If you can qualify for the SASH program, you’ll get an upfront incentive of $3 per watt of solar installed.
So, if you want to install a 6 kilowatt system on your home, you’ll get an incentive of $18,000! That’s basically enough to pay for the entire cost of your solar system.
If you meet the following criteria, you could take advantage of this hugely helpful incentive:
- You’re a Pacific Gas & Electric, Southern California Edison, or San Diego Gas & Electric customer
- You own and live in your home
- Have a household income that is 80% of or below the the area-median income
- Live in a home that is considered to be “affordable housing” by the California Public Utility code
To check if you live in one of the approved areas, explore this map.
The Multi-family Affordable Solar Homes (MASH) program
The MASH program is designed for those fortunate enough to own a multi-family housing complex.
Those people can qualify for a large grant program to retrofit low income multi-family housing developments with solar power.
Grants range from $1.10 to $1.80 per watt of solar installed. Exact amounts for different project types are listed on the California Public Utilities Commission website.
MASH program requirements:
- The multi-family residential building must be financed by one of the following:
- Low income housing tax credits
- Tax-exempt mortgage revenue bonds
- General obligation bonds
- Some kind of local, state, or Federal grants and loans
- If at least 20% of the total units are sold or rented to lower-income residents
There are some additional qualifications listed in the MASH program handbook.
The MASH program is currently fully subscribed. New applications will be placed on a waitlist.