California Solar Incentives and Rebates: How to Maximize Your Solar Savings | Solar.com

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California Solar Incentives and Rebates: How to Maximize Your Solar Savings

With abundant sunshine and some of the nation’s highest electricity prices, it’s no wonder why over a million California homeowners have gone solar.

Rooftop solar is already a worthwhile investment in California, but a wide-range of federal, state, and local incentives can make the deal even sweeter. In this article, we’ll dig into California solar incentives and estimate the lifetime savings of solar using real binding quotes generated for solar.com customers.

See how much you can save with solar. Start here.

California solar and battery incentives

For many California homeowners, going solar is already a slam dunk. However, there are federal, state, and local incentives that can maximize your solar savings.

The incentives fall into two broad categories: tax incentives and rebates. Let’s start by digging into the tax incentives.

Pro Tip: If you plan on moving out of California anytime soon, check out our list of other states incentives and rebates!

Solar and battery tax incentives

The following California solar incentives come in the form of tax credits, exemptions, and exclusions. Consult a licensed tax professional for advice regarding tax incentives.

Federal solar and battery tax credit

The first tax incentive to mention is the 30% solar investment tax credit – also known as the ITC or Residential Clean Energy Credit.

This federal tax credit is worth 30% of the cost of installing solar and battery storage systems. Thanks to the Inflation Reduction Act, the ITC will remain at 30% until 2032 and beginning on January 1, 2023 applies to battery storage that isn’t hooked up to solar.

Learn more about the federal solar tax credit here.

Property tax exclusion

Studies by Zillow and Berkeley Lab found that solar panels increase home values by up to $4,000 per kW. And Californians know better than anyone else that higher property value means higher property taxes.

But thanks to California’s Active Solar Energy System Exclusion, rooftop solar systems installed before January 1, 2025 won’t be assessed in property valuations, and therefore won’t increase your property tax.

According to the California State Board of Equalization, this tax exclusion applies to solar systems “where the energy is used to provide for the collection, storage, or distribution of solar energy.”

It does not apply to solar swimming pool heaters or hot tub heaters.

Property-Assessed Clean Energy (PACE)

Upfront cost is often the biggest hurdle to going solar, but the PACE program – known as the Home Energy Renovation Opportunity (HERO) program in California – is one way to go solar with zero money down.

Through the HERO program, your state or local government teams up with a local lender to fund the upfront cost of your solar project. Then you pay the project off through an increase to your property tax bill over an agreed upon term, typically 5 to 20 years.

The savings come when the increase to your property taxes is lower than the energy savings provided by your solar system.

California Solar incentivesSolar and battery rebates

California also has solar incentives in the form of rebates, which can help reduce the upfront cost of solar and battery storage projects. We’ve listed a few below, but we strongly encourage you to check for local rebates through your utility, city, or municipality.

Self-Generation Incentive Program (SGIP)

With frequent power outages and Time-of-Use rates, home battery storage is an opportunity for both energy independence and savings.

Through SGIP, eligible Californians can be reimbursed for $150 to $1,000 per kWh of battery storage installed – which, in some cases, covers the entire cost of the project.

The incentive amount depends on your utility, your wildfire risk, and special circumstances like having a life threatening illness, medical equipment, and an electric pump for well water.

Check out our complete guide to SGIP eligibility here.

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

DAC-SASH is an upfront rebate to reduce the cost of going solar for qualifying low-income households.

To be eligible, you must meet all of the following criteria.

  • Receive electrical service from
    • Pacific Gas & Electric (PG&E)
    • Southern California Edison (SCE)
    • San Diego Gas & Electric (SDG&E)
  • Own and occupy a single-family home as a primary residence
  • Be located in a disadvantaged community identified on this map
  • Household income below the CARE or FERA program limits

DAC-SASH is scheduled to run through 2030. Visit GRID Alternatives to check your eligibility.

Local rebates

In addition to state rebate incentives, California also has several local rebates that can further maximize your solar savings.

For example, Rancho Mirage Energy Authority has a Residential Solar Rebate Program that offers a one-time $500 incentive for installing or expanding a residential solar system.

Similarly, Sacramento Municipal Utility District (SMUD) offers a $150 stipend for residential solar system installations.

A trustworthy solar installer can identify and claim local rebates. Find one here.

Cost of going solar in California

While there are a variety of solar incentives in California, most homeowners will only qualify for the federal solar tax credit – and that’s okay. Even without incentives, the cost of going solar in California is already much cheaper than grid energy.

But, for many homeowners, the goal of going solar is to maximize your energy savings, so let’s see how the cost of going solar in California with and without incentives compares to sticking with grid energy.

Cost of solar vs grid electricity in San Diego

The figures below are from a real quote presented to a solar.com customer in San Diego:

Item Amount
4.4 kW solar panel system $20,078
Solar.com cash discount $5,118
Contract price $14,960
30% Residential Clean Energy Credit $4,488
Net price $10,472

With California’s abundant sunshine, a 4.4 kW solar system can be expected to produce:

  • 6,506 kWh of electricity per year
  • 149,687 kWh of electricity over 25 years

If you divide the net cost of the project by the lifetime production, the cost per kilowatt-hour of rooftop solar for this San Diego customer comes to:

  • 7 cents per kWh with the 30% solar tax credit
  • 10 cents per kWh without the solar tax credit

Now, let’s compare the cost per year electricity from home solar to the cost of grid electricity:

Source of electricity Cost of electricity (cents/kWh) Cost per year for 6,506 kWh of electricity
Solar with tax credit 7 $455.42
Solar without tax credit 10 $650.60
Grid – San Diego* 40.9 $2,660.95
Grid – National average* 16.7 $1,086.50

*Average price for September 2022 per the US Bureau of Labor Statistics.

Even without the 30% federal tax credit, grid electricity is 309% more expensive per year than home solar – and that’s before factoring in the constantly rising cost of grid electricity

According to the Bureau of Labor Statistics, the average cost of grid electricity has increased by 6.24% per year since 2017 in the San Diego-Carlsbad metro area – but let’s use a 5% annual increase to be conservative.

Meanwhile, going solar freezes your electricity rate for 25 years.

Here’s how the cost of solar versus grid energy in San Diego compares over 25 years:

solar vs grid costs San Diego

Even without the 30% solar tax credit, this solar.com customer in San Diego his looking at a payback period of 5 years and lifetime savings of over $110,000.

Once they claim their 30% tax credit, the payback period drops to 4 years and the lifetime savings increase to over $116,500.

Use our solar calculator to see how much you could save.

We’ll be the first to point out that California is a giant, diverse state. And with electricity prices nearly 2.5 times greater than the national average, San Diego is a bit of an outlier.

So let’s run the same comparison for a solar.com bid in the Los Angeles metro area.

Cost of solar vs grid electricity in Los Angeles

The figures below are from a real quote presented to a solar.com customer in Moorpark, California – a suburb of Los Angeles.

Item Amount
10.4 kW solar panel system $47,232
Solar.com cash discount $11,748
Contract price $35,484
30% Residential Clean Energy Credit $10,645
Net price $24,839

With California’s abundant sunshine, a 10.4 kW solar system can be expected to produce:

  • 11,783 kWh of electricity per year
  • 294,567 kWh of electricity over 25 years

If you divide the net cost of the project by the lifetime production, the cost per kilowatt-hour of home solar for this Los Angeles-area customer comes to:

  • 8.4 cents per kWh with the 30% solar tax credit
  • 12 cents per kWh without the solar tax credit

Now, let’s compare the cost per year electricity from home solar to the cost of grid electricity:

Source of electricity Cost of electricity (cents/kWh) Cost per year for 11,783 kWh of electricity
Solar with tax credit 8.4 $939.77
Solar without tax credit 12 $1413.96
Grid – Los Angeles metro* 24.4 $2,875.05
Grid – National average* 16.7 $1,967.76

*Average price for September 2022 per the US Bureau of Labor Statistics.

Even without the 30% federal tax credit, grid electricity is 103% more expensive per year than home solar – and that’s before factoring in the constantly rising cost of grid electricity

According to the Bureau of Labor Statistics, the average cost of grid electricity has increased by 6.51% per year since 2017 in the Los Angeles metro area – but let’s use a 5% annual increase to be conservative.

Meanwhile, going solar freezes your electricity rate for 25 years.

Here’s how the cost of solar versus grid energy in Los Angeles compares over 25 years:

Solar vs grid costs Los Angeles

Even without the 30% solar tax credit, this solar.com customer near Los Angeles is looking at a payback period of 9 years and lifetime savings of over $101,000.

If they claim their 30% tax credit, the payback period drops to 7 years and the lifetime savings increase to over $112,000.

Calculate how much you could save by going solar in California.

Is going solar worth it in California?

Whether your goal is energy savings, contributing to the clean energy transition, or providing backup power for grid outages, going solar is absolutely worth it in California – with or without incentives.

However, California has a wide-range of solar and battery incentives that make going solar an even sweeter deal. Take the first step toward energy savings by comparing multiple quotes from our network of vetted installers.

California Solar Incentives FAQ’s

How much do solar panels cost in California?

Based on real binding quotes generated by solar.com, solar panels range in price between $10,000 for a 4.4 kW system to $25,000 for a 10.4 kW system, after the 30% federal tax credit is applied.

That breaks down to 7 to 8.4 cents per kilowatt-hour. This is considerably cheaper than grid electricity in California, which ranges from 24.4 cents/kWh in Los Angeles to 40.9 cents/kWh in San Diego.

How does the California solar tax credit work?

California no longer has a state solar tax credit. However, the federal solar tax credit is worth 30% of the installed cost of a solar and/or battery system. This credit can be used to decrease your federal tax liability and increase your tax refund.

On a $15,000 solar system, the federal solar tax credit can be used to lower your tax liability by $4,500. If you don’t have enough tax liability to use at all it once, the tax credit can be rolled over into future years.

Consult a licensed tax professional for advice regarding applying the solar tax credit.

Can you get free solar panels in California?

There are a few programs in California that can drastically reduce or completely cover the cost of going solar. These niche programs are reserved for low-income and disadvantaged communities that meet strict eligibility criteria.

The Disadvantaged Communities/Single-Family Solar Homes (DAC-SASH) offers an upfront rebate for low-income homeowners in disadvantaged communities identified here.

California’s Low-Income Weatherization Program provides no-cost solar systems and energy efficiency upgrades for eligible farmworker households and other low-income housing types.

 

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