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:
- Solar and battery tax incentives
- Solar and battery rebates
- Cost of solar versus grid electricity
- Is solar worth it in California?
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!
California 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 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.
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 compares tobuying electricity from a utility provider.
Cost of solar vs grid electricity in the Los Angeles metro area
The figures below are from a real quote presented to a solar.com customer in Buena Park, Cali. for a 6.4 kW solar system under NEM 3.0 solar billing.
| Item | Amount |
| Contract price (cash purchase) | $27,306 |
| 30% Residential Clean Energy Credit | -$8,192 |
| Net price | $19,114 |
With California’s abundant sunshine, a 6.4 kW solar system can be expected to produce:
- An average of 9,770 kWh of electricity per year
- A total of 244,250 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:
- 7.8 cents per kWh with the 30% solar tax credit
- 11.2 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 9,770 kWh of electricity |
| Solar with tax credit | 7.4 | $723 |
| Solar without tax credit | 11.2 | $1,094 |
| Grid – LA metro average* | 25.1 | $2,452 |
*Average price for April 2022 per the US Burea of Labor Statistics.
Even without the 30% federal tax credit, grid electricity is 118% 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 over 6% per year since 2017 in the Los Angeles metro area – but let’s use a 4% annual increase to be conservative.
Here’s how the cost of solar versus grid energy in Los Angeles compares over the 25-year warrantied life of a solar system:
Even NEM 3.0 solar billing, this solar.com customer near Los Angeles is looking at a payback period around 9 years and over $60,000 in energy cost savings over 25 years.
Is going solar worth it in California?
Whether your goal is energy cost savings, contributing to the clean energy transition, or providing backup power for grid outages, going solar is absolutely worth it in California – even under NEM 3.0 solar billing.
California is notorious for having some of the nation’s highest utility electricity rates and there is plenty of reason to belive they will continue increasing. Home solar is an affordable alternative to buying electricity from a utility provider and a hedge against rising energy costs.
See how much you could save by comparing quotes from our network of trusted installers.
California Solar Incentives FAQ’s
How much do solar panels cost in California?
Based on real binding quotes generated by solar.com, a 6.4 kW solar system (slightly larger than average for California) has a net cost around $19,000 after claiming the 30% federal tax credit.
That breaks down to around $3 per Watt for the system, and around 7.8 cents per kWh for the electricity it produces. For comparison, grid electricity rates ranged between 25.1 cents/kWh in Los Angeles to 40.9 cents/kWh in San Diego in 2022.
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.
