In This Guide: Incentives, Tax Credits, and Rebates | Federal Solar Tax Credit | Our Conclusion | FAQs

Making the transition to solar energy is expensive, but the cost has steadily dropped over the past decade. If you live in California, you may have access to even more savings. The Golden State has drastically increased its number of solar tax credits over the last few years.

This guide explains the solar tax credits currently available to California homeowners so you can cut down on costs for your solar energy system. To find the best solar company for your switch to renewable energy, read the This Old House Reviews Team’s guide.

California Solar Incentives, Tax Credits, and Rebates

California offers a number of credits and incentives through state-level legislation and individual utility companies. Read through California’s solar rebates and tax credits below to check your eligibility.

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

The DAC-SASH program makes solar panel systems affordable for homeowners living in the top 25% of California’s most disadvantaged communities. Homeowners must meet certain income qualifications and be customers of Pacific Gas and Electric (PG&E), Southern California Edison (SCE), or San Diego Gas and Electric (SDG&E).

The program provides clean solar energy to these communities and gives community members access to job training and employment opportunities in the solar industry. The DAC-SASH program is currently planned to run through 2030.

More Resources: The California Public Utilities Commission (CPUC) website

Self-Generation Incentive Program (SGIP)

Businesses and homes in California can receive an up-front rebate for installing an energy storage system, such as a solar battery. The SGIP is a tiered-block program, meaning that the incentive’s value declines as more homeowners and businesses install storage systems. 

The rebate value also depends on the size of your solar battery storage. The SGIP currently offers $200 per kilowatt-hour (kWh) of stored energy capacity. This means the popular Tesla Powerwall 2 battery generates about $2,700 in savings.

More Resources: The California Public Utilities Commission (CPUC) website

Equity Resilience Incentives

The SGIP program offers an additional incentive called the Equity Resiliency rebate that lowers the cost of energy storage technology. This applies to homeowners in low-income households and high-risk fire areas, as well as those who experienced Public Safety Power Shutoffs (PSPS) events on two or more occasions. 

Equity Resiliency also applies to owners of critical facilities, such as electric well pumps, that provide services to the affected areas. If you fulfill any of these descriptions, you qualify for a rebate of $1,000 per kWh, almost the entire cost of most energy storage installations.

More Resources: The California Public Utilities Commission (CPUC) website

Active Solar Energy System Exclusion

This program ensures that the added home value of installing a solar energy system won’t increase your property taxes. It’s currently slated to run until 2025. 

More Resources: California State Board of Equalization website

Rancho Mirage Energy Authority Discounts/Rebates

If you’re installing a solar power system on a home in Rancho Mirage, the RMEA offers a rebate of $500 to cover the cost of your permit fee. You receive this incentive after the utility company has granted you permission to operate (PTO).

More Resources: Rancho Mirage Energy Authority website

Sacramento Municipal Utility District Stipend

The Sacramento Municipal Utility District offers a $150 rebate to customers who install a residential solar energy system.

More Resources: Sacramento Municipal Utility District website

California Net-Metering

In addition to the incentives above, you can enroll in a local net-metering (sometimes called net energy metering, or NEM) program. Most solar power systems generate more energy than your home needs. Net-metering programs allow you to feed this excess energy into your local power grid.

Not only does this lower the demand for grid-supplied electricity in your neighborhood, but it also allows you to maximize your savings. When you sell your surplus power back to a utility company, you receive solar renewable energy credits (SRECs) that can be applied to your future energy bills. 

California currently offers statewide net-metering incentives for homeowners with solar panel systems. However, the exact credit value varies based on your utility company and power output.

Federal Solar Tax Credit

Another savings opportunity California residents can take advantage of is the federal solar tax credit, known as the Federal Solar Investment Tax Credit (ITC). This credit provides a federal tax reduction equal to 30% of your solar panel installation costs. You must own the system and install it during a qualifying tax year. Unfortunately, you can’t use the ITC if you’re leasing your solar power system or are in a power purchase agreement (PPA). 

Remember that the ITC is a tax credit and not a tax refund. The difference is that a tax refund is paid out to the taxpayer, while a tax credit reduces the amount of taxes you owe. If your annual taxes are less than the ITC, the IRS won’t refund you. Instead, the deduction will roll over to the next tax year and will continue to do so for up to five years.

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Our Conclusion

If you live in California, we encourage you to see which of these incentives you qualify for. We also recommend checking which of your local utility providers offer net-metering for your home’s address. 

If you’re just starting your solar journey, use our tool below to see which reputable solar installation companies service your address. These companies can help you complete the paperwork to receive the California tax incentives discussed in this article.

FAQs About Solar Incentives in California

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