As a resident of Southern California, switching to renewable solar energy means you are eligible for economic benefits like incentives, tax credits, and other rebate programs. Your eligibility to receive these rewards, however, depends on a variety of factors, including your income level, interest in battery storage, and your electric utility provider, among others.
This blog post discusses several solar incentives available to California homeowners and why consulting with a solar expert is the best way to determine your eligibility for these bonuses.
Solar Incentives vs. Tax Credits
Before getting into the details of California-specific solar incentives, it’s important to understand the basic difference between solar incentives and tax credits.
- Federal, state, and local governments offer incentives to encourage more households to switch to solar power. These rewards come in a variety of forms, such as cash rebates, tax exemptions, renewable energy credits, and performance-based bonuses.
- A tax credit is a dollar-for-dollar reduction of your annual income taxes. You would otherwise pay the federal government this amount through your tax return with the Internal Revenue Service (IRS). California does not offer any exclusive statewide tax credit. However, as a U.S. citizen, you can still take advantage of the federal solar Investment Tax Credit (ITC).
Federal Legislation
The federal residential solar energy credit, also known as an Investment Tax Credit (ITC), is based on the amount of money you invest in fitting your home with a solar photovoltaic (PV) system. Under the new Inflation Reduction Act of 2022, homeowners can claim 30% of solar installation costs until 2032, with no maximum limit to the amount you can claim.
In an effort to encourage individual participation in climate change initiatives, the new law offers rebates to homeowners who upgrade older appliances to more energy-efficient models. Additional incentives are also available for those who purchase new or used electric vehicles.
As an investor in solar energy property, you can apply the credit to your personal income taxes as long as construction on your solar PV system begins between 2021 and 2022.
California Solar Incentives Available to You
Statewide Solar Incentives
Self-Generation Incentive Program (SGIP)
The California Public Utilities Commission provides incentives to support existing, new, and emerging distributed energy resources (DER) for residential and non-residential facilities. As part of their wildfire season preparation plan, CPUC has more than $1B in authorized funding for SGIP. This program offers upfront rebates for installing energy storage systems, such as solar batteries paired with rooftop solar panels. The rebates vary depending on battery storage capacity.
Property Tax Exclusion for Solar Energy Systems
Installing solar panels or solar-powered devices on your home increases its value. The property tax exclusion exempts you from paying property taxes equal to the amount of your property’s increased value due to the system’s installation. This statewide tax exclusion is extended through January 1, 2025.
California Public Utilities Commission (CPUC) Programs
The following ongoing California Solar Initiative (CSI) subprograms provide incentives to all low-income households installing solar PV systems and all residential customers investing in solar thermal technologies.
- Single-family Solar Affordable Solar Housing Program and Multi-family Solar Affordable Solar Housing Program: These programs are designed to reduce collective electricity usage via conventional systems in disadvantaged communities and promote economically and environmentally sustainable energy solutions. Single-family and multi-family low-income homeowners are eligible for cash incentives for every kilowatt (kW) solar power installed under these programs.
- CSI Thermal Program: All residential utility customers of Pacific Gas and Electric (PG&E), San Diego Gas and Electric (SDG&E), and South California Gas Company (SoCalGas) are eligible to receive incentives for the installation of solar water heating systems and other solar thermal technologies.
Additionally, California residents are still eligible to take advantage of the economic benefits of Net Energy Metering (NEM).
- Learn more about the California Solar Rights Act (1978).
- Become your own best advocate with the California Solar Consumer Protection Guide.
Installing solar panels requires a significant upfront investment. These solar incentives can help California homeowners reduce their out-of-pocket expenses during the construction and installation of a residential solar PV system. However, consulting a solar expert is highly recommended in order to properly determine your eligibility for these incentives.
Partnering with A Solar Expert to Determine Your Eligibility for Solar Incentives
At Baker Electric Home Energy, we help you reap the benefits of going solar with our high-quality custom solar solutions, all of which include installation, consultation, repair, and maintenance services. As a SoCal-based business for over 80 years, we are deeply familiar with the frequently changing state solar incentive programs and can advise you on your best options regarding eligibility.
With over 16,500 high-quality solar installations, we are your go-to solar consultant committed to guarding you against future electricity rate hikes and helping you make the most of your investment in solar energy.
