California Solar Incentives, Tax Credits & Rebates (2024 Guide)
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California has the United States’ largest solar market, and the state plans to convert to 100% clean energy by 2045. To help with this effort, the Golden State offers multiple incentives to reduce solar installation costs and make it more accessible to solar companies. 75% of homeowners in our survey of 1,000 solar buyers indicated that incentives were easy to access, so you don’t want to miss out We’ve detailed the top California solar incentives available to help you save money before choosing a top solar company in the state.
What Solar Tax Credits and Rebates Does California Offer?
According to the Solar Energy Industries Association (SEIA), California has over $102 billion invested in solar energy, with more than 28% of the state’s electricity coming from renewable energy. Here is a breakdown of the different federal government, state, and local incentives in California. We will provide further information about each of these further down the article.
| Incentive | Type | Where It Comes From | What It Provides |
|---|---|---|---|
| Active Solar Energy System exemption | Tax exemption | State | Waived property tax on increased home value as a result of active solar panels |
| DAC-SASH | Low-income program | State | Discounted solar systems for low-income residents |
| Equity Resilience Rebate Program | Rebate | State | Lower energy costs for those who experience frequent power shut-off events |
| Rancho Mirage Energy Authority rebates | Rebate | Local | Covered permit fees for Rancho Mirage residents |
| Sacramento Municipal Utility District stipend | Rebate | Local | Money back on solar battery storage |
| Self-Generation Incentive Program | Rebate | Local | Payment for installing an energy storage system |
| Solar rights and easement laws | Law | State | Protection from solar installation denial |
| Net metering | Bill credit | Local | Free electricity from your utility company |
| Federal solar tax credit | Tax credit | Federal | Potentially thousands of dollars back on your system |
Can You Qualify for the Federal Solar Tax Credit in California?
The biggest solar incentive California residents can take advantage of is the federal solar tax credit, also called the Investment Tax Credit (ITC). According to our 2024 survey of 1,000 recent solar buyers, 64% took advantage of the ITC as a way to get money back.
The federal solar tax credit provides a 30% federal tax reduction on your solar panel installation costs, but you must own the system and install it during a qualifying tax year. Unfortunately, you cannot use this tax credit if you’re leasing your solar power system or have a power purchase agreement (PPA).
The ITC is a tax credit, not a tax refund. A tax refund is paid out to the taxpayer, while a tax credit reduces the taxes you owe. The IRS won’t refund you if your annual taxes are less than the ITC. Instead, the remaining credit rolls over to the next tax period.
Does California Offer Net Metering?
California also offers a net metering, or net energy metering (NEM), program, which 32% of our survey takers have used to lower energy costs. If your system is grid-tied, meaning it’s connected to the power grid, you can send excess energy your home doesn’t use back to the grid. You then receive a credit toward your energy bill for the amount of electricity you sent back. State officials decreased the value of these credits by 75% to encourage residents to invest in energy storage, such as solar batteries, instead.
Top net metering programs in California include:
- Los Angeles Department of Water and Power (LADWP)
- Pacific Gas & Electric (PGE)
- San Diego Gas & Electric (SDG&E)
- Southern California Edison (SCE)
According to Wood Mackenzie, NEM 3.0 will impact California’s typical solar payback period. Previously, this period lasted between five and six years. With the lowered NEM credits, this period could extend to 15 years.
What Other Ways Can You Save on Solar in California?
California residents receive various solar incentives based on their location and financial situation. For example, all Golden State residents can use the state’s Solar Rights and Easement Laws, but only Sacramento residents can use the Sacramento Municipal Utility District Stipend.
We’ve provided a detailed explanation of California’s current solar incentive programs and policies, what they offer, and how to obtain them.
Active Solar Energy System Property Tax Exemption
Typically, home improvement projects increase your property value and taxes. However, the Active Solar Energy System exemption allows you to enjoy the added home value of a solar system without increased tax liability. This tax exemption applies to any residential solar system purchase. It runs until 2025.
More resources: California State Board of Equalization website
Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH)
The DAC-SASH program makes solar panel systems affordable for homeowners in California’s top 25% most disadvantaged communities. You must meet certain income qualifications and be customers of one of the following utility companies:
- Pacific Gas and Electric (PG&E)
- San Diego Gas and Electric (SDG&E)
- Southern California Edison (SCE)
The program provides these communities with clean solar energy and gives residents access to job training and employment opportunities in the solar industry. The DAC-SASH program, backed by the California Public Utilities Commission (CPUC), runs through 2030.
More resources: Visit the GRID Alternatives website to apply.
Equity Resilience Rebate Program
SGIP offers an additional incentive to lower your solar system energy costs. The Equity Resiliency rebate applies to homeowners in low-income households, high-risk fire areas, and those who experienced Public Safety Power Shutoff (PSPS) events on two or more occasions. Also known as de-energization, PSPS events occur during dangerous weather conditions or natural disasters and help reduce the risk of electrical infrastructure fires.
This program 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 requirements, you qualify for a rebate of $1,000 per kilowatt-hour (kWh)—almost the entire cost of most energy storage installations.
Rancho Mirage Energy Authority Discounts and Rebates
If you’re installing a solar power system on a home in Rancho Mirage, the Rancho Mirage Energy Authority (RMEA) offers a $500 rebate to cover permit fee costs. This rebate is issued once the utility company grants permission to operate (PTO), meaning your system is cleared for operation.
More resources: Rancho Mirage Energy Authority website
Sacramento Municipal Utility District Stipend
The Sacramento Municipal Utility District (SMUD) offers rebates to residential customers for solar energy battery storage. Depending on residents’ participation level in SMUD’s voluntary program, My Energy Optimizer, rebates can go up to $2,500.
More resources: Sacramento Municipal Utility District website
Self-Generation Incentive Program (SGIP)
You 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.
To qualify, you must be a PG&E, SDG&E, SCE, or Southern California Gas Company (SoCalGas) customer.
We reviewed the application process and found it to be simple. Here are the steps to follow:
- Visit the CPUC website and click the “Find an Installer” tool.
- Select one of the approved SGIP installers to complete your installation.
- Have your installer file the necessary rebate paperwork.
The rebate value also depends on your solar battery storage size. The SGIP currently offers $200 per kWh of stored energy capacity.
As an example, let’s calculate your potential savings based on the popular Tesla Powerwall 2 battery. This solar battery includes 13.5 kWh of stored energy capacity. Based on the SGIP rebate, you could generate about $2,700 in savings. Of course, you will also need to account for the expense of the Tesla Powerwall.
More resources: The California Public Utilities Commission (CPUC) website
Solar Rights and Easement Laws
The California Solar Right Acts (CA Civil Code 714) protects a homeowner’s right to own a solar system and restricts homeowners associations (HOAs) from denying installation.
HOAs can place “reasonable” restrictions on solar systems that fall within the following parameters:
- The restriction cannot add more than $1,000 to a resident’s total solar costs.
- The restriction won’t reduce solar system performance efficiency by more than 10%.
- Any restrictions must allow for an alternative system with comparable efficiency, cost, and energy-saving benefits.
More resources: Database of State Incentives for Renewables & Efficiency (DSIRE)
How Much Do Solar Panels Cost in California?
Solar panels cost an average of $28,457* ($2.95 per watt) in California for a 10-kWh system. This is the most common system size for a 2,000-square-foot home and is aligned with the national average solar panel cost of $29,410 for this system size. See below how much you can expect to pay before and after applying the federal tax credit in California.
| System Size | Average Cost | Cost With Federal Tax Credit |
|---|---|---|
| 5 kW | $14,728 | $10,310 |
| 6 kW | $17,674 | $12,372 |
| 7 kW | $20,620 | $14,434 |
| 8 kW | $23,565 | $16,496 |
| 9 kW | $26,511 | $18,558 |
| 10 kW | $29,457 | $20,620 |
California Solar Companies We Recommend
When you’re ready to contact a solar company, we recommend the following providers. We’ve researched and reviewed the industry’s best solar brands, comparing them on product options and performance, warranty coverage, customer service, reputation, and more. These are the top solar companies in California according to our ratings:
- Sunrun: Sunrun is a good option for those wanting flexible financing options. It’s also one of the few companies that offers insurance coverage in case of panel damage or theft.
- Momentum Solar: Momentum Solar is known for providing great customer service. It keeps in touch with customers throughout the installation process via its app and helps find and apply for solar incentives.
Is Going Solar in California Worth It?
Installing solar panels has significant up front costs but can return big savings. Based on our research, solar panels are worth it in California given the state’s many incentives, year-round sunny conditions, and high electricity rate. The average monthly electric bill for residential Californians is $284, or 33 cents per kWh. That’s 73% higher than the national average rate of 19 cents per kWh. With the average payback period in California being around six years, it won’t be long before you start to benefit from utility bill savings.
We’ve covered the most significant California solar programs in our guide, but there may be other smaller city- or municipality-specific incentives worth exploring. You can also read our guide on the best solar companies in California to determine which provider best matches your needs.
FAQ About California Solar Incentives
Is California a good state for solar incentives?
California has more solar incentives than almost every other state. Residents benefit from various incentive opportunities, such as tax credits, solar rebate programs, property tax exclusions, discounted rates, and solar protection laws. These incentives can help California buyers save thousands of dollars when switching to solar energy.
How much do solar panels cost?
According to EnergySage.com, the national average solar panel cost is $29,410 for a 10-kW system. California solar costs are roughly equal, with the average California solar panel system costing $29,457 for the same system size. System costs can be reduced by California’s many solar incentives.
Is it worth getting solar in California?
California’s high electricity rates, number of sunny days per year, and multiple solar incentives make it an ideal state for getting solar.
Our Rating Methodology
We are committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:
- Solar equipment, installation, and services (25%)
- Warranty and performance guarantees (25%)
- Brand reputation and certifications (15%)
- Financing options (15%)
- Experience (10%)
- Availability (10%)
Total scores are divided by 20 for a final 5-point rating scale.
To share feedback or ask a question about this article, send a note to our Reviews team at reviews@thisoldhousereviews.com.
