California is leading the way in renewable energy, aiming to hit 100% clean energy by 2045. To help homeowners make the switch, the state offers some of the best solar incentives in the country. These programs can significantly cut your installation costs and make solar power more accessible. According to our survey of 1,000 solar customers, 75% said that California’s solar incentives were easy to access, so now’s the time to jump in. In this guide, we’ll explore the top California solar incentives, which can save you thousands on your solar panel costs, before choosing a top solar company in the state.
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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 top solar incentive for California homeowners is the federal solar tax credit. Also known as the Investment Tax Credit (ITC), this federal incentive allows you to deduct 30% of your total solar installation costs from your federal taxes.
However, there are some key restrictions. The ITC is not a cash rebate—it reduces the amount you owe in federal taxes. If your tax liability is lower than the credit amount, the unused portion can roll over to the next tax year. Additionally, you won’t qualify if you lease your solar panels or have a power purchase agreement (PPA).
Despite these limitations, the ITC remains a major cost-saving opportunity. In our 2024 survey, 64% of solar homeowners reported using this incentive. You may also boost your savings by adding solar battery storage, which is eligible under the tax credit.
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.
More Resources: Equity Resilience Program – CPUC website
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?
Switching to solar in California involves more than just selecting panels—you’ll also need to consider how to finance your system. The average cost for a solar system in California is $11,612 before incentives, according to EnergySage. However, with the federal solar tax credit, which allows homeowners to deduct 30% of installation costs, the price drops to $8,128.
Below are the most common solar financing options and how they influence your total savings:
- Upfront cash payment: Paying in full eliminates monthly payments and financing fees, lowering overall costs. However, it requires a significant upfront investment.
- Solar loan: This allows you to finance your system with monthly payments while still qualifying for tax credits and incentives. Loan terms vary, but many low-interest rates are available.
- Solar lease: You rent the system from a solar provider and pay a fixed monthly fee. While it requires no upfront investment, you won’t own the system or qualify for tax credits.
- Power purchase agreement (PPA): This is similar to a lease, but instead of paying a fixed rate, you pay for the electricity your system generates. You still won’t own the panels or qualify for incentives.
- Property Assessed Clean Energy (PACE) financing: This is a state-supported financing option that allows homeowners to fund solar installations with little to no money down and repay through property taxes.
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 you find and apply for solar incentives.
Is Going Solar in California Worth It?
Installing solar panels has significant upfront 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 rates. 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.
The Solar Installation Process in California
Understanding the solar installation process can help you transition to clean energy smoothly. Here’s a step-by-step breakdown of what to expect:
1. Consultation
The first step is to evaluate your home’s solar potential and how many solar panels you need. Most companies use online tools to assess sunlight exposure and send an expert to conduct an in-person property survey. This process typically takes a few days.
2. System Design
Your installer will create a custom solar system based on your roof size, energy needs, and budget. You’ll receive multiple design options, including recommendations for solar inverters and battery storage. This phase usually takes 1–2 weeks as you finalize details with your installer.
3. Permitting and Approvals
California has some of the highest solar adoption rates, which can slow down permitting processes. Your installer will handle local zoning requirements, utility interconnection applications, and potential homeowner association (HOA) approvals. Permitting and utility approvals can take anywhere from two weeks to several months, depending on demand and location.
4. Permit Submission and Approval
Once your design is finalized, your installer submits it to your local building department. Timelines vary, but approval generally takes two weeks to a month. If revisions are needed, this step may take longer.
5. Installation
Once permits are approved, solar panel installation can usually be completed in one to two days. Most homeowners have their system installed within one to three months of their initial consultation.
6. Final Inspection and System Activation
After installation, your system must pass a final inspection from your local authority and utility provider. Once approved, your installer will activate your system and walk you through how to monitor performance—typically through an app or inverter display. If you have battery storage, you’ll also learn how your system switches between grid and off-grid power during outages.
FAQs 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.
