California has the highest electricity costs in the United States, but there’s a way to make it more affordable. Switch to solar. Cut your electricity costs without moving to another state by installing a solar photovoltaic (PV) cell system installed at your home. Take advantage of tax credits and other financial incentives to bring down the cost of installing a solar panel system.
Federal, state, and local governments, and even some utility companies, offer incentives to help make solar more affordable for consumers. Solar incentives, tax benefits, and performance-based rebates are all common forms of these incentives, which can cut the cost of installing solar panels by up to 50%!
It’s worth the effort. Because of the state’s abundant clear skies and sunshine, you can expect a solar panel system to reliably generate energy in California. Read on to find out what financial incentives are available to Californians.
Federal Investment Tax Credits
The federal government offers two tax credit programs to help make going solar more affordable. The first tax credit is for residences, and the second is for businesses.
The Federal Investment Tax Credit (ITC) is the biggest incentive for solar power available to homeowners. In 2022, the ITC grants you a tax credit of 26% of the cost of solar installed solar panels.. It is a credit toward the amount you owe on taxes rather than a deduction. In effect, it’s like a cash discount. Act fast to take full advantage of this incentive. The credit amount will decrease to 22% for systems installed in 2023, and it will end in 2024 unless extended by the federal government.
Businesses benefit from the Business Energy Investment Tax Credit (B-ITC), which also provides a tax credit of 26%. The 26% credit applies to commercial systems started before 2023. The incentive value will decrease each year, starting in 2022 through 2025. At that time, the incentive will hold steady at 10% of the total cost of installing a solar panel system.
Active Solar Energy System Property Tax Exclusion
To help consumers spend less money upfront, the California State Board of Equalization endorses the Active Solar Energy System Exclusion, a program that excludes solar panels from property taxation. Solar panels on existing or newly built homes are currently excluded from the home’s assessed value, which means you won’t pay property taxes on your solar panel system when you install them on your home in California.
Don’t wait! This exclusion is only effective until January 1, 2025.
Self Generation Incentive Program (SGIP)
Through its Self Generation Incentive Program, the California Public Utilities Commission (CPUC) encourages the development of existing, new, and emerging distributed energy resources. Businesses and residences in California can get an up-front rebate for installing energy storage (battery backup) systems under this program. However, the incentive doesn’t have a fixed value. The value of the stimulus will decrease over time as more battery storage systems are installed in the state.
If you install a larger battery, your rebate will be worth more because utility companies offer a “block” incentive. The more energy your battery backup system can store, the larger your rebate!
Talk to one of our solar energy experts to learn more about what size of battery backup system is right for you.
Equity Resilience Incentives
In connection with the SGIP program, California gives an additional incentive for “Equity Resiliency” solar panel installation projects. This program addresses the needs of customers in high-risk fire areas, low-income households, customers who experienced Public Safety Power Shutoffs (PSPS) events on multiple occasions, and vital facilities that provide essential services to the affected areas.
Customers in these groups are eligible for a rebate of up to four times greater than the usual SGIP. In most cases, this rebate covers the full cost of installing a battery backup system but it could be challenging to obtain.
Disadvantaged Communities—Single-family Solar Homes (DAC-SASH)
The California Public Utilities Commission (CPUC) and nonprofit organization, GRID Alternatives, worked together to create the DAC-SASH program. The program leverages solar energy to help low-income households in economically and environmentally challenged areas lower their expenses. As of now, the DAC-SASH program is scheduled to last through 2030.
To be considered, you must meet the following requirements:
- Be a customer of Pacific Gas and Electric (PG&E), Southern California Edison (SCE), or San Diego Gas and Electric (SDG&E).
- Live on tribal land or in one of California’s top 25% most disadvantaged communities per CalEnviroScreen.
- Meet the CARE and FERA income qualifications.
Let us guide you as you begin your solar energy journey today.
“Sell” Your Excess Energy Through Net Energy Metering in California
Net Energy Metering (NEM) is an agreement between you and your utility company that enables the utility company to add the surplus energy generated by your solar panel system to the grid. Under the agreement, the utility company tracks any surplus energy generated by your solar panels. It then reduces your monthly energy cost by the value of excess energy you provide.
Solar PV cell systems typically generate more energy than the average residence uses. This can result in financial benefits beyond the solar rebates and credits we’ve already mentioned. You can save even more on your electric bill by selling your excess power to the utility company. This not only helps you, but it also helps your community run cleaner by reducing the demand for grid-supplied electricity from nonrenewable energy sources.
Solar power is becoming increasingly popular, as it’s a great way to reduce your carbon footprint and save money on your monthly bills. But the cost of solar panel installation can be intimidating. For Californians, however, going solar makes sense. California’s electricity prices are notoriously high! But by tapping into the tax credits and financial incentives mentioned above, you can get a great deal on your solar panel installation and start saving on your utility bills every month!
Ready to lower your utility bill? Contact our solar panel specialists to learn how you can become “energy independent.”