Solar Incentives in California

May 14, 2022 3 min

Solar Incentives in California

Make solar affordable with incentives

Local, state, and federal officials have long sought out ways to make solar panels more attractive to Californians. However, it wasn’t until 2006, when the California Solar Initiative and Residential Renewable Energy Tax Credits were introduced that solar truly took off in the Golden State.

While costs of solar panels have plummeted in recent years, you can still take advantage of incentives to drop costs further. You can save nearly 50% on installation and quickly recoup the remaining costs with the following incentives:

  • Federal incentives
    • Claim a tax credit worth 30% of installation costs
  • Investor-owned utility rebates
    • Receive rebates based on system size from IOUs
  • Publicly owned utility rebates
    • Receive rebates based on system size from POUs
  • Net metering
    • Generate electricity and offset your power bill

Lower your costs with federal incentives

The federal Residential Renewable Energy Tax Credit will most likely be the largest incentive you can use for your solar installation.

For installing solar panels on your home, you can claim a tax credit worth 30% of total installation costs. In California, the average cost per watt of solar sits at $6, meaning the typical 3-to-4 kW system might run between $18,000 and $24,000 without incentives.

The federal tax credit lets you drop those costs to $12,600 and $16,800 respectfully, leading to big savings even before you apply other local and state incentives.

Access investor-owned utility rebates

The California Solar Initiative (CSI) has been California’s leading solar rebate program for years. Introduced in 2006, the CSI aims to install 1,940 MW of solar capacity in California by 2017.

The CSI works in partnership with the big investor-owned utilities in California – Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas and Electric (SDG&E). Some incentives in the programs are now winding down, but they’ve led to explosive growth in solar installations over the years.

Consider that as of August 2013, CSI has helped to fund 159,306 solar projects and installed 1,647 megawatts of capacity. Compare that to seven years earlier before the program was introduced, where the total number of solar projects in California totaled 24,118.

Rebates are determined by both the size of your solar installation and predetermined payments based on a declining 10-step system. Once a step reaches its maximum customer limit, new customers are relegated to a lower level and given a smaller rebate.

Because the payment per watt fluctuates throughout the year, you can find out the latest information by contacting local solar installers and asking more about current incentives.

Access publicly owned utility rebates

If you aren’t a customer with PG&E, SCE, or SDG&E, you aren’t out of luck.

Most publicly owned utilities offer their own rebate programs for solar panels. For example, here are just a few utilities with programs that make it easier to go solar:

  • Alameda Municipal Power
  • Corona Department of Water and Power
  • Glendale Water and Power
  • City of Palo Alto Utilities
  • Sacramento Municipal Utility District
  • Turlock Irrigation District

Be sure to check with your local utility to learn more about what incentives you might have access to.

Net metering

Whether you’re with a large investor-owned utility or publicly owned one, you’ll have access to net metering benefits that act as long-term incentives.

When you go solar, you enter into a special billing arrangement called net metering, which rewards you for the electricity you generate. Under net metering, you’re fully credited for the retail value of the electricity you create, letting you offset your power bills and even earn money back.

Once you’ve installed your panels, you’ll immediately notice that your power bill now shows how much electricity you’re generating, in addition to how much electricity you’re using.

If you head outside and check your energy meter, you might even see it spinning backwards, earning you credits as you generate more power than you use. The money you save and earn through net metering essentially helps you pay off the remainder of your installation costs. Most people completely pay off their systems within 10 years.

Now is the time to act

Incentives in California are winding down, even as the average price for solar panels drops. While solar is becoming more affordable on its own, you should still take advantage of a good situation while it exists.

Unless they’re extended, the federal solar tax credit is set to expire in December of 2016, just as state incentives end. Contact local solar installers to learn more about making your solar panels as affordable as possible.