California Solar Incentives: Federal Rebate Lower Cost of Solar Panels (CA)

They were one of the first states to actively promote further research and development into this renewable resource, and they have only increased the push over the preceding years.

And when combined with the federal solar investment tax credit (ITC), residents in California can reduce the installation cost of a solar energy system very effectively.

This guide explains California solar incentives and the many ways that switching to green energy options in the state can reduce your carbon emissions and your monthly costs.

Solar Panels Evolution in California

Due to its high elevation and mild winters followed by long hot summers, Hesperia in California was selected as the first megawatt-sized photovoltaic power station by a solar company called ARCO Solar.

They brought the project online in 1982 with 2,160 panels mounted on sun-tracking stands installed on the 6 acres of arid land. Although not big by today’s standards, it was a success and paved the way for another site in 1984.

Carrizo Plain was a much bigger operation covering over 12 acres, again constructed by ARCO Solar. They signed a contract with the Pacific Gas & Electric Company to feed the energy into their utility grid.

The new, 6-megawatt solar substation could produce power for about 2,500 local residencies. That was a substantial achievement, yet it was to be dwarfed by the next generation of solar farm constructed in the Sunkist state of California.

Solar Panels California (Solar Panel Cost)

Solar farms continued to be installed in other sites in California, bigger and more powerful ones capable of powering 60,000 homes. But what wasn’t happening at this time was domestic properties installing solar systems for their own personal use.

The state was actively promoting the benefits of photovoltaic systems, harnessing the energy of the sun to replace the reliance on fossil fuels, and relieving the strain on an overburdened electricity system.

But the cost of solar panels in California at the time was beyond the reach of most Californians. Those that could afford them were rewarded with a substandard power supply that provided just a few hours a day of extra solar-generated electricity.¹

Results like those were not enough to entice homeowners to invest a lot of money for very little reward.

For many, it didn’t make economic sense to spend upwards of $20,000 for a trickle of energy just to be able to turn on the microwave and the tv for 2 hours a day.

But the problem was not solely due to the cost of the solar systems. Two things had to change before Californians would start to dig deep into their wallets and be able to fully believe solar energy was the future.

The California Solar Program and the Federal Rebate Lower Cost of Solar Panels (CA)

The output efficiency ratings of photovoltaic systems have increased since 2008, with improved production methods significantly reducing the prices by a consistent drop of 5% every year.

A solar panel installation for a typical household would cost roughly $8.82 per watt in 2008. More efficient design modifications simplified the installation procedure so that less rewiring and hardware were needed, resulting in those costs plummeting by more than 60%, and the per-watt cost falling to about $3.14.

A year earlier, the California solar incentives program had been launched with a budget of $3.3 billion and was about to change the game.

Championed by the Governor at the time, Arnold Schwarzenegger, its goal was to install 1,000,000 rooftop solar panels across the state, and he promoted it vigorously, the program very personal for him.

Since its inception, the Go Solar California campaign quickly gathered pace and attention as more and more residents throughout the state became aware of the new discounts that were now available to them.

The incentives, some of which had been open to solar farms for years, had now been adapted specifically to target homeowners such as yourself to drastically reduce the cost of solar panels in California.

The (CSI) California Solar Initiative’s milestone was exceeded in 2019 and is largely responsible for your state becoming the national leader in the installation of residential solar panels,² and for supporting clean renewable energy that will reduce your greenhouse gas emissions.

Not all programs will be applicable to your household, however, but all are worth investigating to verify what qualifications you will require for eligibility. At the end of the day, you have nothing to lose by applying even if there is a kernel of doubt that you will be accepted.

What’s the worse that will happen? Maybe you won’t get the full relief or maybe even be rejected, but some of them will apply to your particular circumstances for sure.

California Solar Tax Credit (California Solar Incentives)

In the United States, switching to solar energy will cost the average household perhaps like yours up to a lofty  $24,000 before any incentives.

For larger homes or buildings with high energy needs, that cost may be significantly higher.

Fortunately, the wide system of invaluable financial incentives that are made available to residents like you is one of the key elements that make California one of the best jurisdictions in the country for residential and commercial solar conversions.

For you and millions of people like you who have been interested in purchasing solar panels for years but have been hesitant for financial or other reasons, these energy rebates and incentive programs have now made solar power more affordable, and easy to adopt.

These programs are there to allay your fears and have helped to decrease the upfront cost of a solar system in California to less than $11,000 after some of those subsidies have been applied, making the transition just that bit more affordable for you.

The Federal Solar Tax Credit (ITC)

This federal solar tax credit was first introduced in 2006 and is one of the most beneficial incentives in California, and is open to all citizens, and if there is one incentive that you should apply for, this is it.

It is intended to lower your actual cost of switching to solar by deducting a whopping 30% off the cost of a completely new solar system from income tax obligations when your taxes are filed.

The solar tax credit (2022) was due to be decreased to 26% but that was amended and the expiry dates were extended due to demand. The credits available to you for the duration are listed below, but don’t be shy about informing your friends and neighbors if they are in the same boat as you.

The more people like you adopt solar power as the energy of choice, the better it is for California and the fight against climate change.

• 30% for any equipment you install between 2022–2032.
• 26 percent for systems you put in place by 2033
• 22% for devices you put in place by 2034
• In 2035, the program will be canceled and no longer be accessible, so don’t delay your conversion any longer

Claiming the federal energy credits is not a difficult process and just takes a short amount of time when submitting your taxes.

First, you have to print and fill in the Residential Energy Credits form(5695) with the data provided by your solar installation company.

This will include the total system cost, the location where your panels were installed, normally your rooftop, the system’s kW capacity, as well as some other details that your installer ought to have given you.

Afterward, all you have to do is attach the form to your tax return and submit it electronically if requested. In instances where the average 6 kW system costs $16,380, the federal credit will actually lower the system cost to $11,466, roughly saving you  $4,914.

Since 2022, the name was changed from the ITC to Residential Clean Energy Credit, but it still offers the same great discount structure that you can take advantage of.

California Solar Roof Incentives: The Self-Generation Incentive Program (SGIP)

Roof installation of your solar panels ensures that the ecosystem won’t be impacted from the installation.

The program offers you further incentives if you pair your solar panels with a solar battery system at the point of installation.³

It is available to all homeowners who install battery storage devices smaller than 10 kW as long as they are served by PG&E, SCE, Southern California Gas, or SDG&E.

An incentive of $0.25 per installed watt-hour of storage will be refunded to you once your new system is fully operational, and with this program, you will benefit from between 15% and 20% off the battery price.

This can be higher in low-income neighborhoods and regions that experience blackouts and brownouts more frequently.

Considering that California leads the nation in power outages, this scheme could be beneficial to thousands of homeowners such as yourself.

If you are eligible,  it could cover about 85% of the cost of your battery storage system, which would be a significant saving since batteries are essential components of any solar array.

This is another rather straightforward procedure to fill out the application forms and it will help you to reduce the cost of solar panels in California so you can have them installed sooner rather than later.

The Single-Family Affordable Solar Housing (SASH) Program

The Disadvantaged Communities SASH (DAC-SASH) initiative, was established to make solar energy available specifically to low-income households and communities who are unable to purchase solar systems due to financial constraints.

Whether you fall into this category or not,  it can have value to you or someone you know as it offers a one-time upfront cash-back incentive.

If interested, you must be a homeowner, not a renter, and a customer of Southern California Edison, Pacific Gas & Electric, or San Diego Gas & Electric to qualify.

Your total household income would have to be verified, which includes all of the permanent working inhabitants who live there, and that their income is at least 80% less than the median household income for the area.

Due to the reams of paperwork required to validate all the incomes and the affordable housing status, the application process will take some time, but it can result in you receiving an immediate rebate.

For someone who is in low-income housing and is in the middle of the affordable housing crisis,⁴ this program can make all the difference. And when it is finally approved, the cost of your new solar array could be reduced by $18,000.

There are agencies and companies that are more than willing to explain and walk you through how to get California solar incentive to enable solar panels to be installed as cost-effectively as possible.

Active Solar Energy System Property Tax Exclusion in California

All Californians are eligible for this exclusion. Typically, any home upgrades will raise the value of the property, which conversely raises the taxes on the property.

Fortunately, as with any home improvement project, a new solar rooftop array system is more or less guaranteed to increase the value of your home by up to 4.1%.

This exemption stops those taxes from being applied to your adjusted property value; the last thing you want is the savings on your utility bills to be canceled out by the extra taxes lumped onto your property because it is now worth more.

Over the useful lifetime of the solar system, this benefit might ultimately save you hundreds if not thousands of dollars in taxes.

And, thankfully, all solar power installations in California automatically qualify for this tax break, so you don’t even have to apply for it.

PACE Financing in California (Solar Panels for House)

There is a pro-solar finance scheme called PACE with a low APR that you can apply for if financing is a route you are considering.

The no-down-payment serves to broaden the accessibility to this renewable power source to a wider consumer base which may assist you or someone you know.

Also, with a PACE loan, the funds required for the solar installation can be financed using your taxes that are to be paid in the next quarter.

The cost of financing is typically far less expensive than a contract with a solar supplier or another finance firm, which makes it even more enticing.

If you’re interested, contact the Department of Financial Protection and Innovation (DFPI) and submit an application.

After a vendor is selected from their approved list, a program administrator will assist you in completing the required documentation, and the project can move forward quickly.

Net Metering in California (Solar Panel Installation)

One of the most important incentives that can benefit you and other solar users in the U.S., is net metering, often known as Net Energy Metering (NEM).⁵

This billing strategy opens up the door for you to receive credit for any excess electricity you supply to the grid through a unique billing system.

For every surplus kWh, your system produces that is not used, a crediting method is applied to your future power bills to offset the costs.

In practice, when you, the property owner, inform the local power grid that you would like to supply any unused electricity back to the grid, they will install a bidirectional metering system in your home.

Your new electricity meter will record all the electricity generated by the solar array during the day and then will run backward to give credit for any electricity used at night or during other times when the house uses more electricity than the system can produce.

In this system setup, no batteries are used for storage, and your photovoltaic system will be directly connected to the grid.

Subsequent bills are then credited with the excess electricity produced and only the additional units consumed will need to be paid for.

The bidirectional electric meter accurately tracks all the electricity movements that will be fully displayed on your now cheaper utility bill.

Sadly, the local government in California decided to restructure the buy-back incentive as of December 2022 from 100% to 75% from April 2023 when NEM 3.0 will be initiated.

This is unfortunate because NEM 2.0 guaranteed you as the property owner the maximum long-term savings and returns on your solar investment while crediting all unused energy back to the utility company at full retail rates.

It was a situation that attracted new customers in droves, especially with the extra incentive of all accrued future credits continued rolling over indefinitely.

NEM 3.0 is obviously less generous, reducing the buy-back rate for grid-connected renewable energy systems to 75% of the retail rate which will have an immediate impact on the credits allocated to your bills.⁶

Not surprisingly, this was not only unwelcome news for Californians but across the nation, net metering laws were starting to evolve in other states. This was unfortunate as net metering was an enticing reason for homeowners to adopt this infinite energy resource.

Related Reading: Is Solar Energy a Renewable Resource? The Dirty Truth About Renewable Solar

Reducing the percentage may dissuade or cause some consumers to hesitate before investing in a solar system.

It’s still worthwhile contacting the electric company either directly or through the installer to find out if there have been any changes as net metering is in a state of flux at the moment.

Benefits of a Net Metering System and Solar Panels for Home

When first getting on the solar energy ladder, savvy homeowners such as yourself are looking at ways to save money on the purchase price, and applying for all the California solar incentives available is a wise move.

Net metering offers ways to save money and possibly a way for you to make a passive income from electricity fed back into the grid. Here are a few other benefits

• A battery storage system is not necessary in order to store excess power. This saves on the purchase price and added installation expenses associated with it.
  Extra electrical power is transmitted to the grid automatically by the metering energy inverter installed in your home.
• Compared to a non-grid system, the maintenance cost is lower and it requires very little upkeep.
• By producing several units of power, users can earn money from the state government or the electric department or credit for future use, depending on the type of contract they have with their utility provider.

California Solar Rebates (Local Solar Incentives)

There are also a large number of regional solar incentives offered by various utilities, solar rebates from the government, and other municipalities, all designed to help you potentially lower solar installation costs.

If you are a resident of San Diego County, for example, they have a project that is combining home building projects or partial renovations with solar or other energy efficiency upgrades, to enable those that qualify to get a discount on the permit fees of 7.5%.

The California solar initiative rebate for residents of San Francisco, on the other hand, has the option to finance PV systems through the City of San Francisco GreenFinanceSF program.

For simplicity, it enables the processing of solar installation payments to be done through your filed taxes.

If you are a Rancho Mirage Energy Authority (RMEA) customer, you could be eligible to receive up to $500 in rebates from the utility company for installing new solar PV systems or even upgrading your existing one.

Solar rebates from the Sacramento Municipal Utility District (SMUD) customers that install batteries in addition to their new solar panel system are eligible for further rebates and incentives from SMUD.³ Rebates have a potential value of $2,500.

It is prudent to enquire with the local utility company and the local government to see if there are any additional benefits you might receive for switching to solar as local incentives can change at any time.

Solar Panel Cost Calculator California (How Much Are Solar Panels in California?)

The actual cost of solar panels in California is and isn’t the top concern of potential customers.

All residential and commercial owners can quickly use an online calculator for solar panels to estimate how many solar panels they are going to need to supply enough power for all the utilities in their home or business.

That number is going to be between 17-21 panels but can vary depending on the size of the property, occupants, and energy demands.

On top of that, they have to calculate if a battery storage system will be required or if they are going to forego that extra expense and enroll in net metering.

Fortunately, an online solar panel calculator will answer all those questions as well as what solar incentives are available in California.

What they will discover is that the Golden State has one of the most competitively priced solar panel installations in the country with prices ranging from $12,622 to $17,000, before all the California solar incentives are applied.

Apart from overall cost, an important consideration is the payback period. The length of time it will take for the initial investment to be recouped through electricity savings can often be a deciding factor.

The average time is about 6 years and after that milestone, any electricity generated can be classed as free.

Free Solar Panels California (How To Get Solar Panels for Free)

There is no question about the dedication California has in its drive to fully embrace renewable energies.

By 2045 the intention in how to get solar panels for free is that the state will no longer be reliant on any form of energy generation derived from fossil fuels and will be using 100% green energy.

Incentives and rebate programs assist residents of the state from all walks of life to have solar systems installed. Yet not everyone is able to afford the cost of installation

that, even after all the deductions, can still be a substantial investment.

Low-income families and some elderly residents are disadvantaged to such a degree that any financial contribution on their part is beyond their means. However, as long as they own their own property there is a program that will enable them to have a solar system installed on their property.

It is called the Low-Income Weatherization Program (LIWP).⁷ It came into effect in 2016 and there is no other program like it in California, providing free PV systems and energy efficiency improvements if you qualify as low-income.

The primary objective is to reduce the pressure on the grid as the state is constantly under threat of blackouts. By enrolling in this program,  you will be helping to combat the global rising greenhouse gas emissions, as well as helping lower your own energy costs which constantly appear to be on the rise.

With this opportunity, low-income families who are barely managing from paycheck to paycheck, will not be left behind in the drive that your state is undergoing to be 100% powered by renewable energy.

But just as importantly,  the program will ease the financial burden of high utility bills by reducing them to a level that you may find more manageable.

Solar Companies in California (Solar Installation)

Entrepreneurs and business leaders have flocked to this region to start enterprises supplying and installing solar systems as the state is heavily promoting the benefits of solar energy.

This influx has occurred because California is heavily promoting the benefits of solar energy to its residents with incredible incentives, and you should know that these rebates have made solar easier to obtain for your neighbors in the state.

With over 2,000 to choose from, consumers are sometimes confused about which are the reputable companies, and those who are not as reliable.

What is going to be a priority for your specific energy needs may not be the same as your neighbors, so when choosing your supplier and installer do an in-depth due diligence to ensure they are the right fit for you.

For example, some companies will offer a 25-year warranty, while others may not. Let’s have a look at what services you should be looking out for.

• Does the company offer a free on-site evaluation, or does it have to be paid for? Some installation companies will charge you for the quote and deduct that fee from the sales price when you place the order.
• How good is the 25-year warranty? Does it guarantee that the panels will still have an energy output of 95% after 10 years, or just 80%? And then what will it be after another 10? A seemingly small point, but a small reduction in electricity production can make a big difference on your utility bill.
• What is their after-sales service like if there are any problems?
• Always confirm with the company if they have all the information for all the incentives and rebates available to you throughout the state and on a federal level.  A good company can save you a lot of money and time trying to search for all the programs yourself.
• Do they provide the battery storage system as well or does that have to come from a third party? Surprisingly, some companies contract a separate entity for batteries which may affect the final price.
• Is there finance available?
• Does the company offer solar panel leasing options?⁸ Even after all the incentives and rebate programs have been factored into the price, the cost may still be beyond the reach of your bank balance.
  Leasing could be a good opportunity for you and could be worth exploring.
• Can the company install electric vehicle chargers? With more EVs, and electric bikes, being purchased, home charging stations are on the rise.

Not all companies offer everything or a full turn-key operation. Ask questions such as how long they have been in business, what other jobs they have done in your area, and just confirm, even if they don’t offer everything, that they can supply everything you need.

Solar Panel Installation

Rather than employing a company to install the rooftop array, it is possible to undertake the entire process personally to keep costs down.

It is important to be aware that when self-installing some of the California solar incentives may no longer be applicable.

Before embarking down this route, check on a few things so there will be no unwelcome surprises

1. Confirm that no incentives nor rebates will become ineligible. It would be pointless to save $500 on fitting the panels and lose $1,000 from incentives
2. Always purchase more panels than you need for current household or business electricity demands.
3. Decide if a battery storage system will be required or if the system will be connected to the grid for net metering.
4. Get your roof checked out. There is a significant amount of weight involved when 17-21 solar panels are to be mounted on your roof that may or may not be stable enough to support the additional weight long-term.
   A professional inspection will be worth the outlay and may offer some suggestions for the best location for better weight distribution. This could be important if your house was built pre-20th century, but even more modern houses can have damaged or rotten joists.
5. Simple things like water runoff from the roof have to be considered. The racking cannot be bolted into a place where it will interfere with the natural water flow into the gutters.
   If positioned incorrectly, the rainwater can be channeled to cascade over the side like a waterfall.
6. Check, check, and double-check that if you decided to self-install that no warranties will become void.
7. When a stable spot has been chosen, and the best angle has been calculated to capture the maximum amount of peak daily sunshine, then erecting scaffolding is the first step to make the project easier and safer.
8. Follow all the racking installation guide instructions carefully.⁹ It will describe to you how to mount the system securely to the rafters irrespective of the style of the tiles.
9. Bolt the solar panels in place and connect all the electrical wiring.
10. Connect the inverter first to the solar array and then to the battery system if there is one. If there is not, then an electrician should be used to ensure that you are connected safely to the grid.
11. Inspect all the connections and then run a test on the whole system. And then you should be good to go solar.

Solar Panel Maintenance

Solar panels require barely any maintenance at all, which is one of the appeals of this renewable power source. There are no moving parts that will wear out, break down, or need upgrading at any time.

However, check them every 6-12 months to clear away any substances like leaves, sand, or any other foreign object that could interfere with the cell’s ability to absorb solar rays.

Because they are generally situated on rooftops, debris can accumulate on the face of the panels and reduce the amount of electricity they produce.

To clean them, a regular garden hose for general cleaning is adequate or you can buy a solar panel cleaning kit, and it will be up to you to add the elbow grease to get the job done. If they become too obscured the efficiency output can be somewhat reduced.

Doing this in the morning or evening is recommended when the panels will be at their coolest, and this will help to increase the electricity output.¹⁰

Every 4-6 years, you should have an installer inspect the entire system in more detail to check for any signs of damage, rust, or erosion.

Automatic sprinkler cleaners can be added to the array to simplify this chore, or a solar panel cleaning business could be contracted instead.

Always scrutinize the small print on the terms of the warranty as some manufacturers of solar panels might void the guarantee if any self-cleaning is done.

California Solar Incentives and the Solar Rights and Easement Laws

In some parts of the country, HOAs have been able to prevent residents from installing solar arrays simply because they have outlawed rooftop arrays based solely on aesthetics.

The Solar Rights and Easement Laws enshrine the rights of any householder to install solar arrays and will also prohibit neighbors from blocking access to direct sunlight to the panels, especially in the case where shade is cast by trees planted after installation.

These regulations make it illegal for governments and homeowners associations (HOAs) to create barriers to installing rooftop solar panels, enabling everyone to have access to solar energy.

Carbon Footprint Solar Panels (Free Solar California)

Solar power is one of the cleanest renewable energy resources on the planet. Its infinite nature and abundant, reliable availability can be harnessed by anyone with an installed photovoltaic system.

But it’s not free. Not even in California. True, it is one of the most effective methods of combatting climate change,¹¹ and of encouraging entire populations to embrace clean energy production, but it comes with a cost.

And that cost comes in the form of the carbon footprint it leaves in its wake. In the wake of the carbon footprint solar panels is the optional word because any carbon residue trailing behind solar energy is instigated from the point of manufacturing, including the mining of the raw materials and the transportation of said materials.

Like any manufacturing process, the production of solar cells emits carbon, and the production of solar panels is no exception.

This is due to the composition of the cells themselves which are made of silicon and other fine metals including copper, silver, indium, and tellurium.

All of these materials have to be mined, and that process is incredibly energy intensive, an energy that is powered by fossil fuels, which in turn creates carbon emissions.

Even though silicon is one of the most abundant elements on the planet, it can only be found in rocks like obsidian, granite, and sandstone and ores like quartzite, and mica, with sand being the most common than silica,¹² as it is known in this form, is extracted from, simply because there is a lot of it.

The actual method of extracting that component that is so vital to solar panels is called reduction. And that takes the heat. A lot of it.

Temperatures of over 2,000 °C in enormous furnaces have to be reached to exceed the melting point of the silica, and studies have shown that this production process produces about 6.0 kg CO2e/kg of silicon metal.

Considering that each individual cell contains 11 grams of silicon, manufacturing a complete solar panel would take 660 kg of silicon.

If an average household has between 17-21 panels, that would mean that at least 11,000 grams of silicon would be needed for each one.

It has been calculated that the majority of solar panels such as yours will achieve carbon neutrality after three years of usage, taking into account the mining and accumulation of all other materials, including overseas and overland transit.

The good news is that your solar panel system has a 30-40 year lifespan, therefore the energy it generates during that period will entirely outweigh the carbon emissions that were initially generated to make the panel, and ultimately install them on your rooftop.

California Solar Incentives: Solar Programs in California

California solar incentives have greatly reduced the cost of solar panels in California over the last few decades and have managed to propel your pioneering state to the forefront of the solar revolution surging across the United States.

A new regulation was passed in 2020 mandating that practically all newly constructed homes were to have a solar system installed.

This would undoubtedly increase property prices in your area, but would also ensure that within 20 years the goal of the state to be 100% reliant on solar energy would be attainable.

The government in California is relying on your assistance to reach that goal earlier than expected, just as the timeframe to install solar systems on 1,000,000 rooftops was surpassed.

This was all achievable thanks to the California solar incentives (federal rebate lower cost of solar panels – CA) that even now keep attracting more consumers.

Frequently Asked Questions About California Solar Incentives