The Golden State is known for its sunshine, and now more than ever, Californians are taking advantage of the state’s solar incentives to power their homes with clean energy. In this guide, we will outline all of the solar incentives available in California in 2022 and provide tips on how to take advantage of them.
So whether you’re a homeowner or business owner thinking about making the switch to solar, keep reading for everything you need to know!
What Do You Need to Know About the Solar Industry and Incentives in California?
Although California has one of the best climates in the country for rooftop solar power, the Golden State is also seeing a rise in other forms of renewable energy.
California offers a variety of tax breaks, exemptions, and rebates that make installing photovoltaic (PV) systems more cheap for locals while also assisting the state in producing more renewable energy.
According to the most recent data from the Energy Information Administration, California now generates over half (43%) of the nation’s small-scale home solar energy because to these proactive incentives (EIA).
California Solar Incentives Guide: What Rebate and Tax Credit Programs for Solar Energy Are Available to Californians?
For Californians, rooftop solar panels have long been a dependable and wise financial investment, and many buyers are able to quickly recoup their costs (ROI).
However, there is currently no statewide solar tax credit to assist people with the initial purchase of solar panels in California due to the already cost-effective nature of solar in the state.
Nevertheless, the federal solar tax credit is available to all residents of California, and the state also provides a number of other solar incentive programs and rebates with the purpose of expanding access to dependable, inexpensive solar energy.
Self-Generation Incentive Program (SGIP)
California’s SGIP provides incentives to people who use solar battery systems to store extra energy in response to an increase in the frequency of power outages. An essential part of disaster preparedness is battery storage.
The California Public Utilities Commission (CPUC) gave SGIP more funding in January 2020. The majority of home solar customers can currently get paid $200 every installed kilowatt-hour (kWh) of solar battery storage.
The Equity Resiliency Budget, which was created to benefit communities with low incomes and high fire risks, received the majority of the SGIP funds. In response to the rise in wildfires and Public Safety Power Shutoffs (PSPS), which are deliberate power interruptions, this budget program was developed.
Californians who meet the requirements can get $1,000 for every kWh of installed battery storage. Below are the criteria for this program:
1. Residing in a region with a fire risk of Tier 3 or Tier 4 (per this map)
2. Residing in an area where at least two PSPS occurrences have occurred
3. Residing in a vital facility that provides services to underserved communities, a high-risk area for fires, or an area affected by PSPS
4. Regarded as a low-income client
Does it make a difference if I am a homeowner or renter?
Though it is normally simpler for homeowners to apply for the SGIP rebate, renters may still be eligible with their landlord’s help. If you are unsure of what is required, please talk to your installer or Program Administrator.
Why would you want to store energy in your home?
1. If your roof already has solar panels, extra solar power can be kept and used when there is no sunlight.
2. Despite not having solar panels, this utilizing technology, you may store energy from the electric grid and make use of the energy in case of a power failure. With respect to the battery, depending on how often you use it, this might last a number of hours or more.
3. Battery storage can be crucial for a stronger emergency preparedness strategy should there be a power outage.
Who do I call if I want to learn more?
Contact your local Program Administrator if you still have questions and want more information about SGIP. Your Program Administrator depends on who your utility is:
SDG&E (via Center for Sustainable Energy)
Single-Family Affordable Solar Housing (DAC-SASH) Program
SASH provides qualifying low-income homes with a $3 per watt incentive to install rooftop solar panels (a standard solar system is 5,000 watts). The initiative also offers subsidized rates for participation in community solar projects and utility-scale clean energy for those who might not be able to put solar on their roof. The current price reduction is 20%.
To qualify for this program, you must be a customer of Pacific Gas and Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (SDG&E). Prior to 2022, there existed an incentive scheme for multifamily affordable solar housing (MASH), however it has since been discontinued.
Are There Any Other Solar Incentives in California?
Net Energy Metering
Customers may send any extra energy produced by their solar panels back to the local power grid through net metering, often known as NEM. Customers earn credits from their utility providers in return, which they can use on future payments.
One of the strongest net metering schemes in the US has historically been provided by California, which pays its solar consumers at full retail rate.
Net metering will still be accessible in California as of August 2022. The program is evolving, though, and it’s anticipated that soon the state will permit each utility provider to choose the fee solar users would receive for their extra energy. Expect rates to decline in value if this occurs.
Below are the major utility providers in California and how they currently compensate solar customers for their exported energy:
- Los Angeles Department of Water and Power (LADWP)
- Pacific Gas & Electric (PGE)
- San Diego Gas & Electric (SDG&E)
- Southern California Edison (SCE)
Local Solar Incentives in California
Numerous local utilities and municipalities in California have terminated their solar incentive schemes as of 2022. However, some are still accessible, including:
Rancho Mirage Energy Authority (RMEA): For residential customers that build or upgrade a home solar system, the Rancho Mirage Energy Authority will give a $500 incentive.
Sacramento Municipal Utility District (SMUD): SMUD provides a range of incentives totaling up to $2,500 for solar consumers installing battery storage systems. You may find information about the program on their website.
Take advantage of the many solar incentives still available in California while you can. A penny save today could be worth a lot more tomorrow.
What are the Benefits of the National Solar Tax Credit for Californians?
U.S. households who buy and install a solar power system in 2022 may be eligible for a tax credit of 26% of the total system cost through the Solar Investment Tax Credit or Federal Solar Tax Credit. The ITC will drop to 22% in 2023 and gradually disappear in 2024.
But it’s anticipated that the solar tax credit will be reinstated at the same 26% rate when the Inflation Reduction Act is passed. Under the Bush administration’s Energy Policy Act of 2005, the credit was initially designed.
Californians who want to take advantage of the credit can submit IRS Form 5695 with their yearly tax returns. Homeowners must now fit the following requirements to qualify for the federal tax credit:
1. At any time between 2006 and the end of 2022, you built a household solar power system.
2. The site of the solar panel installation is a residence. It’s not necessary for it to be your main abode.
3. In contrast to renting solar panels, you own the solar system, which means you either paid cash for it or obtained a solar loan.
Frequently Asked Questions
1. Is it worth your while to install solar panels in California?
YES! Solar panels are a great investment for Californians. Not only will you save money on your electricity bills, but you may also be eligible for solar incentives, like the federal Solar Investment Tax Credit.
2. What is the best type of solar panel for Californians?
The most popular type of solar panel in California is the monocrystalline silicon solar panel. This type of solar panel is known for its high efficiency and durability.
3. What is the average cost of solar panels in California?
The average cost of a solar panel system in California is $18,000. However, the cost of your system will depend on the size of your home and your energy needs. Solar Panel systems typically range from $11,000 to $30,000.