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California has long been at the forefront of the renewable energy movement, and its commitment to solar power is evident through a variety of innovative incentives and programs. These initiatives are designed to make solar energy more accessible and affordable for residents, businesses, and communities across the state. From financial rebates and tax credits to supportive legislation and funding for critical infrastructure, California’s solar incentives aim to reduce greenhouse gas emissions, promote energy independence, and ensure environmental justice.
In this breakdown, we will explore the key solar incentives available in California, detailing how each program works, who can benefit, and the impact these initiatives have on the state’s energy landscape. Whether you’re a homeowner considering solar panels, a business looking to cut energy costs, or a community leader interested in sustainability, understanding these incentives can help you make informed decisions and take full advantage of the benefits that solar energy has to offer.
More about incentives in other states read in our Key solar incentives in the U.S. article.
Solar for All
- The Community Power Coalition’s “Powering America Together” SFA program, led by Inclusive Prosperity Capital, Inc., will collaborate with the US Department of Energy’s National Community Solar Partnership and Community Power Accelerator program. Comprising seasoned community solar experts, CPC aims to support low-income community solar projects, reduce carbon emissions, lower energy costs, and promote quality jobs, community wealth-building, energy resilience, and equitable workforce development.
- California’s CA-S4A program is a coalition of state entities with expertise in regulatory design, capacity building, project finance, infrastructure development, and grid management. This coalition will leverage California’s extensive solar energy market transformation over the past two decades to provide affordable, reliable clean energy statewide. The program aims to enhance programmatic capacity, extend current initiatives, address funding gaps, and support new strategies for future market conditions, all while continuing California’s decarbonization efforts.
- Teaming up with GRID Alternatives, a coalition of ten mission-driven nonprofit solar and affordable housing providers has developed the Solar Access for Nationwide Affordable Housing Program (SANAH). SANAH aims to maximize benefits for households and communities by advancing equity, reducing pollution, and combating climate change. The program offers expanded access to solar and storage for income-qualified households, significant energy savings, and relief from high costs, along with benefits like efficiency improvements and electrification.
Net Energy Metering (NEM)
California’s net metering program, known as Net Energy Metering (NEM), allows homeowners and businesses with solar panels to earn credits on their utility bills for the excess energy they generate. Under NEM, when a solar system produces more electricity than needed, the surplus energy is sent to the grid, and customers receive credits that offset future electricity use when their system isn’t generating power (like at night).
California recently transitioned from NEM 2.0 to NEM 3.0, which adjusts the compensation rate for exported energy, reducing the amount received for excess power. This change aims to promote energy storage adoption by incentivizing solar customers to install battery systems to store and use solar power during peak demand times. Despite the reduced credit rates, California’s net metering remains a valuable way for solar users to lower energy costs and support the state’s renewable energy goals.
The NEM 3.0 structure includes net billing, which results in a 75% lower credit value for excess energy sent to the grid. The rates are based on avoided cost, which is how much money the utility saves by not producing the energy itself.
Two utility companies in California (Pacific Gas & Electric and Southern California Edison) offer customers higher-valued credits for nine years if they apply for interconnection before the end of 2027. If you are unable to lock in NEM 2.0 rates and live in these utilities’ service areas, then you still have an opportunity for slightly better rates than those who wait until after 2027.
Virtual Net Energy Metering
The Virtual Net Billing Tariff, adopted in Decision 23-11-068, replaces the VNEM tariff starting February 15, 2024. New applicants will use this tariff unless they qualify for the SOMAH or MASH VNEM tariffs. Virtual net energy metering (VNEM) allows property owners to share benefits of onsite renewable electrical generation with tenants. In VNEM, energy credits from the property’s generation facility are allocated to tenants and common areas, with electricity sent to the grid and bill credits applied based on these allocations. Tenants or common areas may be net producers, receiving bill credits, or net consumers, charged for extra energy consumption. VNEM customers also have an annual true-up to balance generation and consumption over the year.
Self-Generation Incentive Program (SGIP)
The CPUC’s Self-Generation Incentive Program (SGIP) provides rebates for installing energy storage technology at both residential and non-residential facilities. These technologies include battery storage systems that can operate during power outages.
Depending on the type and usage, batteries can supply power for several hours or longer, making them a crucial component of an emergency preparedness plan in case of a power outage.
To prepare for the next wildfire season, the CPUC has allocated over $1 billion in funding through 2024 for SGIP. This funding prioritizes communities in high fire-threat areas, those that have experienced two or more utility Public Safety Power Shut-off (PSPS) events, as well as low-income and medically vulnerable customers. Additionally, funds are available for “critical facilities” that support community resilience during PSPS events or wildfires.
Residential Clean Energy Tax Credit, formerly the federal investment tax credit (ITC)
The ITC offers a federal tax credit for solar energy systems installed on residential and commercial properties. As of 2024, it provides a 30% tax credit on the cost of installing solar panels.The solar PV system must be installed and operational during the tax year to qualify for the credit.
When filing your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. To qualify for the ITC, you must purchase your system with cash or through a solar loan—leasing a system does not make you eligible.
Additionally, you need to have a sufficient tax liability, though you can carry over any unused credit year-to-year until the ITC expires at the end of 2034. The only exception for direct payment eligibility is if you are a tax-exempt entity, such as a nonprofit organization.
Property Assessed Clean Energy Programs
CSCDA’s Open PACE program is a turnkey resource for residential and commercial property owners to finance energy efficiency, renewable energy, water conservation and seismic improvements. CSCDA developed qualification criteria to select PACE Program Administrators to be included in the CSCDA Open PACE platform. The CSCDA Open PACE Program Administrators will:
- Develop managed contractor networks in California communities
- Provide 100% financing for energy efficiency projects
- File repayment obligations through property tax bills
DAC-SASH
The California Public Utilities Commission (CPUC) has approved the Disadvantaged Communities Single-family Solar Homes (DAC-SASH) program to promote the adoption of clean, affordable solar energy among residential customers in disadvantaged communities. This program is designed to extend the benefits of solar energy to those who may face economic and environmental challenges.
Key Features of the DAC-SASH Program
DAC-SASH specifically aims to assist low-income households in disadvantaged communities. These areas often suffer from higher levels of pollution and other environmental burdens, making the shift to renewable energy both a financial relief and an environmental necessity.
The DAC-SASH program is set to run through 2030, providing a long-term commitment to improving access to solar energy for disadvantaged communities.
The program is modeled after the successful Single-family Affordable Solar Homes (SASH) program, which has a proven track record in increasing solar adoption among low-income households. By leveraging the strategies and lessons learned from SASH, DAC-SASH aims to replicate and build upon this success.
DAC-SASH offers significant financial incentives to reduce the upfront cost of installing solar energy systems. These incentives are designed to make solar installations affordable for homeowners who might not otherwise have the financial resources to invest in renewable energy.
By increasing the adoption of solar energy in disadvantaged communities, the DAC-SASH program helps reduce energy costs for low-income households, lowers greenhouse gas emissions, and contributes to environmental justice by addressing the disproportionate pollution burden on these communities.
Solar energy can enhance the resilience of disadvantaged communities by providing a reliable source of electricity, especially in areas prone to power outages or natural disasters. This is particularly important in California, where wildfires and other emergencies can disrupt the power supply.
California Solar Rights Act
The Solar Rights Act protects the rights of property owners to install solar energy systems. It limits the ability of homeowners’ associations and local governments to impose restrictions that would hinder solar installations.
RMEA’s Residential Solar Rebate Program (ENDED ON 10/14/2024)
On October 15th, three new programs were launched to enhance sustainable energy solutions for the community:
- Residential Resiliency Battery Program: This program supported residents in increasing energy resilience by helping with the installation of home battery systems, providing backup power during outages.
- ChargeUp Rancho Mirage EV Charger Program: This initiative promoted electric vehicle (EV) adoption by assisting with home EV charger installations, making EV ownership more accessible and convenient.
- Residential Energy Efficiency Program: Focused on reducing energy consumption, this program offered resources and incentives for upgrading homes with energy-efficient solutions.
With an additional $1 million allocated to these programs, customers had more opportunities to save and invest in sustainable energy. More details were shared to help residents participate and take full advantage of these initiatives.
Income Qualified Solar Rebate Program
AMP is offering a $500 rebate for income qualified customers who are installing solar in their homes. This rebate will help offset city fees associated with installing solar in your home.
Eligibility requirements include an annual household income below $106,000 and being a residential customer with a home built before January 1, 2020 (new construction homes are not eligible). The rebate is administered after the final project invoice has been paid. This applies only to new PV systems and new PV systems with battery storage. Projects must be completed after November 1, 2022, to qualify.
Active Solar Energy System Exclusion
The property tax incentive for installing an active solar energy system is a new construction exclusion, not an exemption, meaning it won’t affect the existing property’s assessment. Typically, additions to real property are assessed at market value, but active solar energy systems are not, keeping the property’s assessment unchanged. Some active solar energy properties may qualify for this exclusion, which has been extended through the 2025-26 fiscal year, with the statute set to sunset on January 1, 2027. Active solar energy systems include those used for water heating, space conditioning, electricity production, process heat, and solar mechanical energy, but exclude solar pool heaters, hot tub heaters, passive energy systems, and wind energy systems.
California’s Low-Income Weatherization Program (LIWP)
California’s Low-Income Weatherization Program (LIWP) provides free solar photovoltaic (PV) systems and energy efficiency upgrades to low-income farmworker households. It reduces greenhouse gas emissions and energy costs by generating clean, renewable power. LIWP also improves living conditions, economic security, and community health by lowering utility bills and enhancing air quality. This program ensures low-income residents benefit from the State’s Climate Investments, making homes more affordable and comfortable.
The Renewable Market Adjusting Tariff (ReMAT)
The Renewable Market Adjusting Tariff (ReMAT) is a feed-in tariff program enabling small Renewable Portfolio Standard (RPS) eligible generators under 3 MW to sell renewable electricity to investor-owned utilities (IOUs). ReMAT offers fixed-price contracts with standardized terms and market-adjusted prices, updated annually by CPUC resolution. The renewable energy generated under ReMAT contributes to an IOU’s RPS obligations.
Under ReMAT, a total of 493.6 MW of capacity is allocated among the IOUs as follows:
- Pacific Gas and Electric (PG&E): 218.8 MW
- Southern California Edison (SCE): 226.0 MW
- San Diego Gas & Electric (SDG&E): 48.8 MW
The Marin Clean Energy (MCE) Feed-In Tariff Plus
FIT Plus is a wholesale energy supply program offering stable, competitive energy prices to local, small-scale renewable energy developers through predefined contract terms. Managed by MCE, the program provides a standardized agreement, removing the need for contract negotiations and creating a reliable basis for project financing. This structure ensures developers have a clear and predictable revenue stream. Importantly, FIT Plus energy suppliers do not need to be MCE customers to participate.
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The Los Angeles Department of Water and Power (LADWP) Feed-in Tariff (FiT) Program
LADWP will purchase energy from projects through a Standard Offer Power Purchase Agreement for terms up to 20 years, with pricing based on system size and location. This price encompasses all energy, capacity rights, and environmental benefits tied to each project.
This program supports the development of local renewable capacity through a public-private partnership, helping LADWP meet its Renewable Portfolio Standard targets.
Total Capacity: 235 MW
- In-Service: 111.0 MW
- Active: 98.4 MW
- Available: 25.6 MW
The San Diego County Green Building Program
The San Diego County Green Building Program incentivizes the construction of energy-efficient buildings by offering expedited permitting and reduced fees for projects that meet specific green building standards. This initiative supports residential, commercial, and industrial developments that incorporate sustainable practices, aiming to reduce environmental impact and promote energy conservation within the county.
The City of San Diego’s Sustainable Building Expedited Permit Program
The City of San Diego’s Sustainable Building Expedited Permit Program aims to promote the construction of sustainable buildings by offering expedited processing for qualifying projects. This program is designed to support developments that meet certain green building standards, encouraging the use of energy-efficient and environmentally friendly building practices.
Western Riverside Council of Governments – Home Energy Renovation Opportunity (HERO) Financing Program
The Western Riverside Council of Governments’ Home Energy Renovation Opportunity (HERO) Financing Program offers Property Assessed Clean Energy (PACE) financing to homeowners for energy-efficient and renewable energy home improvements. This includes projects like solar panels, HVAC systems, windows, and insulation. The financing is repaid through property tax assessments, providing an accessible way for homeowners to invest in energy efficiency and sustainability.
CaliforniaFIRST
The CaliforniaFIRST program offers Property Assessed Clean Energy (PACE) financing for residential and commercial property owners to fund energy efficiency, renewable energy, and water conservation improvements. This financing is repaid through property tax assessments, making it accessible for property owners to undertake environmentally beneficial projects.
Property Tax Exclusion for Solar Energy Systems and Solar Plus Storage System
The Property Tax Exclusion for Solar Energy Systems and Solar Plus Storage System program in California excludes the added value of solar energy systems and solar plus storage systems from property tax assessments. This exclusion applies to both residential and commercial properties and aims to encourage the adoption of solar technologies by preventing an increase in property taxes due to the installation of these systems.
These incentives collectively contribute to making solar energy more accessible and affordable, promoting the growth of renewable energy in California.
Disclaimer
The information provided herein is for informational purposes only and is accurate as of the time of publication. Please be aware that the solar energy landscape, including technology, regulations, incentives, and market conditions, changes frequently. Therefore, it is essential to consult with qualified experts and professionals before making any decisions regarding solar energy installations or investments. This will ensure that you receive the most current and applicable advice tailored to your specific circumstances.
