Can switching to solar power really save you money in California? It can! A list of local, state, and federal incentives offer discounts for solar installation and battery storage systems. From tax credits to installation rebates, there are lots of options to save big on energy efficiency and self-generated power.
This blog covers some of the most commonly used programs, including:
- Investment Tax Credit (ITC)
- Inflation Reduction Act (IRA)
- Local Rebates
- Net Energy Metering Programs
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Investment Tax Credit
In 2005, the Investment Tax Credit was first established when the Energy Policy Act was enacted. It has reached a scheduled expiration date several times since then, but it has been so popular and so successful that Congress has continued to extend the expiration date. The most recent continuation of the program is part of the Inflation Reduction Act and continues to offer a 30% tax credit for the total installation cost of a home solar system. The program is extended for another 10 years at 30% with additional credits at a reduced rate through 2034.
Inflation Reduction Act
The Inflation Reduction Act extended the residential Investment Tax Credit and made some substantial changes. Under the new, revitalized program, homeowners can still get 30% of the installation costs of solar panels as a tax credit and carry over any unused credit to future tax years. For example, a $30,000 solar array would give you a tax credit of $9,000, but if you don't owe that much in federal income taxes for the installation year, you can apply the credit to reduce your taxes owed to $0 for the year and bank the rest to be used the next year.
To qualify for the tax credit, you must own the solar panels, so leasing programs aren't an option. You must have taxable income. The tax credit won't reduce your tax amount to a negative, so you can't cash out the money you haven't paid in. And the solar panels must be installed at your primary or secondary residence.
As the tax credit phases out, the credit amount drops to 26% for systems installing 2033 and 22% for systems installed in 2034. It completely expires in 2035 unless Congress chooses to extend the program further.
The IRA also added battery storage systems to the tax credit, allowing up to 30% of the cost of purchase and installation as a tax credit, provided the system is exclusively charged using solar power.
Active Solar Energy System Property Tax Exclusion
California offers homeowners who install a solar power array an exclusion for the array from their property tax assessment. It's not an exemption, but it does mean that the addition of solar power won't be included in the property's assessed value for tax purposes. This allows homeowners to add solar without worrying about increasing their property tax bills.
Self-Generation Incentive Program
The SGIP is generally acknowledged as the best incentive to install battery storage for a solar array. It offers up to $0.25 per watt-hour of installed storage or $200 per kWh battery installed. This one-time credit helps offset the installation costs for power storage. The SGIP has also added an Equity and Equity Resiliency level to the program for low-income families. It offers a higher rebate amount to reduce the installation cost to nearly or entirely free. Homeowners in qualifying areas can receive up to $1,000 per kWh of battery storage installed, a 4 times increase over the standard SGIP.
DAC-SASH is a program that helps offset solar installation costs through property tax credits. Eligible homeowners can receive a rebate of up to $3 per watt for installed solar panels or approved solar-powered devices. This program is aimed at low-income families and does have fairly strict eligibility requirements. You must:
- Own and live in the home you're seeking DAC-SASH funds for
- Be a customer of Pacific Gas & Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (SDG&E)
- Already enrolled or eligible to enroll in an income-based CARE or FERA utility bill program
- Your property must also be located in a qualified area
Net metering or net energy metering is one of the best ways for solar panel owners to save when switching to self-generated power. While not specifically a solar incentive for California, net metering allows property owners to sell back unused electricity generated by their solar panels in exchange for bill credits. New solar panel owners currently fall under NEM 2.0, which offers a set rate for excess energy near the rate customers pay for their electricity. It locks in that rate of return for 20 years and helps make it possible to see a return on your solar investment in as little as 6 years.
However, NEM 2.0 is ending as of April 13th, 2023. Any homeowner who has already filed a completed interconnection application by that date can still participate in NEM 2.0 and get the 20-year rate guarantee, provided they complete their solar installation within 3 years. Those that miss the deadline will be under NEM 3.0 guidelines which offer substantially reduced bill credits for excess energy.
Want to get started on your solar installation today?
Let us help. At Burgeson's, we put honesty and integrity first, which is why we always offer honest opinions about solar viability for your home. If you have questions about how much you could save with solar panels and battery back-up, call us at 909-792-2222 to schedule a free estimate and get honest and upfront pricing.