California Solar Incentives, Rebates & Tax Credits (2024 Guide)

Overview of California Solar Incentives

The chart below provides a quick look at the available incentives for going solar in CA. We’ll dive deeper into how they affect your total solar system cost and how to redeem them in the following sections.

Federal Solar Tax Credit (ITC) for Californians

The federal solar tax credit is one of the most valuable incentives in California, and it’s available to all residents. It’s designed to help reduce the effective cost of converting to solar and incentivize residents to adopt renewable energy.

This federal tax credit for solar is a credit to your income tax liability for 30% of your system value. When you file your income taxes, 30% of your system cost will be credited to what you owe. Unused credit can be carried over for up to five years to allow more individuals to take the credit.

This credit was originally established in 2006. Since then, the credit dropped to 26% in 2022 and was previously scheduled to drop to 22% in 2023 and would no longer be available in 2024. However, the federal government updated the policy with the IRA, extended the dates for inclusion and re-upped the credit percentage. Current credit rates are as follows:

• 30% for systems installed between 2022 and 2032
• 26% for systems installed in 2033
• 22% for systems installed in 2034
• The program will be discontinued in 2035 and will no longer be available²

In California, where the average 6 kW system totals $19,980, the federal credit will average around $5,994, bringing down your effective system cost to $13,986.

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California’s Self-Generation Incentive Program (SGIP)

Since power outages can be an issue for utility companies in California (the state leads the nation in power outages), the state initiated the Self-Generation Incentive Program, which provides rebates to customers who add a solar battery to their solar system.

The program, initiated by the California Public Utilities Commission (CPUC), provides a rebate of up to $200 per kWh of battery installed as a part of residential solar panel systems.

A Tesla Powerwall solar battery, for example, which has a capacity of 13.5 kWh, could be eligible for a rebate of up to $2,600.

Watch Below: California Updated Their Net Metering Policy. What Does That Mean For You?

California’s Single-Family Affordable Solar Housing (SASH) Program

The SASH program — also known as the Disadvantaged Communities SASH (DAC-SASH) program — was initiated to make solar accessible to low-income households and areas. It provides one-time, upfront cash-back incentives to bring down the cost of solar in California for eligible individuals.

This solar program was started by the California Solar Initiative (CSI). It’s open to prospective solar customers who:

• Are customers of Pacific Gas & Electric (PG&E), Southern California Edison (SCE) or San Diego Gas & Electric (SDG&E)
• Own their home
• Live in the home full-time that qualifies
• Have a household income that is at or below 80% of the median household income in the area
• Take advantage of “affordable housing,” which is defined by Public Utilities Code 2852

If you qualify, you can get immediate rebates of up to $3 per watt — an average of $18,000 in CA — to make your solar array more affordable.

As of January 2024, the SASH program is CLOSED. It might open again in the future if funds are replenished, so make sure to check with your utility company or the DSIRE database for future opportunities.

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California’s Equity Resiliency Program (ERP)

The Equity Resiliency Program (ERP) is offered as part of the SASH program. Rather than providing rebates for solar panels, this program provides rebates for energy storage solutions.

If you qualify for the SASH program and you also want to install solar energy batteries in your home, then the ERP is an outstanding option. It will help reduce the cost of your batteries by up to $1,000 per kWh of battery capacity installed. For a Tesla Powerwall, which has a capacity of 13.5 kWh, the ERP could cover the entire cost.

Note that, since the SASH program is currently closed, this perk is also not currently available as of January 2024. Check the DSIRE website or the program’s website for more information on future openings.

Active Solar Energy System Property Tax Exemption in California

This exemption is available to all residents of California. Normally, when you carry out home improvements, your home value increases, which drives up your taxes. As with any home improvement project, converting to solar is expected to boost your home value by around 4.1%.³

While going solar would normally cause your taxes to increase as a result, this exemption prevents that from happening. Ultimately, this perk can save you hundreds or thousands of dollars in taxes over the lifespan of your system.

PACE Financing in California

PACE financing is a pro-solar financing program that provides low-APR, no-money-down financing options for aspiring solar customers. PACE loans let you pay for your solar installation via your taxes, and the cost of financing is often significantly lower than if you chose to finance through your installer or a third party.

California’s Solar Rights and Easement Laws

California has initiated solar rights and easement laws, which basically make solar accessible to all residents. These laws prevent homeowners associations (HOAs) and municipalities from preventing residents from installing rooftop solar panels.

This is less of an incentive than it is a guarantee that you retain the right to enjoy the benefits of solar.

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Net Metering in California: NEM 2.0 vs NEM 3.0

Net metering — sometimes called net energy metering (NEM) — has historically been one of the most crucial incentives for solar customers in the U.S. This is a billing policy that lets you over-produce electricity with your system when the sunlight is abundant and intense. You earn credits for all excess energy you generate and then use those credits to reduce future electric bills.

Unfortunately, as of December 2022 the local governance in California have decided to get away with the majority of the incentive and have enacted NEM 3.0 to take place starting April 14th 2024. While NEM 2.0 mandated that all excess energy be credited at the full retail rate, which is the best-case scenario for solar customers and leads to the greatest long-term savings, with credits also rolling over to future months indefinitely, NEM 3.0 is much more conservative- and reduced the buy back rate for solar energy from retail rate to 75% less.

Net metering policies are changing across the country, and most are becoming less appealing rather than more beneficial as it is seen as na unequal pricing structurer and can be seen as a penalty to lower income households without solar.

It is important to note that while the policy does go into affects starting April 4th, 2024, if you install solar prior to that date you will be grandfathered into the NEM 2.0 guideline of full retail rate for 20 years- making now the BEST time to go solar in California for the foreseeable future. If you already have solar panels but need to replace them in the next 5 years and were grandfathered into NEM 1.0, we also recommend you re-install solar panels before this deadline to qualify for the more lucrative policy for the extended length of time. 

Local Solar Incentives in California

Finally, California is home to quite a few local solar incentives, which are provided by individual utility companies, cities, counties or other municipalities. Below, we’ll provide a comprehensive list of all of the local perks available in California and how they can help make solar more affordable for you.

• San Diego County Green Building Program: If you live in San Diego County and you’re coupling a home build or renovation with solar or other energy efficiency upgrades, you can get a reduction in the permit fees. This offers a 7.5% reduction, plus expedited processing times.
• City of San Francisco GreenFinanceSF: Residents of San Francisco can opt to finance PV systems using this program. It allows your payments to be processed via your taxes for convenience, and it helps to reduce interest rates for greater savings over time.
• Rancho Mirage Energy Authority (RMEA) Solar Rebate: Customers of RMEA can claim up to $500 in rebates from the utility provider when installing or expanding upon an existing solar PV system.
• Sacramento Municipal Utility District (SMUD) Solar Rebates: SMUD provides additional rebates and incentives to customers who install batteries along with their panels. Rebates can add up to around $2,500.

Local incentives are always subject to change. As such, we recommend checking with your utility provider and your nearest municipality to see if there are any additional perks available to you for converting to solar.

You can use the links at the very bottom of this page to find all the local incentives available in your city.

So, What Are the Best Solar Rebates and Incentives In California?

We’ve included a comprehensive list of all of the incentives available for solar customers in California above. However, not all of the perks mentioned are of equal value, and some help to make going solar in California more worth it than others. Below, we’ll include a short list of the top incentives we think it’s most important for you to take advantage of.

Federal Tax Credit

If you only take one incentive in CA, make sure this is it. The federal tax credit provides an average of just under $6,000 in tax credits to solar customers. Not only does the federal tax credit provide the highest potential for savings, but it also takes minimal time to apply for. As such, the value you get for the time spent applying is outstanding.

Net Metering (For Now)

Net metering is another of the low-cost-high-reward incentives that we absolutely recommend taking advantage of. In many cases, your utility company won’t even require that you fill out any paperwork to access net metering. However, even if you do have to spend some time and effort applying, this policy is worth it, as it helps you maximize long-term savings.

Self-Generation Incentive Program (SGIP)

Finally, we strongly recommend taking advantage of the Self-Generation Incentive Program if you plan to install a battery with your other PV equipment. With the value of net metering set to drop in California, we especially recommend cashing in on this incentive. The SGIP requires minimal paperwork and can save you over $2,500, on average.

What’s The Near Term Outlook For More Incentives In California?

California has been ranked as one of the top states — if not the top state — for solar conversion for quite some time. This is partially because the state has maintained a variety of beneficial incentives to make converting more affordable and valuable.

Given how many incentives are available in California right now, the likelihood is that there won’t be too many more popping up in the near future. In fact, it’s more likely that incentives will become less readily available or less valuable in the coming years if any changes are made. That’s why we recommend acting now.

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The cost information presented in this article is derived from a comprehensive analysis, incorporating data from multiple industry sources. The average cost per watt per state was calculated based on figures from Consumer Affairs, Energy Sage, and Berkeley Lab’s Electricity Markets & Policy Department. Additionally, monthly energy consumption and the average monthly cost of electricity were sourced from the U.S. Energy Information Administration, ensuring a well-rounded and accurate representation of the information presented.