Solar Incentives In California 2021
California has remained a solar haven for the world and indeed the entire United States with lots of policies that have encouraged the uptake of solar energy. The golden state has revamped its effort in making itself a solar state in the year 2021 by making it even cheaper to install and use residential solar. There are building requirements for solar panels to be installed on new homes while more restrictions are being created on traditional energy sources. The measures aren’t rash especially on the backdrop of massive blackouts that swept central and northern California in 2019. The need to install solar panels is high but the going cost of installing solar panels can be so high with a 6-kilowatt system ranging from $16, 000 to $22,000. As a result of the huge financial burden many are wary of installing solar panels despite their huge benefits. Luckily there are many incentives and rebates to help you pay for the upfront cost of solar installation.
The incentives in the State of California stretch from federal, state to regional incentives that people in multiple parts of the state can take advantage of. And, in California there is definitely a golden standard to be the leading state to harness energy from the sun, with a goal to become 100% sustainable, which you can reference here in one of our older blog releases.
The federal Investment Tax Credit (ITC)
Although California does not have a California specific tax credit, so many of its inhabitants use solar, that we are a leading state in getting the federal ITC to residents. As one the leading solar pioneer states in the US there are federal tax incentives on purchasing solar panels. The Investment tax credit provides a 26% tax credit on all installation costs provided the taxable income is above the credit itself. The federal tax credit is available at 26% of all installations until 2022 and thereafter fall to 22% in the year 2023. The tax credit is essentially a 26% discount on the home solar system. If you buy a solar panel at, say $20,000 you are eligible for a tax credit of $5,200. Hurry and get the best deal as the solar credit may not last that long with a reduced solar credit after 2023. The federal solar incentive is likely to be gone by 2024 unless a federal legislation is introduced before 2024. Learn more about the ITC here.
Net Energy Metering (NEM)
The state of California has a net metering program that gives homeowners the ability to sell excess energy to the energy grid and receive incentives. Customers who install small renewable energy sources such as solar, wind and other sources to serve their home needs are eligible to the states metering program. Excess electricity sold from solar is usually generated from midday and homes will be able to sell electricity to the utility companies for the next 20 years. The customers with solar energy can use the energy in their homes and sell the excess energy to the utility companies. There are financial credits on electricity bills for all surplus energy supplied on the grid. The net energy metering does not cause any negative effects on anyone who sells their excess electricity to the utility firms. A person who participates in the NEM program is still eligible for incentives, rebates or credit provided by the electric utility.
Outside Of ITC You Can Still Receive Credits
Under the NEM tariffs participating customers can qualify for bill credits for extra power generation that your home solar power systems provides in excess of your actual electric utility consumption within your household. If your system is even slightly offset for your home solar power needs, you will be able to take advantage of this tarriff as much as possible. The bill credits are applied on a month-to-month basis at the same retail rate that the customer would be paid for energy consumption. New NEM customers must pay the same unavoidable charges to the public services as other IOU customers such as competition transaction charges, Departments of Water Resources bond charges, nuclear-decommissioning charges, and public transport charges. All NEM customer-generators are exempt from standby charges. There is also a net surplus compensation and renewable energy in the state of California. At the end of the year billing period, any surplus electricity is straightened up to a separate fair market value called Net surplus compensation. The rate is usually based on a 12-month rolling average of the energy market. The rate can range from $0.02 to $0.03 per kWh. The solar customer-generators may also receive compensation for the Renewable energy credits related to the surplus electricity generation. The process of getting renewable energy compensation is simple but one has to register with Western Renewable Energy Generation Information System (WREGIS) and follow other eligibility guidelines. Having the net metering can help customers pay off the cost of the solar panel so they experience the freedom of solar energy.
Single-Family Affordable Solar Homes (SASH) Program
The SASH Program combines fixed, capacity-based, and upfront cost rebates from non-profit administration. Through the program, qualifying homeowners can get solar at no upfront cost or any ongoing costs. The program ensures robust participation by in essence giving solar panels with full financial benefits to disadvantaged households. The program has strict qualification criteria to ensure that only those who qualify are in the most need can get the rebates and incentives. To start benefiting from the program you have to first of all own a home and receive electrical services from Pacific Gas & Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (SDG&E).
The household income of the qualifying home should be 80% or below the area’s median income which is estimated from the previous year tax return The last option in the checklist to qualify for the affordable housing program is the home has to qualify as affordable housing. California Public utilities define affordable housing as single-family homes that have resale restrictions or equity sharing agreements with public entities or non-profit affordable housing providers.
The home may also be part of a large complex supported by public financing to enable reselling the home at an affordable cost to low-income homes or a single-family home bought through state or federal funding or through a first home buyer loan program and contains a resale restriction or any equity sharing agreement. Homes that qualify for the SASH program can receive an upfront incentive of up to $3 per watt of solar installed the formula is straightforward and anyone who qualifies for the program can receive an incentive. A house that may install a 7-kilowatt system is eligible for $21,000. The catch of the incentive is that a household cannot receive an incentive greater than the cost of installing the solar system.
The SASH program is not all about installing solar panels but also about empowering the local communities. The program has green jobs training for low-income areas to help people secure well-paying jobs. The program has been very successful at mobilizing solar installations and as of 2021, at least 9,400 solar panel systems had been installed through the program. Multifamily Affordable Solar Housing (MASH) Program MASH provides solar incentives on qualifying multifamily affordable housing units that install solar. MASH together with SASH are both initiatives under the California Solar Initiatives Program (CSI). The program has been active since the year 2008 with the goals to promote the uptake of solar energy in the affordable housing sector, enhance energy use and quality of affordable housing through solar and other energy-efficient technologies, and reduce the electrical consumption and bills without raising the household expenses of the affordable housing occupants. The program has been engaged in promoting and increasing the awareness and appreciation of the benefits of solar households that live in affordable housing units.
The success of the program prompted the California congress to expand its goal to include maximizing the benefits of the ratepayers, ensure the participants who receive monetary incentives enroll in the energy assistance program as well as provide skill training and employment in the energy efficiency sectors and solar energy. The program helps to retrofit solar panels to low-income multifamily dwellings. The program strictly follows strict criteria in determining eligibility to the residential unit being financed by tax-exempt revenue bonds, general obligation bonds, low-income house credits, and any kind of local, state, or federal loans and grants. Housing complexes can qualify for the program if at least 20% of the units are rented or sold to low-income residents. It is possible to qualify on either track 1C or 1D that gives a rebate of $1.10 and $1.80 per watt respectively.
California Low Incentive Storage Residential customers can qualify for the Self-Generation Incentive Program (SGIP) rebate of between $200-$1,000 per kilowatt-hour of storage. You can receive the rebate if your home is serviced by PG&E, SCE, Southern California Gas, or SDG&E. The incentives come in three tiers: Residential storage, Residential equity storage, and Residential equity resiliency storage.
The first tier is for homes with battery storage systems less than 10kW where most homeowners can qualify for $200 for a Kilowatt-hour of storage installed. Residential equity storage is for batteries installed on low-income homes and could attract up to $850 per Kilowatt Hour.
The last tier is for those homes in areas that experienced two or more planned safety power shutouts and could attract rebates of up to $1,000 per kilowatt-hour.
Solar Energy Property Exclusion
If you are afraid of paying hefty property taxes then you can consider adding a panel to your house. The tax exemption applies to new home solar installation and houses built with solar panels. The property tax won’t be increased for solar homes at least till 2024. Houses with solar panels increase the value by about 3% in California compared to those that don’t have solar. It is clear that the golden state wants to set the gold standard on encouraging more solar installations. Residents may take advantage of the offer before their expiration to take advantage of the solar incentives.