When it comes to solar energy in the United States, California is king. The Golden State has led the way for residential and commercial solar installations down through the years and this is thanks, in large part, to the availability of some excellent financial incentives, tax credits, and solar initiatives. When you combine the financial incentives with an ideal climate and an environmentally-conscious population, it’s easy to see why California is the number one solar state in the U.S. Below are some of the best California solar incentives available in 2021.
The Federal Investment Tax Credit
The solar investment tax credit (ITC), also known as the federal investment tax credit, remains one of the biggest draws for prospective solar customers in California. The ITC has driven solar growth across the entire country since its enactment over a decade ago—and it’s easy to see why. The solar ITC is a 26% tax credit available for both residential and commercial solar systems. You can claim the solar ITC when you are filing your yearly tax returns and, if your tax liability is not large enough to claim the entire credit, it can be rolled over to the following year—as long as the ITC is still in effect. Unfortunately, despite all its success, the ITC is in the process of stepping down and will be reduced to 22% in 2021, before declining to 10% for commercial/utility-scale solar only from 2022 onwards. For a full explanation of the solar investment tax credit, check out our recent blog post here.
Net metering has been a hotly-contested issue across a number of states in recent years, but it remains available for solar customers in California. Utilities in California must provide a net metering option for their consumers, allowing California solar customers to make a big dent in their utility bill each month. Those customers availing of a net metering program will receive a bill credit each month, making net metering one of the best reasons to go solar in California in 2021. If you are preparing to go solar, or just researching the idea, be sure to check out the net metering program on offer from your utility company.
The following utilities offer some of the top net metering programs in California:
Click here to learn more about net metering.
Property Tax Exemption
Although California no longer offers its own state tax credit for solar, it does offer a very appealing property tax exemption for solar systems. Solar panels have been shown to increase property value and, thanks to the property tax exemption, California residents will not have to pay additional property taxes despite the value of their home increasing. This is just another perk of going solar and, perhaps, one that you may not consider at first.
The Disadvantaged Communities Single-family Solar Homes (DAC-SASH) Program
The SASH program is one of California’s incentives intended to benefit low-income communities and encourage the adoption of solar in these communities. This incentive is for single-family homeowners, and qualifying customers will receive an upfront incentive of 3$ per watt. If you scale this rate up alongside the cost of a typical solar system, it could effectively cover the entire system cost.
To take advantage of the SASH program, you must be a customer of one of the following utilities:
Pacific Gas and Electric (PG&E)
Southern California Edison (SCE)
San Diego Gas and Electric (SDG&E)
In addition to the utility requirements, you must also own & live in your home, reside in a house that is considered ‘affordable housing’ by the California Public Utility code, and have a household income which is 80% of, or below, the area-median income.
The Multifamily Affordable Solar Housing (MASH) Program
The MASH program is another incentive aiming to boost solar energy in low-income communities. Those who own a multi-family housing complex could qualify for a grant program which allows them to retrofit these housing developments with solar panels. The rate on offer varies from $1.10 to $1.80 depending on project type. For grant rate information, eligibility requirements, and further details about the California MASH Program, please consult our recent blog post.
The Self-Generation Incentive Program (SGIP)
Although this incentive is for solar battery storage and not just solar panels, it’s still an appealing prospect as solar-plus-storage is becoming increasingly common. Residential battery storage systems smaller than 10kW are eligible for an incentive of $0.25 per watt hour of storage installed. You can take advantage of this incentive if you are based in the service area of:
Southern California Gas
Local Utility Rebates
Certain California municipalities offer solar rebates. Depending on the utility service area in which you are based, you may be eligible for a solar rebate. These rebates may be offered as either lump sum payments, or on a per-watt basis. The following table, courtesy of Solar Reviews, details the different rebates on offer from different municipalities.
California Renewable Portfolio Standard (RPS)
Although this is not a direct incentive available to California solar customers, the ripple effect of the program should lead to benefits in the future. The RPS has set a target of 100 percent of electricity production coming from renewable resources by the year 2045. This ambitious climate goal should lead to financial incentives for consumers, as it puts pressure on utilities who will be liable to pay large fees if the goal is not met. The RPS target will, hopefully, lead to more clean energy initiatives across the state of California, and greater savings for solar customers.
These are just some of the best incentives available for those going solar in California in 2021. To learn more about California solar, or discuss your own project, get in touch with YSG Solar today. Send us an email or call at 212.389.9215 to learn more.
YSG Solar is a project development vehicle responsible for commoditizing energy infrastructure projects. We work with long-term owners and operators to provide clean energy assets with stable, predictable cash flows. YSG's market focus is distributed generation and utility-scale projects located within North America.