What solar incentives and rebates are available to California homeowners in 2021?
Updated
Image source: California Clean Energy
2021 marks a year of change for renewable energy and residential solar in the Golden State.
Changes to the building codes relating to energy efficiency took effect just last year (2020), which consisted of requiring solar panels to be installed on most new homes. Meanwhile, residential customers of the big three investor-owned utilities, Pacific Gas and Electric, Southern California Edison, San Diego Gas and Electric, are being moved over to Time-of-Use electric billing, which will see them paying expensive ‘peak rates.’
There is also the lingering memory of the rolling blackouts that swept across central and northern California in 2019, as well as the after-effects of the COVID-19 pandemic on the economy. In this environment, it is not surprising that more people are considering solar energy systems and battery energy storage for their homes, both for the energy savings and for independence from the utility companies.
One of the first questions these folks ask is, "What solar incentives are available in my city and how much will they save me on the system my home needs?"
In this blog, we’ll explain all of the solar rebates and incentives available in California. We have also built the California solar incentives calculator which allows you to drill down on specific system costs and show only the incentives that are applicable to you.
Quick summary: All CA solar incentives and rebates in 2021
Here is a summary table showing all California solar rebates and incentives available to homeowners who install a solar PV system for clean energy.
| Incentive | Amount | Eligibility |
|---|---|---|
| Solar tax credit | 26% of total system cost (including installation) | Anyone who pays federal taxes |
| Net metering | Your solar exports earn the retail rate of electricity, less a small non-bypassable surcharge | All customers of investor-owned utilities (PG&E, SoCal Ed, SDG&E) |
| SASH | $3 per watt of installed solar | Low-income families who own their home |
| MASH | $1.10 - $1.80 per watt of installed solar | Low-income multi-family dwellings |
| SGIP | $200/kWh - $1,000/kWh of installed battery storage | All customers of investor-owned utilities.; additional conditions apply for the higher tiers |
Scroll down for details on how each of these solar incentives and rebates work.
How much is the California solar tax credit in 2021?
Homeowners installing solar panels in California will receive a 26% tax credit on their purchase.
It’s important to make a clarification here: there is no California-specific solar tax credit. When people refer to the ‘California solar tax credit’, they are actually referring to the federal solar tax credit, which applies to all American homes, including those in California.
The federal solar tax credit is 26% of the cost of a system until the end of 2022, and falls to 22% in 2023. Unless new federal legislation is introduced, the federal solar investment tax credit (also known as the ITC or Investment Tax Credit) will be gone in 2024.
Learn more: The federal solar tax credit: all your questions answered
Does California have a net metering incentive?
Under California’s net energy metering incentive, investor-owned utilities are required to buy homeowners’ excess solar electricity at close-to retail rates.
The NEM 2.0 program, passed by the Public Utilities Commission in 2018, guarantees that homeowners going solar will be able to sell the excess solar electricity - typically produced during midday - for a period of 20 years.
This is an extremely valuable incentive; selling your electricity to the utility at a good value is the easiest way to pay off your solar panel purchase quickly.
Learn more: California Net Metering 2.0 in 2021: Everything you need to know
What rebates are there for low-income households in California?
Throughout the U.S., solar is adopted more in areas that have higher incomes, even though low-income communities have the most to gain from the benefits of solar power. Low-income solar incentives have the ability to spur solar development in disadvantaged communities.
There are two California solar initiatives aimed at increasing affordable solar housing:
- The Single-Family Affordable Solar Homes (SASH) program
- The Multi-family Affordable Solar Homes (MASH) program
SASH Program
The SASH program can cover all or most of upfront solar installation costs for eligible low-income single family homes.
To qualify for the SASH program, a homeowner must:
- Be a customer of either Pacific Gas & Electric, Southern California Edison, or San Diego Gas & Electric
- Own and live in their home
- Have a household income that is 80% lower than the area median income
- Live in a home that is considered to be “affordable housing” by the California Public Utility code
Those who qualify for the SASH program will receive an upfront incentive of $3 per watt of solar installed. So, if a qualifying homeowner installs a 6 kilowatt system, they’ll receive an incentive of $18,000. The amount of the incentive received cannot exceed the total cost of the solar system.
The SASH program also provides green job training in low-income areas to help people secure good-paying green energy jobs.
The program is administered by the non profit organization Grid Alternatives. As of January 2021, almost 9,400 solar panel systems had been installed under the program.
MASH Program
The MASH program is designed to retrofit low income multi-family dwellings with solar. To qualify, a multi-family residential building must be financed by one of the following:
- Low-income housing tax credits
- Tax-exempt mortgage revenue bonds
- General obligation bonds
- Some kind of local, state, or Federal grants and loans
The housing complex can also qualify if at least 20% of the total units are sold or rented to lower-income residents. Additional qualifications are listed out in the MASH program handbook.
The MASH program has two tracks you can qualify for: Track 1C and Track 1D.
Those eligible for Track 1C will receive a rebate of $1.10 per watt of solar installed, whereas those who qualify for Track 1D will receive $1.80 per watt installed. For more information on which track you qualify for, check out the California Public Utilities Commission website.
The MASH program is currently fully subscribed, however, new applications will be placed on a waitlist.
SGIP Program: California solar incentives now cover battery storage
Residential customers can currently qualify for a Self-Generation Incentive Program (SGIP) rebate of between $200-$1,000 per kilowatt-hour of storage. That means you could earn a rebate of between $2,000 and $10,000 when you install a 10 kWh solar battery system.
If you’re installing a battery storage system on a property serviced by PG&E, SCE, Southern California Gas, or SDG&E, you can take advantage of the SGIP incentive. And yes, the rebate can be applied to the Tesla Powerwall.
There are three incentive tiers:
1. Residential storage
Battery storage systems that are smaller than 10 kW and are installed on a residential property are eligible for an incentive of $200/kWh of storage installed. This is the incentive that most homeowners will qualify for.
2. Residential equity storage
SGIP also has what is known as the “equity budget”. This budget has money set aside for solar batteries that are installed in low-income and disadvantaged areas. The goal of the residential equity incentive is to encourage more battery storage deployment in low-income areas.
Residential equity systems will receive a rebate of $850/kWh installed.
3. Residential equity resiliency storage
Low-income homes that are located in either a Tier 3 or Tier 4 fire district, or that are in areas that have experienced two or more planned safety power shutoff (PSPS) events can qualify for an even higher incentive when they install battery storage on their home - this is known as the equity resilience incentive.
Projects that qualify for the equity resiliency incentive program will receive a rebate of $1,000/kWh of storage installed. This covers almost the entire cost of a solar battery system.
Learn more: California’s SGIP battery rebate program in 2021
Do utility companies in California offer any upfront solar rebates?
Upfront rebates from utilities used to be common, but now only a few utility companies offer them.
LADWP offers a $1,000 solar rebate, as well as some other smaller utilities in the Bay Area. Unfortunately, there is no upfront solar rebate for customers of the big three investor-owned utilities. If you are a customer of another smaller utility company, you can use the calculator below to check to see what rebates you are eligible for.
Use the California solar incentives calculator to determine costs
By just entering your address and some basic information, you can find out:
All incentives, rebates, and credits you qualify for
Based on your utility and location, the California solar incentives calculator will show you all incentives and rebates you quality for - as well as how much each of them will be worth to you in dollar terms.
Your recommended solar system size
The calculator has a database of the electric rates charged by each utility company in California.
This means that from just the amount you spent on electricity last month, the calculator can show you how much electricity you used and how many solar panels you will need to power your home.
Accurate solar panel prices
We have a network of over 80 solar company partners in California. Most are long-established, family-owned installers with excellent customer reviews. We use the average of these companies’ prices to generate our online cost estimate and to calculate the savings you will get from the federal solar tax credit.
You can choose to have 1-4 of these companies view your roof online and provide an exact bid which will show you the exact value of the tax credit - if you choose to accept their bid.
Key takeaways
- The California solar tax credit is actually the federal Investment Tax Credit (ITC) and it’s worth 26% of your total solar panel costs.
- You can sell your excess solar power production to investor-owned utilities at near-retail prices, thanks to California net metering rules.
- California’s low-income solar incentives are designed to help both low-income single family homes as well as multi-family dwellings install solar.
- The SGIP program offers a generous rebate to all Californians who buy battery storage systems; extra money is set aside for those who are low-income, disadvantaged, and in fire-affected districts.
- Our California solar incentives calculator will show you your estimated solar panel costs and the value of any solar incentives and rebates you are eligible for.
Andrew Sendy
Home Solar Journalist
Andy is deeply concerned about climate change but is also concerned about cost of living pressures on American families. He advocates for solar energy and solar battery storage only to the extent that they make financial sense for homeowners. He is not affiliated with any particular solar company in the United States.
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