What solar incentives are available in your part of California in 2021 and how much will they save you?
2020 marked a year of change for residential solar in California.
Changes to the building codes took effect in 2020, requiring solar panels to be installed on most new homes. Residential customers of the big three investor-owned utilities (PG&E, SoCal Ed, SDG&E) were moved over to time-of-use electric billing. There is also the lingering memory of the rolling blackouts that swept across central and northern California in 2019.
In this environment, it is not surprising that more people are considering solar panels for their homes in addition to battery energy storage in order to save money and obtain independence from their 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?"
We have built the California solar incentives calculator (above) to not only answer this question. It allows you to drill down and show only the incentives that are applicable where they live.
How much is the California solar tax credit in 2021?
There is no California solar tax credit. When people refer to the California solar tax credit they are mistakingly 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 tax credit (also known as the ITC-Investment Tax Credit) will be gone in 2024.
California solar incentives for low income households
Throughout the US, 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.
California has two main low-income solar programs:
- The Single-Family Affordable Solar Homes (SASH) program
- The Multi-family Affordable Solar Homes (MASH) program
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. In 2019, the SASH program reached the notable milestone of installing 8,288 total solar systems.
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 the California Public Utilities Commission website.
The MASH program is currently fully subscribed, however, new applications will be placed on a waitlist.
California solar incentives now cover battery storage
California is not only a national leader in solar, it is also a leader in solar battery storage, thanks in part to the Self Generation Incentive Program (SGIP). If you install a battery storage system on your property that is serviced by PG&E, SCE, Southern California Gas, or SDG&E, you can take advantage of the SGIP incentive.
Battery storage systems that are smaller than 10 kW and are installed on a residential property are eligible for an incentive of $0.25 per watt hour of storage installed. We outline how much you can save on battery storage when you use the SGIP incentive program in our breakdown of the SGIP rebate.
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 catalyze more battery storage deployment in low-income areas. Residential equity systems will receive a rebate of $0.85 per watt hour installed.
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 $1.00 per watt hour of storage installed. This covers almost the entire cost of a solar battery system. Check our blog on SGIP's equity resiliency program for more information.
Why has it traditionally been difficult to tell a homeowner exactly what solar incentives their home in California is eligible for?
It is relatively easy to tell a homeowner what federal and statewide solar incentives are available but showing a homeowner all of the available incentives is far more difficult because of local city or utility company-based incentives.
There were once perhaps as many as 30 city and utility-based solar incentive programs in California. There are now quite a few less, but the fact remains that the calculator will show you the exact level of incentives for your home in California.
Are there any utility companies in California still offering upfront solar rebates?
There are a few utility companies that now offer upfront rebates. For example, 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 to check to see what rebates you are eligible for.
What is the most lucrative solar incentive available in California in 2021?
In terms of reducing the initial cost of a solar power system, the most lucrative California solar incentive is the federal 26% federal tax credit. The average cost of a 7kW residential solar power system in California is approximately $20,000, which the 26% tax credit effectively reduces by $5,200.
However, the net metering laws that require your utility company to buy excess solar energy from you at close to full retail electric rates are probably worth much more over the 15 or 20-year life of the net metering agreement.
What net metering laws apply in California?
Most utility companies in California offer net metering. However, in 2018, the Public Utilities Commission changed the net metering law that applies to the investor-owned utilities. These utilities’ customers now get a little less than the full retail rate of electricity for the power they export to the grid during the middle of the day. This is known as the NEM 2 program.
How will the introductions of time-of-use billing affect the investment return from installing residential solar?
Under time-of-use electric billing, there are expensive peak periods in the late afternoon and early evening and cheaper off-peak periods late at night and in the morning.
What other information does the California solar incentives calculator provide?
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.
It also uses artificial intelligence to scan your roof and lay out the solar panels in the best places for maximum electricity generation.
How does the CA solar panels calculator get accurate solar prices to work out the value of the federal solar tax credit to me?
We have a network of over 80 solar companies in California. Most are long-established, family-owned companies 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.
Author: 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.