What solar incentives are available in California in 2018

Are there any state solar tax credits available in California?

There is no state-level solar tax credit in California. However, with electricity rates amongst the highest in the nation California is still the leading state in terms of the investment return you can make from installing home solar.  California residents can still take full advantage of the 30% federal solar tax credit and the NEM 2 net metering program in California (discussed below) is still a very valuable solar incentive.

You can enter your power spend and utility company into the solar calculator to work out your payback and investment return from solar in California given current solar incentives available if you wish to work it out for your home.

What solar rebates are available in California?

Most up-front solar rebates in California ended in 2016 as the California Solar Initiative expired, while PG&E, SCE and SDG&E no longer offer rebates the following utilities do:

LADWP $0.25/watt residential
Silicon Valley Power $1.00/watt residential
City of San Francisco $0.30/watt
SMUD $300


California's excellent net metering program

While exact rules vary somewhat from utility to utility power companies by law must provide net metering to their solar customers in California.

When your solar system produces more power than what is needed in your home the excess generation is sold to your utility through the grid. By law your utility must value each kWh sent to them at the retail price you pay for power in the form of credit against your bill. When your solar system isn't producing enough energy to power your home, energy is drawn from the grid as normal.

Here is a more visual look on how net metering affects your bill:

Basic service charge $8
Energy charge per kWh $0.15
Energy Drawn from the grid 1,200kWh
Solar energy Exported to the grid 1,100kWh
Net consumption/excess 100kWh
Applicable energy charge $15
Total bill $23


This is the base concept of 1 for 1 net metering and is the type of net metering offered by municipal utilities such as LADWP however, the rules are a little different for SCE, PG&E and SDG&E.

NEM-2 rules with SCE, PG&E and SDG&E

Customers of SCE, PG&E and SDG&E receive what's called NEM-2 net metering which has different rules. NEM-2 requires new solar customers to switch to time-of- use billing in order to receive net metering. Time-of-use billing doesn't make much difference to net metering returns however, NEM-2 includes what's called non-bypassable charges. Non-bypassable charges are roughly 2¢ per kWh and are applied to energy your home draws from the grid and cannot be offset by your net metering credits.

Overall customers on NEM-2 see returns roughly 10% less than traditional net metering however, the difference is miniscule and with such high power prices installing a solar system in California is still a great investment.

The 30% federal solar tax credit

If you have a federal income tax liability 30% of the cost of installing solar can be claimed as a deduction to you taxes.

How do I claim the 30% federal solar tax credit?

To claim the 30% federal solar tax credit simply complete form 5695 when you do your taxes for the year.

Take full advantage of the 30% federal solar tax credit in California

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