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California solar energy incentives for residential systems

The federal government provides a 30-percent renewable energy tax credit for homeowners who install solar photovoltaic (PV) panels or a solar water heating (solar thermal) system. Beyond this, California provides a number of programs that can reduce the total installed costs of a residential solar energy system. What follows is a brief overview of what's possible in terms of solar financial incentives. By no means a comprehensive list, it's a good place to start. You'll soon see that California leads the country in efforts to cut installation costs for firms that decide to get solar -- the rebate and financing options are near endless. (Note: the overview below does not cover CA solar public loan programs, nor CA private loan options.) 

When you're ready to move forward with your project, you may want to consider filling out our solar energy information form. It's free and requires just a few minutes to complete. After learning about your home energy needs, we'll work with our California solar panel installation partners to get you a free site visit and quote. We're here to make sure that you quality service and a great price on your solar energy system. 

Are you a California business owner? See our CA commercial solar incentive page.   


PG&E, SCE, and SDG&E: the California Solar Initiative

In January 2006, the Public Utilities Commission (CPUC) set up the California Solar Initiative (CSI) to provide over $3 billion for solar-energy projects. The objective is to put solar panels on a million roofs, statewide -- contributing to an overall target of 3,000 megawatts (mW) of solar capacity installed by 2016. To fulfill CSI mandates, three main utilities -- PGE, SCE and SDG&E -- sponsor the following rebate option: 

  • For small and medium systems: the Expected Performance-Based Buydown (EPBB) program, which provides a per-watt rebate for commercial systems (under 50kW in size) 

As the total amount of installed solar capacity grows statewide, the incentive amounts are reduced in predetermined steps. Here is a look at the statewide rebate schedule, courtesy of the California Solar Initiative:


CSI Rebate Tracker


The structure of the rebate schedule naturally provides an incentive to act now. As of July 2010, the EPBB rebate available for small- and medium-sized residential and commercial systems was $0.65/watt for PG&E and SDG&E, while the PBI was $0.09/kWh. For SCE, the EPBB rebate available for small- and medium-sized residential systems was $1.90/watt and the PBI was $0.26/kWh.The CSI trigger point tracker tracks and displays current incentive levels for residential systems. (Note: SDG&E customers are covered under the CCSE program administrator listing on the CSI trigger point tracker.)


Utility-Sponsored Solar Rebate Programs 

If you're not a customer of PGE, SCE or SDG&E, don't worry -- nearly 30 California other (municipal) utilities offer rebates for solar and other forms of renewable energy. While the details and requirements for each program vary a bit, the going rebate rate is typically between $2.00 and $3.50 per Watt of AC power, depending on the system’s size and applicable sector. The DSIRE website is a great resource for comprehensive information on these utility programs.Incentives for larger municipal utilities are summarized below:

SMUD solar rebates: Residential grid-connected systems are eligible for an upfront payment of $1.90 per installed watt.

LADWP solar rebates: The Solar Incentive Program provides incentives that are paid on an upfront basis for estimated production of an installed system over 20 years. As of March 2010, residential systems receive $0.12 per expected kWh of generation.


Rebates for Solar Water Heating Systems

Relative to solar PV panels, solar water heating (solar thermal) systems may offer a shorter payback period. Moreover, these types of systems are relatively less expensive and offer consistent energy savings. California Solar Initiative incentivizes residential solar water heating systems based on the amount of natural gas or electricity conserved by the system. Full details of this program are here. Residential customers of SMUD, for example, who install solar water heating systems are eligible for a rebate of $1,500. Systems must meet a number of specifications. See the CPUC website for full details and application instructions.  


CA Rebate for Solar PV Panels on New Homes 

Administered by the California Energy Commission (CEC), the New Solar Homes Partnership (NSHP) provides a per/watt rebate for solar panels that are incorporated into new homes. The rebate breakdown looks like this:

An expected performance-based incentive of $2.50/watt for panels installed on custom homes and developments that have fewer than six homes.

A "solar as a standard feature" incentive of $2.60/watt, which is available to developers who install panels on at least half of the residential units in a given development that has more than six homes total.


California Net-Metering Rules

California's net-metering law has since 1996 required all utilities (save LADWP) to offer net metering to all commercial (and residential) customers. For more information, contact your utility. Here are the net-metering webpages for the state's three biggest utilities: PGE, SCE and SDG&E

Related reading: What is net metering?  


Miscellaneous CA Solar Tax Incentives

Some states -- like Louisiana -- offer large solar tax credits but almost nothing in the way of solar rebates. Things in California are the exact opposite: while CA ensures buyers receive rebates and/or compensation from production-based incentives, the state provides no solar tax credit. That said, there is at least one tax-related initiative worth mentioning:  

  • A 100% solar energy property tax exemption ensures that solar PV panels or a solar water heating system won't increase the property tax liability of homeowners and businesses

[Last updated: 6/26/10]

California: Residential Solar Incentives  

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