2024 California Solar Incentives, Tax Credits, Rebates, & Exemptions

In California, solar incentives can effectively reduce the cost of the average solar panel installation by over $5,400 and potentially save homeowners a lot more if they need a larger installation or choose home energy storage along with solar. 

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Overview of California solar incentives and rebates

The Golden State no longer offers solar rebates or other large incentives for homeowners who want to choose clean energy, but there are still several solar programs available that can help Californians take control of their energy bills.

Incentive	Estimated average savings	Eligibility	About
Federal solar tax credit	$5,400	All tax-paying U.S.  citizens	Tax credit equal to 30% of installation costs, applied to federal income taxes
Property tax exclusion	Less than $50 per year	All homeowners with solar panels	The value added by a new solar installation is excluded from property tax reassessment
Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH)	All or nearly all costs covered	Residential customers of PG&E, SCE, or SDG&E who live in the top 25% most disadvantaged communities statewide	This program helps low-income homeowners in certain disadvantaged communities get solar panels installed for low or no cost through the non-profit GRID Alternatives Energy for All Program
Self-Generation Incentive Program (SGIP)	$2,025	Customers of PG&E, SCE, SDG&E, and SoCalGas, and certain people living in high fire threat districts, Indian Country, or low-income housing	Incentives for installing battery storage of between $150 and $1,000 per kWh, based on qualifying factors
Demand Side Grid Support (DSGS) Program	$350 per year	Tesla Powerwall owners	Powerwall who agree to let their batteries be remotely controlled during certain times of the year can earn payments

Federal solar tax credit

There is no specific California solar tax credit, but the federal government offers a solar tax credit to all U.S. residents who own a home on which they install solar panels. The credit equals 30% of the cost to install solar, but can only be claimed by homeowners with the tax liability to claim the credit. 

The average solar panel system in California will earn a tax credit of about $5,400. But,  the value of the solar tax credit can depend largely on system size, which you can see in the following table:

System size	Estimated cost	Tax credit
4 kW	$13,000	$3,900
6 kW (CA average)	$18,000	$5,400
10 kW	$28,500	$8,550
15 kW	$40,500	$12,150

Taxpayers can claim the credit in the year after their solar installation is complete. The credit applies to all costs of installing solar panels or home battery storage, except for costs associated with structural improvements to roofing materials that are not associated with generating energy. 

Note: Lending companies often require paying the value of the solar tax credit toward a solar loan by 18 months to keep monthly payments low.

California solar property tax exclusion

The California Active Solar Energy System Exclusion prevents an automatic re-assessment of a property when the owner pays to install a solar energy system. Normally, the addition of a valuable asset, like solar panels, to a property triggers such a re-assessment.

The average market value added to a home by solar panels is estimated at around 6.8%, and the California state property tax rate is 0.75% per dollar of assessed value per year. However, it is difficult to determine the total value of the solar property tax exclusion because the assessed value of a home differs from the market value and is unique to each home. 

Note that this is not a property tax exemption; instead, it temporarily excludes the value added by solar panels from assessment. 

The Property Tax Exclusion applies only to the home's original owner when the solar panels were installed. A change in home ownership can result in a reassessment of the value. Talk with a tax professional for more information. 

California DAC-SASH program (Disadvantaged Communities – Single-Family Solar Homes)

The DAC-SASH program is a low-income solar incentive available to people who own and occupy homes in disadvantaged communities served by the state’s largest electric utility companies: PG&E, SCE, and SDG&E. 

The program provides incentive payments that can be combined with other local incentives to mostly or fully cover the cost of rooftop solar panels for these residents. The non-profit GRID Alternatives administers the DAC-SASH program, which conducts workforce development, policy advocacy, and solar job skills training and performs installations under the DAC-SASH program.

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California net metering and solar buyback plans

If you’ve been following the solar news in California lately, you know that net metering in most parts of the state is a whole mess. 

Just a couple years ago, California offered its Net Energy Metering (NEM) 2.0 program, under which homeowners earned nearly-full credit for any excess energy their solar panels generated and sent to the grid during the day. Eligibility for NEM 2.0 ended on April 15th, 2023.

The state’s major utilities, Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas and Electric (SDG&E), now offer Net Billing, or NEM 3.0. Under NEM 3.0, the solar buyback rate averages about a quarter of the retail rate and changes during every hour of the day. It also has different values for weekdays and weekends and a new set of values for each month of the year. This makes it nearly impossible to calculate the savings from a solar installation accurately. 

The one bright spot in all this is that you can still save the full retail rate of electricity by getting a home solar battery for and self-consuming all the electricity your solar panels generate. 

Read our full article on NEM 3.0 for more information.

Solar billing from other California utilities 

If you are not serviced by one of California's “big three” utility companies, you might have access to a different set of solar buyback rules.

LADWP customers who get solar panels in Los Angeles can still get full retail-rate net metering, meaning they get the best solar sayings possible. 

Sacramento residents can sign up for SMUD’s Solar and Storage rate. Although exported solar energy is not credited, it is still a better deal than NEM 3 for solar customers. 

Finally, a patchwork of co-ops and municipal utilities in outlying areas of eastern California have their own rules. Some of them are very hostile to grid-tied solar installations, so it might be a better idea to have a separate off-grid solar system to take care of some of your electricity needs in these areas.  

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Solar battery incentives in California

There is one major solar battery incentive in California, the Self Generation Incentive Program (SGIP), which provides rebates to people who install home batteries. There is also a smaller program called the Demand Side Grid Support (DSGS) Program, which provides payments to homeowners with Tesla Powerwall batteries based on the energy drawn from those batteries during certain times of very high demand on the energy grid. 

Self Generation Incentive Program

The SGIP rebate program offers a $150 discount per kWh of energy storage for customers of the three big utility companies that install small residential solar batteries. 

Additional incentives are available to people who qualify under the “Equity” and “Equity Resiliency” requirements. The first group comprises people with lower incomes living in economically disadvantaged communities, and the second group comprises low-income households in high-risk fire areas. 

The SGIP program is designed and authorized by the California Public Utilities Commission (CPUC). You can check the program's current status to see the current incentive amounts and total incentives available.

Demand Side Grid Support Program

The DSGS program is a newer way to compensate battery owners for allowing their batteries to be partially discharged during certain hours of peak demand on the electricity grid. DSGS is a Virtual Power Plant program, meaning all the batteries are “aggregated” to act like a backup power plant.

Homeowners in PG&E, SCE, and SDG&E territories with Tesla Powerwall batteries can sign up to participate in the DSGS program and earn payments of up to $350 per year. 

In exchange for the payments, Powerwall owners agree to let Tesla take remote control of their battery for a few days per year.  During these events, the batteries power the homes where they’re installed, reducing grid demand. 

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California installation costs

The average cost of solar panels in California is $18,000 before incentives for a 6-kilowatt solar installation at $3.00 per watt of solar installed. After the federal solar tax credit, the average cost drops to $12,600.

Average pre-incentive cost: $18,000

Federal tax credit: $18,000 x 30% = $5,400

Effective system cost: $18,000 - $5,400 = $12,600

A Tesla Powerwall 3 costs about $15,600 on average, bringing the total solar plus storage system cost to about $33,600 before incentives. This system is eligible for both the federal tax credit and the SGIP incentive, bringing the cost down to $22,102.50.

Average pre-incentive cost: $33,600

SGIP rebate: $150 x 13.5 kWh = $2,025

Net system cost after SGIP rebate: $33,600 - $2,025 = $31,575

Federal tax credit: $31,575 x 30% = $9,472.50

Effective system cost: $31,575 - $9,472.50 = $22,102.50

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 Do incentives make solar worthwhile in California?

Ever since the passage of NEM 3, the question of whether solar is worth it in California has become very difficult to answer. Now that homeowners cannot earn large credits for selling solar energy back into the grid during the day, it has become much more common to add batteries to a home solar installation and self-consume as much solar energy as possible. 

But batteries are expensive. As you can read above, adding a Tesla Powerwall nearly doubles the cost of a solar installation. Can this really be economical? 

Yes, in fact, it can. 

California has the fourth-highest average electricity cost in the nation and the third-highest rate of increase in those costs. It’s pretty clear that electricity rates aren’t going down anytime soon.

In addition, when you sign up for California Net Billing, you have to go on a time-of-use rate plan. This means the cost of electricity from the grid changes based on the time of day, with the highest charges in the late afternoon and evening. If you can combine solar and battery storage to eliminate your grid usage during those times, you can save some serious money.

According to the SolarReviews Solar Industry Survey for 2024, the median payback time for a solar and battery installation in California is just 8 years, compared to 10 years for solar-only installation. That’s better than many places in the nation. 

If you’re ready to get started on your solar journey, the next step is finding the best solar companies in your area, and comparing multiple quotes for solar panels. 

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California solar incentives FAQs