California Solar Incentives and Rebates 2020

Introduction

Are you are a resident of California who’s interested in installing a solar energy system, but worried about the expenses? There are financial incentives that can help you make the switch to clean energy, and 2019 is the perfect year to get solar panels installed on your property.

California leads the way when it comes to the use of solar power. With programs like the California Solar Initiative (CSI) in the past, the Golden State held the top spot among states with the highest solar electricity capacity installed in 2019. Although the rebate programs of the CSI are now over, there are other solar incentives that you can avail of in 2020. 

Cost of Solar Panels

Living in California comes with many benefits, including plenty of sunshine. Residents have long taken advantage of this by harnessing clean energy from the sun. Installers, along with local and federal bodies, offer plenty of incentives to help ease the switch for electric consumer residents. As equipment has become more advanced and efficient, solar panel costs have dropped.

The exact cost of a solar panel system for your California property depends on several factors, such as your county of residence, the size of your system, the installation company you have chosen, and the equipment used. According to recent data, an average-sized 5 kilowatt (kW) solar installation costs between $13,175 and $17,825. 

This might sound like too big of an investment at first, but the good news is that your state is a leader in solar capacity and incentives, so there are plenty of opportunities to save in 2020. Read on to find out more!

Federal Solar Tax Credit

The federal solar investment tax credit (ITC) is undoubtedly the biggest solar incentive available for Californians. Using this, you can claim 26 percent of your new solar energy system’s cost and installation as a credit on your federal tax return. For example, if the solar panel system costs $10,000, you can get a tax credit of $2,600 and reduce your expenses significantly. However, it is important to know that the 26 percent tax credit will remain valid only for solar energy systems installed until December 31, 2020. After that, the solar credit will drop down to 22 percent in 2021. After that, the ITC will expire – making 2020 the ideal time to go for a solar panel installation on your property. 

CA Solar Incentives and Rebates

California Solar Initiative

There is another financial incentive known as the California Solar Initiative – Single-Family Affordable Solar Housing (SASH) Program. This solar program is aimed at helping low-income homeowners switch to solar energy. Eligible customers of Pacific Gas and Electric (PG&E), San Diego Gas and Electric (SDG&E), and Southern California Edison (SCE) receive upfront rebates and funding to cover the cost of installing solar panels. The SASH program provides fixed upfront incentives to low-income homeowners who qualify, in order to help offset the initial investment in a solar power system.

Renewable Portfolio Standard

California also has a strong Renewable Portfolio Standard (RPS). According to this regulation, utilities need to increase the use of renewable energy sources for energy production – either by producing energy on their own or purchasing it from consumers. If these standards are not met, utility services have to pay high fee amounts. 

The state has set a target of achieving 100 percent renewable energy production by 2045. While it is not a direct financial incentive, this target pushes utilities towards offering more solar incentives and rebates to homeowners, to help them avoid paying huge fines.

Moreover, California has excellent and clear state-wide interconnection standards. Solar energy systems of any capacity can connect to the grid through a process that is less complex and expensive for small residential solar systems. This makes it even easier for homeowners to plug into the grid. Your local solar installer can give you details on the specific interconnection rules in your area. 

Net Metering

Another incentive for going solar in California is the state’s generous net energy metering (NEM) program, known as Net Energy Metering 2.0, or NEM 2.0. This program allows you to sell any extra, unused electricity produced by your solar energy system back to the utility company. In exchange, you are given credit on your next bill at the retail rate. 

If your electric company charges $0.03 per kilowatt-hour, you will receive credit at the same rate. So, for instance, since these credits carry over, you can use the surplus energy generated by your system in the peak summer months to help pay your bills during the monsoon or winter. The NEM 2.0 is set for review at the end of 2019, which is why it is an excellent time to get a solar energy system for your home in California and reap maximum financial benefits.

Property Assessed Clean Energy (PACE)

PACE financing program allows homeowners to make energy-efficient upgrades, such as a solar system, to their homes without initial money down. Their solar project is funded by paying the costs through the resident’s property taxes. Be sure to check if this program is available in your county.

Property Tax Exemption

California also gives a property tax exemption for those who have installed solar panels. Usually, the value of a home goes up by an average of 4.1 percent with the installation of a solar energy system. Factoring in the state’s high real estate prices, this can add approximately $20,000 to your property’s selling price for a 5kW system. But thanks to the state’s Property Tax Exclusion for Solar Energy Systems, you will not be billed any additional amount on your property taxes despite the value increase – thus giving you a 100 percent exemption. This incentive will remain valid for systems installed until 2024. 

Additional Incentives

Depending on your location in California, you may get some additional local solar rebates from your municipality, utility service, or city. Check with local utilities to see what is available in your area. Solar Power Performance Payments, also called production incentives, may also be available in some places. 

Conclusion

Talk to solar installation companies near you for specifics about solar incentives in your area of residence and how to apply for them. From 2020 onward, California’s rules will require every new home to be constructed with solar panels – all the more reason to get started now. Installing a solar energy system on your property in 2020 means you can take advantage of the many financial incentives that are currently available.