Home Solar in California:
Local installers, tax credits, and rebates.
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22,203,596
California residents who experienced power outages in a span of ten years¹
54%
Prices have fallen 54% over the last 10 years²
$1,500+
Average yearly savings for homeowner's who switch to solar³
California Solar
Last updated: April 15, 2025
EnergyPal Team
California, known as the Golden State, is one of the sunniest places in the United States and the most populous state in the country. It is home to the large cities of Los Angeles and San Francisco. California has temperate climates with plenty of oceans, and the southern part of the state is home to the Mojave Desert. California is considered a trendsetting state for the entire nation. California state government policies favor solar tax incentives. High energy-prices, tax incentives and encouraging utility policies make California a favorable place for businesses and residents to install solar panels and battery systems.
Let’s learn about some of those incentives, the utility policies associated with interconnection and setup, and special solar financing plans for solar panels and battery systems in California.
Incentive Programs, Tax Credits, and
Solar Rebates in California
| Incentive | Description |
|---|---|
| Federal ITC - 30% | Solar PV systems installed in 2022 - 2032 are eligible for a 30% tax credit. The credit can only be claimed by on the original installation of the solar equipment located at a residence of yours. You must also purchase it using cash or financing, but you're not leasing the system or paying a solar company for the electricity produced by the system. |
| Instant Rebate from EnergyPal | EnergyPal secures group discounts by leveraging the depth of our network. We pass these savings onto homeowners every day! |
| SGIP Equity | The CPUC has authorized funding of more than $1 billion through 2024 for SGIP. This funding includes prioritization of communities living in high fire-threat areas, communities that have experienced two or more utility Public Safety Power Shut-off (PSPS) events, as well as low income and medically vulnerable customers. Customers can receive $850 per kilowatt hour under the “Equity” Category. |
| SGIP Equity Resiliency | Customers can receive $1,000 per kilowatt-hour under the “Equity Resilience” Category. |
| California Solar Initiative - Solar Thermal Program | Up to $4,366. Program funds have been exhausted for certain commercial/multifamily systems in the SCE and PG&E service areas, and for certain residential systems in all partner service areas. In 2007, the California Solar Initiative allocated $350 million to incentivize solar water heating adoption through rebates on new residential and commercial systems. Later years saw the program expand to include solar pool heating and HVAC systems. Property owners may participate in the program through their energy utility. Current partners include Pacific Gas and Electric, Southern California Edison, Southern California Gas Company, and CSE/San Diego Gas. Rebate amounts depend on system capacity and the property type (single-family, multifamily, commercial). Smaller-capacity systems will yield a rebate based on estimated cost savings for the first year of use. Larger-capacity systems will yield a flat upfront rebate followed by additional incentives based on estimated cost savings. |
| California Solar Initiative - Low-Income Solar Water Heating Rebate Program | Up to $3,750. Beginning in 2011, the California Solar Initiative has offered an incentive program for solar water heating adoption at low-income residential properties. Current incentive partners include Pacific Gas and Electric, San Diego Gas and Electric, and Southern California Gas. Rebate amounts will vary and depend on system capacity and performance at the panel installation site. There are four "step-downs" in incentive credits over time. Qualifying property must have been designated as "low-income" for at least 10 years, with the property owners already participating in an Energy Savings Assistance Program. Multifamily property should be classified as low-income, with at least 50% of tenants participating in an ESAP. |
| City of Palo Alto Utilities - Solar Water Heating Program | Up to $2,719. Palo Alto, California, and its municipal utilities offer solar water heating system incentives to all residential, commercial, and industrial customers. These incentives are meant to encourage Palo Alto Utilities rate-payers to install energy efficient technologies on their homes and facilities. The incentives offered are based upon a calculation of the estimated savings instigated by the solar energy system. Max incentives are capped at $2,719 for gas-displacing systems and $1,834 for electricity or propane-displacing systems. Incentives for all commercial systems may not exceed $100,000. |
| SMUD - PV Residential Retrofit Buy-Down | Up to $300. The Sacramento Municipal Utility District (SMUD) solar incentive for residential installation is available for residents who install solar power systems. Residents who have a solar power system installed can receive an incentive of $300. Residents should start by finding a contractor to complete the application process, install the solar system, and ensure it meets safety guidelines before turning on the system. Residents may do the installation themselves, but they will have to complete the application process before installation begins. PV production meters can be installed at no additional cost to the customer. |
Find The Best Deals On Home Solar In California
California provides some solar energy rebates and incentives that help to reduce the overall cost of solar systems. Our EnergyPal Advisors can help you navigate all of the solar incentives available in California and also apply them to the available solar panel offerings.
The most generous California program is the single-family affordable solar housing (SASH) program, which provides an upfront incentive of $3.00 per watt of solar installed, but this program has an income requirement below 80% of the area median income. The three major utility companies, PG&E, SCE and SDG&E, participate in the limited-enrollment program.
California Rebates and Tax Breaks
Here are more details about the incentives available in California:
- Unfortunately there are no longer any statewide solar rebates in California. There may be some local ones in your town, so be sure to check.
- California provides a battery storage rebate program called the Self Generation Incentive Program (SGIP). This program allows for any owner of a system less than 10 kW in size to receive a rebate of $0.25 per watt hour of storage. Disadvantaged residents can earn $0.85 per watt hour, and if you are in a high fire-threat district, you could earn more.
- Property tax exemption provides a tax break where you won’t pay additional property taxes if your property value increases when you add a solar system (and with solar, your property value does go up!).
- California has two solar programs for low-income owners. The single-family affordable solar homes (SASH) program offers a huge upfront incentive of $3.00 per watt, probably enough to pay for an entire solar system. The single-family affordable solar homes (MASH) program grants up to $1.80 per watt for owners of low-income housing complexes.
Other Solar Energy Incentives
The US federal government helps residents and businesses pay for their solar systems. The federal investment tax credit (ITC) allows for a tax deduction of 30% of the cost of a solar system currently. Tax credits can be rolled over if you can’t use the whole credit this year. The ITC cannot be claimed for solar leases or power purchase agreements (PPAs) where the third party financier takes the credits themselves, but that is typically baked into a reduced lease/PPA monthly for you.
If you purchased a $20,000 system, your savings from the federal tax credit would look like this:
$20,000 X 0.3 = $6,000 savings
So if you spent $20,000 on that system, your cost would go down to $14,000. Depending on where in California you live or if you qualify for other programs, additional rebates could save you even more.
Utility Policies
Utility policy factors determine what your utility provider pays you for the excess power you produce and what you save on your power bill by reducing electricity usage. California gets a high score for utility policies.
Net Metering and Interconnection Policy
One important policy for solar customers is called Net Metering. Net Metering is a billing mechanism that allows solar customers to push electricity to the grid for credit that can be used later, like at night when your solar panels aren’t generating power. This incentivizes people to go solar, provides clean energy for others to use and prevents waste. Some states have poorer net metering policies than others, meaning that credits may not be able to be rolled over to the next month or year, or that you don’t earn full watt-for-watt credit for your excess energy.
California has transitioned to the new NEM 3.0 program, which took effect on April 14, 2023. NEM 3.0 reduces the export rate for residential solar electricity by around 75%, from an average of 30 cents per kWh to 8 cents per kWh. Lower export prices will increase the payback period for solar owners under NEM 3.0 and decrease the overall savings.
This effectively increases the value of pairing battery storage with solar. Under the new rate structure, the return on investment for solar and battery is similar to that of solar only, but with the added benefits and independence of having a backup power source
Solar Setup Fees
You must have a bi-directional meter (necessary for Net Metering), which is usually installed at no cost. Some utility companies have interconnection fees of $75 to $140.
Electricity Prices
Electricity prices in California are on the high end. Usually you don’t want high prices, but with solar, the higher the prices, the more you save, and the more economical a solar system becomes.
According to the US Energy Information Administration, the average total cost of electricity in California is $0.223 per kWh for residents. The national average for all states is $0.134 per kWh, ranging from $0.967 to $0.288 per kWh.
90%
or more in savings on your
monthly utility bill.
This 6 kW system would offset 100% of your energy usage if your typical monthly bill in California is $165, however, your situation may vary so connect with us to get a result tailored to you.
Find The Best Deals On Home Solar In California
Rate Design
Rate designs are comprised of monthly fees and either a flat or tiered rate you pay for electricity. Good rate designs, which save you money when you conserve energy, are tiered and have low fixed monthly fees. Poor rate designs have flat rates and high fixed monthly fees. There are also time-of-use rate structures, which encourage the use of solar energy.
California is above average when it comes to the quality of its electricity bill rate design. It has many tiered and time-of-use rate programs, and low fixed fees (around $5–$10 per month).
Most energy providers require a time-of-use electricity rate plan for solar customers. The rate you pay for energy and the rate you receive for excess energy is lower during the day, which benefits solar customers with a battery.
You still pay fixed monthly fees when you go solar because you are still tied to the grid. Being tied to the grid is a good thing, because otherwise you might not have power at night or if your system stopped working suddenly. Even if you go off of the grid and rely on a battery source, the high cost of the battery would not outweigh the low monthly fee and the savings obtained from a net metering program.
PACE Programs
PACE stands for Property Assessed Clean Energy and is available in California. You can finance your solar system, but the low-interest, long-term loan is not attached to you; it’s attached to your home. It is paid back as a Local Improvement Charge (LIC) on your property tax bill. There are five licensed program administrators within the state, so don’t go with a company that isn’t on this list.
Home Solar Financing in California
There are three pathways to powering your home with solar energy in California: purchasing the solar system outright, obtaining a loan for its financing, or opting for a leasing program. Solar systems can be financed by bank loans, solar installer financing, new home mortgages, energy loans and home equity loans or lines of credit. Cash works too. Regardless of your choice, solar panels can reduce your home energy expenses, contributing to financial savings and a cleaner power supply. Our Energy Advisors can guide you to the best solar deals in California. Here's a comparison:
Solar Purchase
- Optimal Return-On-Investment
- Potential Reduction of Bills to near $0
- Enhances Property Value
Outright Solar Purchase: Homeowners with a stronger financial position often cover the full cost of solar upfront, yielding the highest return-on-investment over the system's lifespan. By paying in cash, homeowners in California can claim tax credits and rebates, avoid interest charges, and directly enjoy the savings on their electricity bills. Some of our customers experience virtually no electricity expenses from the moment they install solar. We offer top-tier products at attractive cash prices.
Solar Loan
- No Initial Expenses
- Ownership of the System
- Appreciates Property Value
Solar Loan Financing: Utilizing a solar loan enables you to save and own your solar system, as our financiers cover the upfront expenses (similar to an auto loan). Homes equipped with solar systems command higher value due to their lower operational costs. Depending on the chosen solar loan, you can achieve greater monthly savings or complete your financing earlier. Our team will help you secure the most favorable rates and terms to match your requirements. To learn about our latest offerings, connect with us
Solar Lease
- No Initial Investment Required
- Complete Maintenance Coverage
- Lower Monthly Payments
- Guaranteed Rates
Solar Leasing: Leasing solar panels provides an accessible and cost-effective path to solar adoption. With zero upfront costs—often referred to as “$0 down solar financing“—installation and maintenance are entirely managed, and your home benefits from the energy generated by the solar panels. You pay a consistent monthly fee and save compared to your existing electricity bill. The reduced electricity rate are what many homeowners like about this option.
Talk to your EnergyPal Advisor about financing solar options in California. We regularly source the best deals and terms for our customers. Let us guide you through the finance and application process from A-Z.
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Frequently Asked Questions
Is it worth going solar in California?
In most cases, yes, solar will save you a significant amount of money. Solar panels produce electricity and reduce how much power you have to purchase from your electric company. The typical homeowner in California pays around 29.78¢ cents per Kilowatthour.
What is the payback period for solar panels in California?
Homeowners who install a solar array sized to meet 100 percent of their energy needs can still pay off the upfront cost in as little as 5-6 years. The typical payback period in California averages 5.8 years.
How much are solar panels in California?
As of August 2023, the average solar panel cost in California is $2.86/W. Given a solar panel system size of 6 kilowatts (kW), an average solar installation in California is $12,012 with 30% tax credit applied.
What incentives are available for solar in California?
Solar installations in California are eligible for the 30% solar tax credit. Connect with us to learn more about all the local California incentives, tax credits & rebates you qualify for.
¹https://www.eaton.com/content/dam/eaton/products/backup-power-ups-surge-it-power-distribution/backup-power-ups/blackout-tracker-/blackout-tracker-annual-report-2018-mz153043en.pdf
²https://www.seia.org/solar-industry-research-data
³https://www.energy.gov/articles/4-reasons-go-solar-summer
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