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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 systems in California.

California Solar

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.

California Solar Incentives

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 26% 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. For the actual US government bill, see 4908 of the HR 133 (It’s a giant file, so watch out!).

If you purchased a $20,000 system, your savings from the federal tax credit would look like this:

$20,000 X 0.26 = $5,200 savings

So if you spent $20,000 on that system, your cost would go down to $14,800. 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’s Net Metering program is highly favorable. You are paid the full retail amount for your excess energy in the form of a bill credit (pending the NEM 3.0 decision). Credits can be carried over into the next month, and at the end of the year, you could receive a check or bill credit for any excess energy you have produced.

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.

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.

Other Energy Financing

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.

Talk to your EnergyPal Advisor about financing solar options in California. We regularly source the best deals and terms for our customers.

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