Talk To A Residential Solar Company About Solar Incentives
Find Solar Rebates and Tax Credits In Lake Forest & Orange County, CA
Barnes Solar California is far and away the most mature market for residential solar panel installations in the country, which can be both a blessing and a curse in some ways. Overall, it is definitely a net positive for homeowners who live here because they are usually more informed about the intricacies of solar panel installations and the state’s solar lobby is powerful enough to fight for important savings tools such as net metering.
But the downside of the mature solar energy market is that, unlike other states like Massachusetts and South Carolina, where rebates and energy credits are used to incentivize homeowners to consider solar energy, California has discontinued almost all of its state-specific solar incentives because the industry is strong enough to sustain itself.
Solar Incentives for Southern California Homeowners
Residential Renewable Energy Tax Credit
The most prominent and recognizable incentive for residential solar customers is the Residential Renewable Energy Tax Credit. According to the official language from the Department of Energy, “a taxpayer may claim a credit of 30% of qualified expenditures for a solar energy system that serves a dwelling unit that is owned and used as a residence by the taxpayer.” In layman’s terms, this means that as long as the homeowner is putting solar panels on his/her primary residence, they are entitled to a tax credit that is equal to 30 percent of the total cost of the solar energy system.
Net Metering in California
Net Metering is not as widely understood as the federal tax credit is but it is arguably the most important incentives with which homeowners save money by installing solar panels. Put simply, net metering is the concept that the homeowner is able to sell excess electricity produced by the solar energy system back to his/her utility and then is able to draw down on said credit when their solar panels do not produce as much electricity as the homeowner uses. In essence, the homeowner’s meter spins backwards and forwards as the utility is essentially agreeing to be the homeowner’s battery.
Property Tax Exemption for Residential Solar Panel Installations
Living in California is not particularly cheap and while many homeowners may have read that a solar system will increase the value of the home (which is true!), their next question usually concerns whether or not their property taxes will increase as well. The question is understandable and luckily for homeowners in California, thanks to an incentive passed as law by the state, there is a property tax exemption for solar panel installations in California.
Self-Generation Incentive Program (SGIP)
If you are a homeowner who is interested in a residential solar panel installation, you have probably begun to hear about solar battery storage or “battery backup” systems. Although batteries are still considered something of a luxury item in the solar industry in that they are expensive and only helpful in very specific situations, the California Public Utilities Commission that set aside some money to incentivize “existing, new, and emerging distributed energy resources”.
Residential Renewable Energy Tax Credit
The most prominent and recognizable incentive for residential solar customers is the Residential Renewable Energy Tax Credit. According to the official language from the Department of Energy, “a taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit that is owned and used as a residence by the taxpayer.” In layman’s terms, this means that as long as the homeowner is putting solar energy on his/her primary residence, they are entitled to a tax credit that is equal to 30 percent of the total cost of the system.
For example, if someone gets a solar panel installation for $20,000, they are entitled to a $6,000 federal tax credit, thus reducing the net cost of the system to $14,000. The tax credit is an incredible cost-savings tool for homeowners interested in investing in solar and it usually can turn what was a 12-year return on investment into a 7 or 8 year ROI depending on the system size and the homeowner’s electricity usage.
In order to qualify for the tax credit, homeowners must purchase the solar system, either with cash or through a solar energy financing option like a loan. If the homeowner chooses to lease the solar system, the tax credit will go to the person or company that is leasing you the equipment. This is one of the main reasons why lease and PPA options have grown less popular as homeowners begin to realize the savings they can collect by owning the system themselves. It is important to research how solar energy financing affects the tax credit benefits.
Also, not everyone has the tax liability to take advantage of the tax credit. The credit can be carried forward for up to five years, which means that the homeowner has five years to recoup the entire amount, but every individual has a unique tax situation and so it is important to do your homework before making any assumptions. In most cases, the tax credit can be a straightforward process. However, it should be noted that at Barnes Solar, we are not tax professionals and homeowners would be wise to speak with an independent tax specialist or accountant to ensure that they can take advantage of the incentive.
Net Metering in California
Net Metering is not as widely understood as the federal tax credit is but it is arguably the most important incentive with which California homeowners save money by going solar. Put simply, net metering is the concept that the homeowner is able to sell excess electricity produced by the solar system back to his/her utility and then is able to draw down on said credit when their solar system does not produce as much electricity as they use. In essence, the homeowner’s meter spins backwards and forwards as the utility is essentially agreeing to be the homeowner’s battery.
The impact on savings is immense, especially for homeowners that are able to build a solar system capable of offsetting 100 percent of their electricity usage. In practice, homeowners build up a credit during the summer, when their solar system is producing the most electricity. And then they are able to draw down on that credit in the winter rather than pay their utility for the extra electricity usage.
There are no circumstances where a homeowner will not qualify for net metering. In fact, net metering is relatively standardized throughout California, but it is still important for homeowners to check with their utility to make sure they understand the intricacies of the policy.
For example, Los Angeles Department of Water and Power is technically exempt from offering net metering, but don’t fret! Customers with LADWP still are able to receive the benefits of net metering, at least for the time being. For more information, don’t forget to check out the DSIRE website as it has all of the nitty-gritty details on how it works.
Property Tax Exemption for Residential Solar Systems
Living in California is not particularly cheap and while many homeowners may have read that a solar system will increase the value of the home (which is true!) there next question usually concerns whether or not their property taxes will increase as well. The question is understandable and luckily for homeowners in California, thanks to an incentive passed as law by the state, there is a property tax exemption for homeowners in California who go solar. According to the Database of State Incentives for Renewables & Efficiency (DSIRE), a section of the California Revenue and Taxation code allows a property tax exclusion for specific types of solar systems installed before 2025. It includes everything from solar systems installed on homes being newly built to solar water heating systems and plenty in between. It also includes batteries used for solar storage, solar space conditioning systems and even solar mechanical energy.
However, homeowners interested in installing pipes and ducts used for solar energy only qualify for 75% of their “full cash value”. It is also worth noting again that Barnes Solar does not employ any tax professionals or home appraisers, so it is important for homeowners to do their own research and homework as well.
Self-Generation Incentive Program (SGIP)
If you are a homeowner who is interested in solar energy or solar energy financing, you have probably begun to hear about batteries or “battery backup” systems. Although batteries are still considered something of a luxury item in solar in that they are expensive and only helpful in very specific situations, the California Public Utilities Commission that set aside some money to incentivize “existing, new, and emerging distributed energy resources”.
This incentive program is called SGIP and it offers rebates to customers who purchase energy storage systems. The amount of the rebate depends on the utility and how many customers serviced by that utility have already participated in the program. For example, for Southern California Edison customers, the program is already in Step 3, meaning that if the homeowner is also planning to take advantage of the federal tax credit, they are entitled to a rebate worth .25/Wh. Please note, the rebate is not based on the size of the solar system, it is based on the size of the battery system.
For more information on the value of the rebate in individual territories, follow along here as the program is updated regularly and changes will happen as more and more homeowners take advantage of the program.