The average California solar shopper will save $3,469 on solar panels with rebates and incentives.
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Solar panel systems in California are expensive, but incentives from the state and federal governments can help you reduce the upfront cost. Between the federal tax credit and other state-specific incentives, you can save thousands on solar panels, making them well worth the investment. Here''s how you can lower the cost of solar if you live in California.
As a California homeowner, you have access to some great incentives that can substantially improve your return on investing in solar panels. The four incentives below are some of the most impactful ways to bring down your solar costs.
Residential Clean Energy Tax Credit, formerly the federal investment tax credit (ITC)
Disadvantaged Communities - Single-family Affordable Solar Housing (DAC-SASH)
Provides $3/W for systems up to 5 kW if you''re a low-income customer in a disadvantaged community
Allows you to finance your system typically with no money upfront and usually includes a low-interest rate
Depending on your utility company, additional rebates may lower your system''s cost
The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system''s cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax.
The average cost for a 5 kW solar panel system is around $11,564 in California. Once you factor in the 30% credit, the cost comes down to $8,095.
When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won''t be eligible.
You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you''re a tax-exempt entity, like a nonprofit organization.
Claiming the ITC is easy! Just follow these three simple steps:
Fill out the form using the documentation you get from your installer.
If you live in a top 25% disadvantaged community and you''re a Pacific Gas & Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (SDG&E) customer, you may be able to install solar for free or at a very low cost. The DAC-SASH program offers an incentive worth $3/W for solar panel systems between 1 and 5 kW. To qualify, you must also meet income requirements and own a single-family home. Through May 2024, the income limit is $39,440 for a household with one or two people.
California is one of only three states that offers property assessed clean energy (PACE) financing to homeowners. This financing arrangement allows you to install a solar panel system with typically no money upfront and pay it back over a set period of time–usually between 10 and 20 years.
Most PACE programs include low interest because the debt is tied to your property instead of you, making it a secure loan. With PACE financing, you make payments as an addition to your property tax bill. If you sell your home before paying off your loan, it will automatically transfer to the new homeowners.
Two local electric companies offer rebates for some homeowners installing solar panels:
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