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In the U.S., California was one of the earliest pioneers and supporters of solar energy. In 1976, the state passed a law that favored investments in the solar energy sector. A few years later, an even more encouraging law hit the books and sought to stop various community associations from banning solar panel systems in their neighborhoods.
Today, California generates about 29% of the total solar supply in the U.S., making it the highest solar producer in the nation. Texas solar panel energy production trails as a distant second, with a production capacity roughly half that of the Golden State. Homeowners and businesses continue to choose to go solar here at a high rate, thanks in part to the high number of California solar incentives available.
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California Solar Tax Credits, Incentives and Rebates Breakdown in 2024
Golden State residents can take advantage of several great solar incentives in California. The programs below can help you save a lot of money on the installation—and earn money back through rebates and net metering. We’ll even show you how to get free solar panels in California through a couple of local incentives.
Federal Solar Tax Credit
While there is no California solar tax credit at the state level, CA residents can take advantage of the ongoing federal solar tax credit on their income taxes. This is officially called the Investment Tax Credit (ITC), and it’s worth 30% of the total installation cost. For instance, if you spent $10,000 on solar panels, you’d earn an ITC of $3,000.
It’s a nonrefundable tax credit, so depending on your tax liability, you may not get the full tax credit when you file. However, you can roll over the remaining funds from that credit into future tax filings. If you need help claiming the tax credit, we recommend working with a tax professional.
The federal solar tax credit will not last forever. Under current law, the 30% tax credit will last through 2032. For the 2033 tax year, it drops to a 26% credit, and for 2034, it decreases again to 22%. After that, the tax credit will go away, unless the federal government extends it.
Self-Generation Incentive Program (SGIP)
The California Public Utilities Commission’s Self-Generation Incentive Program (SGIP) offers rebates to residents for installing a solar battery along with the solar panel. The rebate amount varies depending on battery storage capacity and the local utility company.
Property Tax Exclusion
California currently excludes solar panel installations when assessing the value of your property. That means solar panels, though they do increase your home’s value, will not increase your property taxes. This exclusion will expire on Jan 1, 2025.
Property Assessed Clean Energy (PACE) Program
Qualifying homeowners can get financing through the Property Assessed Clean Energy (PACE) program. In this program, you can finance your solar panel installation and pay back the loan with your property taxes.
This program comes with some caveats: You’ll have increased assessments of your annual property tax bills, and a lien will be placed on your home until you’ve paid off the loan, which can make it harder to sell your house when the time comes until you’ve made your last payment. These contracts can last 10 to 30 years.
Local California Solar Incentives
Golden State residents may be able to take advantage of additional CA solar incentives based on where they live—and some residents could even get free solar panel installation. Here are a few of the most popular:
Alameda Municipal Power Income Qualified Solar Rebate Program
Alameda customers with $106,000 or less of household income, whose house was built before 2020, are eligible for a $500 rebate when installing solar.
Lancaster Energy Power Choice Program
Lancaster Energy customers can get a free Tesla solar panel and Powerwall installation with no upfront cost. Instead, you’ll pay for the energy the system produces, plus a monthly battery payment. You’ll still get a monthly electric bill from Lancaster Energy.
LADWP Solar Rooftops Program
The Los Angeles Department of Water and Power offers another way to get solar panels installed for free. The company will install and maintain the solar panels — and pay you between $240 and $600 per year to lease your roof space. Your electric bill will be unaffected, but you’ll earn some extra cash each year and use your valuable roof space to contribute to California’s solar expansion.
San Diego Building Permits
San Diego County is currently waiving the cost of building permits for residential solar panel installations.
Silicon Valley Power Income-Qualified Solar Grant Program
Customers of Silicon Valley Power may be eligible for a grant for solar panel installation. The program has myriad stipulations; consult directly with the company to learn more.
SoCalGas ENERGY STAR Solar Thermal Water Heating System
SoCalGas customers who install a solar thermal system can get a rebate of $2,500 to $4,500.
Net Metering In California
California is in its third iteration of its Net Energy Metering (NEM) program, called NEM 3.0. This net metering program allows residents who generate power via renewable energy sources (such as solar) to sell excess energy back to their utility company.
NEM 3.0 seriously reduced the buyback rate for solar energy, however — by 75%. Residents previously earned roughly 30 cents per kilowatt but now only receive 8 cents for the same amount of power. Solar advocates continue to fight this restructuring of the program, which has led to major job loss in the solar industry throughout the state.
Past California Solar Panel Incentives
Because California was a pioneer in the solar panel movement, it also has some of the oldest solar panel incentive programs — many of which have now expired. Among some of those programs that the Golden State has now ended are:
- California Solar Incentive (CSI): This program closed at the end of 2016. Because solar panel costs dropped significantly, the California government no longer saw the need for this major rebate program.
- CSI-Thermal Program: Previously, California residents could get rebates for replacing electric- or gas-powered water heaters with a solar thermal system. This California solar rebate ended in mid-2020, however.
- Single-Family Affordable Solar Homes (SASH) Program: This program provided additional incentives for solar installations on single-family homes, but California closed the program in 2022.
- Multi-Family Affordable Solar Housing (MASH) Program: Similarly, this program is closed to new applicants but provided incentives for solar panel installations on multi-family homes.
California Solar Panels Cost
The cost of solar panels in California varies depending on the size of the system, the brand you choose and the installation complexity based on your roof’s shape and slant. The average California homeowner needs a 5 kW system, which costs an average of $12,700 before any incentives or rebates. After the federal tax credit, that’s $8,890.
Which Solar System Is Right for Your Home?
Several factors impact the choice of solar systems for your home, including how much sunlight hits your home, what kind of roof you have, brand preference and budget. The best way to determine the right solar panels in California is to consult with an experienced solar installer near you.
Benefits of Going Solar
Going solar in California — or anywhere you live — has numerous benefits, both for the environment and your bank account:
- Reduced reliance on fossil fuels: Fossil fuels are finite, and burning them is terrible for the environment. By switching to solar, you reduce your carbon footprint and instead rely on a green and unlimited (for at least the next five billion years) source of energy.
- Savings on utility bills: Though you’ll have a large upfront cost to install the solar panels, you’ll enjoy ongoing savings through the reduced cost of energy. If you stay in your home long enough, you’ll more than recoup the money you spent. Here’s how much money solar panels save the average homeowner.
- Energy independence: Solar panels create an independent power grid, right on top of your own home. If the power goes out in your neighborhood after a storm or some other event, you’ll still have access to electricity through your solar panels.
Is It Worth Going Solar in California?
Going solar in the Golden State is still worth the investment, despite the fact that many California incentives for solar have been phased out and the net metering program is merely a shell of its former self. You’ll still be able to take advantage of the federal income tax credit, can get a rebate for installing a solar battery, earn some money for net metering, and may even qualify for local incentives.
Going solar also allows you to become energy-independent and help reduce our reliance on fossil fuels.
How to Choose the Best California Solar Panel Company
Choosing the best solar panel company in California can be tricky because the Golden State is full of great licensed solar providers. Start by reading reviews online and asking friends, family and neighbors with solar panels for their input.
As you compare your top choices, consider factors such as price, availability and customer reviews.
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Bottom Line
Installing solar panels in California can be expensive, but a number of solar incentives, rebates and ongoing earning options can make the investment well worth the cost. Many of these incentives are going away in the coming years, however, so if you’ve had your eye on solar, now is the time to act.
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Frequently Asked Questions (FAQs)
What are the benefits of going solar in California?
California is the leading state for solar energy production, so you’ll be in good company if you make the switch in the Golden State. You can trust that the local solar installers are highly experienced, and you’ll also be eligible for great California solar incentives, rebates and tax credits. You can also make money through net metering and, most importantly, be energy-independent and stop using fossil fuels to power your home.
Which cities have better solar tax exemptions and rebates in California?
You can find great solar tax exemptions and rebates throughout the state of California. Alameda residents can get a $500 rebate while customers of Lancaster Energy and the Los Angeles Department of Water and Power may be able to get free solar panels. San Diego residents are eligible for free building permits for solar installations, Silicon Valley Power customers can get grants, and Southern California residents may be eligible for rebates on solar thermal systems.
Should I buy or lease my solar panels?
If you have the money to spend and plan to be in your home for several years, you’ll find more financial benefits to buying your solar panels rather than leasing them. The savings from leasing are far less because federal tax credits don’t apply when you don’t purchase solar panels outright.
