Is California still one of the best states to go solar?
Traditionally, California has been one of the best states in the country for people who want to install solar panels on their homes. Electricity from the big three utility companies is VERY expensive, and the cost continues to increase every year. On top of that, the grid in many parts of California can be unreliable, with public safety power shutoffs occurring several times a year and affecting thousands of people.
Solar panels paired with a battery can solve both of these problems, saving you thousands on your annual electric bills and helping to alleviate any worries you feel about blackouts.
Nearly 10% of California homes and businesses already have solar installed, and you may be wondering whether solar can work for you, too. The answer to that question is very likely “yes!” as long as your home’s roof is suitable.
But it may be in your best interest to act quickly. As you may have heard, California is changing its solar rules under a process called NEM 3.0. The changes will reduce the bill savings that currently make solar a great financial choice for many homeowners. NEM 3.0 changes have now been finalized, and people who sign a contract for solar panels after April 13th, 2023 will be subject to the new rules.
That means there’s still time to find a solar company and get signed up under the current regulations (more on these below). California also offers solar incentives for people who connect a battery with a solar installation. The federal government also offers a big tax credit on the cost of both solar and batteries.
Here’s our guide to California solar incentives for 2023:
Key takeaways
- There is no California solar tax credit, but the federal Clean Energy Tax Credit is worth 30% of your total cost to install solar panels and batteries.
- Customers of LADWP, PG&E, SCE, and SDG&E can send their excess solar energy to the grid and earn credit at near-retail prices that reduce their bills.
- All Californians who purchase battery storage systems can receive a generous rebate under the Self-Generation Incentive Program; extra money is set aside for low-income, disadvantaged, and in fire-affected districts.
- Our solar calculator will show you your estimated solar panel costs and the value of any solar incentives and rebates you are eligible for.
All CA solar incentives and rebates in 2023
Here is a summary table showing all California solar rebates and incentives available to homeowners who install a solar PV system for clean energy.
| Incentive | Amount | Eligibility |
|---|---|---|
| Solar tax credit | 30% of total system cost (including installation) | Anyone who pays federal taxes |
| Net metering | Your solar exports earn the retail rate of electricity, less a small non-bypassable surcharge | All customers of investor-owned utilities (PG&E, SoCal Ed, SDG&E) |
| SGIP | $200/kWh - $1,000/kWh of installed battery storage | All customers of investor-owned utilities.; additional conditions apply for the higher tiers |
Scroll down for details on how each of these solar incentives and rebates work.
California solar tax credits
Homeowners installing solar panels in California can receive a 30% tax credit on their purchase.
It’s important to clarify here: there is no California-specific solar tax credit. When people refer to the tax credit, they are actually referring to the federal solar tax credit, which applies to all American homes, including those in California.
The federal solar tax credit is 30% of the cost of a system.
Learn more: The federal solar tax credit: all your questions answered
California net metering
Net energy metering (NEM) isn’t exactly an incentive program, but it is the most important way your solar panels save you money. Under California’s current rules, called NEM 2.0, customers of PG&E, SCE, and SDG&E earn credit on their electric bills for every kilowatt-hour of excess solar electricity they send to the grid. LADWP also offers net metering but is not covered by NEM 2.0 rules.
NEM 2.0 was put into place by the Public Utilities Commission in 2018. It guarantees that homeowners going solar can see close-to-retail rate savings for a period of 20 years. This is an extremely valuable program; selling your electricity to the utility at a good value is the easiest way to quickly pay off your solar panel purchase.
As we mentioned above, NEM 2.0 will end for new solar owners after April 13th, 2023. The California Public Utilities Commission has ruled that people who file completed interconnection applications on or before that date can receive NEM 2.0 credits for 20 years as long as their solar installation is completed within 3 years.
Learn more:
- California Net Metering 2.0: Everything you need to know
- NEM 3.0 in California: What homeowners need to know
SGIP Program: California solar incentives now cover battery storage
Residential customers can currently qualify for a Self-Generation Incentive Program (SGIP) rebate of between $150 and $1,000 per kilowatt-hour of storage. That means you could earn a rebate of between $2,000 and $10,000 when you install a 10 kWh solar battery system.
If you’re installing a battery storage system on a property serviced by LADWP, PG&E, SCE, Southern California Gas, SDG&E, or SMUD, you can take advantage of the SGIP incentive. And yes, the rebate can be applied to the Tesla Powerwall.
There are three incentive tiers:
1. Residential storage
Battery storage systems smaller than 10 kilowatts and installed on residential property are eligible for an incentive of $150 to $200 per kilowatt-hour of storage installed, depending on your utility. This is the incentive that most homeowners will qualify for.
2. Residential equity storage
SGIP also has what is known as the “equity budget”. This budget has money set aside for solar batteries installed in low-income and disadvantaged areas. The goal of the residential equity incentive is to encourage more battery storage deployment in low-income areas.
Residential equity systems will receive a rebate of $850/kWh installed.
3. Residential equity resiliency storage
Low-income homes that are located in either a Tier 3 or Tier 4 fire district or in areas that have experienced two or more planned safety power shutoff (PSPS) events can qualify for an even higher incentive when they install battery storage on their home - this is known as the equity resilience incentive.
Projects that qualify for the equity resiliency incentive program will receive a rebate of $1,000/kWh of storage installed. This covers almost the entire cost of a solar battery system.
Learn more: California’s SGIP battery rebate program
Incentives for low-income households in California
Californians with lower incomes might have some trouble getting solar in 2023. The state’s long-running SASH and MASH programs ended on December 31, 2021. There are currently no low-income solar incentives in California other than those described in the section about SGIP equity incentives described above.
That’s not the end of the story, though. The NEM 3.0 ruling includes some hope for lower-income Californians. Specifically, it allows people on the CARE and FERA programs to retain the energy bill reductions that are part of those programs and also includes increased per-kWh payments to these customers for electricity their systems send to the grid. These incentives, combined with low-income SGIP incentives, make it possible for an income-qualified person to get solar panels installed without up-front cost and see savings from day one.
Stay tuned to this website for future updates on California low-income solar incentives.
Do utility companies in California offer any upfront solar rebates?
Upfront rebates from utilities used to be common, but there are no California utilities that offer them anymore.
Are solar panels in California worth the cost?
Given the relative lack of incentives for solar panels in California, it may seem like the state isn’t doing enough to make solar affordable for its citizens. But that’s the thing: it doesn’t need to. Electricity served by the big utility companies is so expensive here that solar is a smart financial decision for many homeowners.
The state has now moved on to incentivizing battery storage through its SGIP program, and the federal government still offers its 30% tax credit that covers all the costs of installing solar panels and batteries. These incentives make solar a no-brainer, but the decision will get more complicated in 2023 as NEM 3.0 takes hold.
If you’ve been holding off on going solar, now is the time to act.
Thi Deremer
Solar Policy Analyst and Researcher
Ben Zientara is a writer, researcher, and solar policy analyst who has written about the residential solar industry, the electric grid, and state utility policy since 2013.