Property Assessed Clean Energy Financing

Program Type Municipal loan program
Technologies Locally determined, but the state recommends photovoltaics, geothermal heat pumps, fuel cells, and high-efficiency HVAC systems, insulation, and windows
Amount Usually a minimum of $5,000
Required Documentation Varies. Usually an application, energy audit, invoices of work
Official Web Site San Francisco GreenFinanceSF:
Berkeley FIRST:
City of Palm Desert Energy Independence Program:
City of Yucaipa Energy Independence Program:
Sonoma County Energy Independence Program:
Placer County mPower Placer:


While Property Assessed Clean Energy (PACE) Financing programs across the country are determined on a state and local basis, most programs were halted when the Federal Housing Financing Agency (FHFA) said such programs could invalidate Freddie Mac and Fannie Mae leases. However, some local programs still exist and more are being introduced. Under California’s PACE rules cities can set up PACE programs and loan homeowners and businesses money at low interest rates to make efficiency improvements, including installing photovoltaics and other forms of solar power to their properties. To be eligible, a property owner must have a clean property title and they must be current on property taxes and mortgages. Property owners who receive a PACE-based loan pay it back through their property taxes, typically over a period of 20 years, in the form of a lien assessed against the property and paid annually as part of the property owner’s annual taxes. 

Interest is calculated at a fixed rate at the time of the loan, and borrowers are allowed to deduct the interest on their income taxes in the same way homeowners can deduct the interest on a home-equity line of credit. If the property is sold during the PACE loan, the PACE assessment is generally transferred to the buyer.

The purpose of the PACE program is to defray the cost of making energy improvements to properties, and to encourage property owners to do so. The California Energy Commission oversees the program, but it’s up to municipalities to implement it—not all cities in California participate.

San Francisco is one of the participants, and property owners there can seek a loan by applying to be a part of a “tax district” that allows the city to recover the cost of the loan through a special line item on local property taxes. Under that program projects funded by financing must make the property 20 percent more energy-efficient, and the city wants property owners to start with the basics—insulation, windows, and so forth. Solar water-heating, photovoltaics, and almost any other renewable-energy-generating equipment is eligible for financing, but for such projects the city requires an energy audit first, and may first require more basic efficiency improvements to the property to accompany the equipment. Such improvements can, of course, be covered by the loan.

The city of Palm Desert, the city of Yucaipa, Sonoma County, Placer County, and the city of Berkeley also offer city-issued loans for energy-efficiency improvements. In most cases, the interest rate is low (7 to 10 percent) and no down-payment is required. For property owners who want to upgrade their property’s efficiency and install solar but lack the upfront capital PACE programs, where available, are an excellent option.

California Feed-in Tariff

Program Type

Power buy-back program


Solar thermal electric, photovoltaics, wind, geothermal electric, anaerobic digestion, small hydroelectric, tidal and wave energy


Dependent on output

Required Documentation


Official Web Site



Feed-in tariffs (FiT) generally pay customers a premium price for generating power from renewable energy like solar or wind. They are different than net-metering rates, which are calculated differently and are generally at a lower rate. California carved out a 480 megawatt FiT from renewable facilities smaller than 1.5 megawatts. However, because of new legislation California’s feed-in tariff is in flux as of September 2012. That being said, where available, the FiT is offered 10- to 25-year contracts. For contracts starting in 2012 systems are reimbursed for generation at a base of 7.7 cents per kilowatt hour produced under 10-year contracts. Under 25 year contracts, they’re reimbursed for generation at a rate of 9.2 cents per kilowatt hour produced. For systems coming online after 2012 the price, anticipating rising electric costs, goes up as can be seen here: Feed-in Tariff Price. While customers generating under an FiT arrangement can sell the energy they generate to the utility, they aren’t eligible for other incentives, like net metering or the California Solar Initiative.


For most residential consumers with small energy-generating systems, opting for an incentive program is probably going to be the better deal. If you’re interested, contact your utility and/or installer to learn about the benefits and limitations of California’s FiT.

California Solar Initiative

Program Type State Rebate Program
Technologies Solar space heat, solar thermal electric, photovoltaics
Amount Dependent on system size
Required Documentation Verification of project cost, calculation of expected system output
Official Web Site


The state of California through the California Solar Initiative (CSI) and its Go Solar California sites has offered a cash rebate or performance-based incentive through utility companies to customers who install solar power-generating equipment on their property. The difference is the cash rebate is based on expected performance, the performance-based incentive is paid out over time, based on actual system performance. 

As part of the RPS California mandated that all power utilities in California offer some form of rebate, though the terms and rates of rebates vary slightly from utility to utility. For customers of California’s three major utilities, Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric, the rebate started at $2.50 per installed watt. It is significantly less at all of them now. As of September 2012 it’s between 20 and 35 cents per installed watt. You can check to see what your rebate should be at: CSI EPBB Calculator. There you can also check what your anticipated net-metering rate (performance-based incentive or PBI) will be for a system.

Getting the rebate for a photovoltaic system involves taking a few preliminary steps. First, you need an energy efficiency audit of your home in order to maximize the efficiency of what you already have. Second, find a solar installer registered with the California Energy Commission. They should apply for the incentive on your behalf. After the state informs you of approval you have a year to install or have the system installed. When that’s done, send in the paperwork and wait for the rebate to arrive.

Residential customers can also opt for the PBI, meaning you’ll get a monthly payment for five years based on how much power your system is actually generating. If you opt for the lump-sum rebate you can recoup up-front costs quicker, but you will not be paid the extra PBI incentive over the first five years. 

California also offers rebates for solar water heaters. A single-family home solar hot water heater that displaces a natural-gas-powered water heater, can receive a rebate of up to $1,875, one that displaces and electric water heater can receive up to $1,250. Solar hot water heaters can reduce water heating costs by 75 percent or more.

California Property Tax Exclusion for Solar Energy Systems

Program Type Property tax exemption
Technologies Solar water heat, solar space heat, solar thermal electric, photovoltaics, solar mechanical energy
Amount 100 percent of the value of the equipment, 75 percent of the value of secondary equipment
Required Documentation Receipt of purchase
Official Web Site


Under the California tax code, the state does not consider solar-energy-generating equipment to add value to a piece of property. What that means is that, if you install such equipment on your property, you won’t get taxed for the value it adds.

Only “active” solar systems can qualify, which the state defines as “solar devices, which are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy.” That definition will cover most solar systems, including photovoltaics, hot-water heaters, solar heating and cooling and others. Also covered under the exclusion are related storage devices, power conditioning equipment, transfer equipment, and parts. However, solar pool or hot-tub heaters do not qualify. Auxiliary equipment that makes the system work, like ducts or pipes (also called “dual-use” equipment), can be exempted from property tax at a rate of 75 percent of its value. The exemption applies to both existing properties and new properties, as long as the seller has not already claimed the exemption.

This exemption is valid, under current California tax law, until 2016. To apply, property owners should contact their county assessor. There’s no limit on this exemption—you can add as much solar-power-generating equipment to your property as you want, property tax-free.


California Rebates and Incentives Summary


If you own property in California and are interested in going solar you’re in luck. Home and business owners in California have a bevy of incentives to choose from to install solar power. California’s robust renewable portfolio standard (RPS), which requires all utilities in the state to source 33 percent of their electric generation from renewable resources by 2020, is a leading driver for the incentives offered throughout the state. Incentives in California are offered by utilities, the state, counties and even some municipalities. A very popular option in California are residential power-purchase agreements or leases, which allow third-parties to own the system and give the home or building owner a fixed price for the system or the electricity it produces over the lifetime of the contract, which can range from 10 to 25 years. Basically, there’s something out there for almost everybody in the Golden State.

In most cases, the state wants homeowners to maximize the efficiency of existing systems on the property—like insulation, windows, and appliances—before installing solar. Bearing that in mind, those seeking to participate in one of California’s solar-power incentives should get an energy audit of their home to make sure it meets or exceeds California’s current HERS building efficiency standards.

In addition, those with solar systems can exempt the equipment from their property taxes, they can also net-meter with their local utility selling excess electricity their system puts on the grid to the power company, and they even get reimbursed for a chunk of the cost of purchase and installation through the California Solar Initiative. However, the popularity of solar in California has led to significant drops in the amount of money available for reimbursement. While such subsidies are subsiding, however, the drop in the cost of photovoltaics and rising energy costs mean that solar remains an incredibly attractive option in the state, and in 2012 solar began coming into parity with grid-supplied electricity in the state. (Last updated Sep. 2012)

California Solar Power Financial Incentives


 Green Building Incentive

Leasing/Lease Purchase

Local Grant Program

Local Loan Program

Local Rebate Program

Production Incentive

Property Tax Exemption

State Grant Program

State Loan Program

State Rebate Program

Utility Grant Program

Utility Loan Program

Utility Rebate Program

Rules, Regulations & Policies

Appliance/Equipment Efficiency Standards

Building Energy Code

Contractor Licensing

Energy Standards for Public Buildings

Generation Disclosure

Green Power Purchasing/Aggregation


Net Metering

Public Benefits Fund

Renewables Portfolio Standard

Solar Access Law/Guideline

Solar/Wind Permitting Standards

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