California Solar Rebates and Incentives

If you own property in California, and you’re looking at investing in solar equipment on that property, then you’re in luck. Home owners in California can choose from a variety of incentives for installing solar power; whether it’s offered by the state, the county, or even the power company, there’s something out there for almost everybody.

In most cases, the state wants homeowners to maximize the efficiency of existing systems on the property—like insulation, windows, and appliances—before they install solar equipment on the property. 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 current building efficiency standards.

Those who can afford to pay for solar systems on their own can get the equipment exempted from their property taxes, sell the excess energy back to the power company, and even get reimbursed for a chunk of the cost of purchase and installation through the California Solar Initiative. Lack the cash to make it happen? Not to worry. In many areas of California, homeowners can get low-interest loans from their city to cover the cost, which they can pay back through property taxes over a period of years.

Solar Rebate and Incentive Programs

California Feed-in Tariff

Program Type	Power buy-back program
Technologies	Solar thermal electric, photovoltaics, wind, geothermal electric, anaerobic digestion, small hydroelectric, tidal and wave energy
Amount	Dependent on output
Required Documentation	Contract-based
Official Web Site	http://www.cpuc.ca.gov/PUC/energy/Renewables/hot/feedintariffs.htm

Under the California Feed-In Tariff program, customers of any California public utility (those with fewer than 75,000 customers are exempted) can elect to sell any renewable energy they generate beyond what they use back to the power company. The downside is, consumers who elect to participate in this program cannot participate in any other renewable energy incentive program, such as the California Solar Initiative.

How it works is that customers enter into a contract with their utility that allows them to sell power to the utility at varying rates—determined in the contract and calculated factoring in the hour, season, and other variables—over a period of years. The longer the contract, the more the utility will pay per kilowatt-hour. On average, for a contract entered into in 2010, customers will make roughly $.08 per kw/h on a 10-year contract and a little over $.10 per kw/h on a 25-year contract.

For most residential consumers with small energy-generating systems, opting for an incentive program is probably going to be the better deal. However, anyone with a renewable-energy-generating system can qualify. If you’re interested, contact your power company and apply.

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	http://www.boe.ca.gov/proptaxes/assessors.htm

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 real solar systems; however, solar pool or hot-tub heaters expressly 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 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	http://www.cpuc.ca.gov/PUC/energy/solar

The state of California offers a cash rebate, through utility companies, to customers who install solar power-generating equipment on their property. For smaller systems (under 50 kilowatts—which covers most residential systems), the state generally pays out a lump sum based on expected performance, or how much power the system is expected to generate.

The state mandates that all power utilities in California offer some form of rebate, though the terms and rates of rebates might 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 (chances are, one of them covers you), the rebate is the same.

Getting the rebate for a photovoltaic system (basically, power-generating solar panels) 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 (these are done through the power company; click here for more information). Second, find a solar installer. Your best bet is to find one who is registered with the California Energy Commission, and can thus apply for the incentive on your behalf. After that, you’ll get a confirmation from the state with the dollar amount of your rebate, and then you have a year to completely install the system. When that’s done, send in the paperwork and wait for the rebate to arrive.

Residential customers can also opt for the Production-Based Incentive, meaning you’ll get a monthly payment for five years based on how much power your system is actually generating. But the lump-sum rebate is the better deal; besides getting an upfront cash payment to cover a chunk of your costs following the completion of the work, you can feasibly take your power bill down to $0 if you’re generating as much or more power than you use. Keep in mind, though, that you will not be paid for any excess energy you might generate.

California also offers rebates for non-power-generating systems, like solar water heaters. Generally, for a system that displaces a natural-gas-powered water heater, you can expect a rebate of about $1,500—in addition to the money you’ll save on natural gas, which could be as much as 75 percent off your current bill.

The CSI is a long-term program that has certain benchmarks set for it over time. As the program meets these benchmarks, incentive levels will decline. Right now, rebates are paid out at a rate of $2.50 per watt AC (actual or based on expected performance), but that rate will decrease over time. To get the most bang for your buck, apply soon.

California Solar Power Financial Incentives

Green Building Incentive
Leasing/Lease Purchase
- Santa Clara Water & Sewer - Solar Water Heating Program
Local Grant Program
- Santa Monica - Green Building Grant Program
Local Loan Program
Local Rebate Program
Production Incentive
- California Feed-In Tariff
- City of Palo Alto Utilities - Solar Renewable Energy Credit Purchase Program
Property Tax Exemption
- Property Tax Exclusion for Solar Energy Systems
State Grant Program
- School Facility Program - Modernization Grants
State Loan Program
- Energy Efficiency Financing Program
State Rebate Program
Utility Grant Program
Utility Loan Program
Utility Rebate Program
Rules, Regulations & Policies

Appliance/Equipment Efficiency Standards
- Appliance Efficiency Regulations
Building Energy Code
Contractor Licensing
- Solar Contractor Licensing
Energy Standards for Public Buildings
Generation Disclosure
- Power Source Disclosure Program
Green Power Purchasing/Aggregation
Interconnection
- Interconnection Standards
Net Metering
- California - Net Metering
Public Benefits Fund
- Public Benefits Funds for Renewables & Efficiency
Renewables Portfolio Standard
- Renewables Portfolio Standard
Solar Access Law/Guideline
Solar/Wind Permitting Standards
- San Jose - Solar Hot Water Heaters & Photovoltaic Systems Permit Requirements
Related Programs & Initiatives

Alternative Fuels and Advanced Vehicles Data Center
The U.S. Department of Energy's Alternative Fuels and Advanced Vehicles Data Center (AFDC) provides a wide range of information and resources to enable the use of alternative fuels and other petroleum-reduction options, such as advanced vehicles, fuel blends, idle reduction and fuel economy. The AFDC site offers a database of state and federal laws and incentives related to alternative fuels and vehicles, air quality, fuel efficiency, and other transportation-related topics.

Green Power Network
The U.S. Department of Energy's Green Power Network provides news and information on green power markets and activities, including opportunities to buy green power. This site provides state-by-state information on green power marketing and utility green power programs. In addition, the site lists marketers of renewable energy credits (RECs), also known as green tags or renewable energy certificates, which represent the environmental attributes of the power produced from renewable energy projects.

Weatherization Assistance Program
The U.S. Department of Energy's Weatherization Assistance Program (WAP) enables low-income families to reduce their energy bills by making their homes more energy-efficient. Through this program, weatherization service providers install energy-efficiency measures in the homes of qualifying homeowners free of charge. The WAP program web site offers a state-by-state map of opportunities, projects and activities.

Wind Powering America
The U.S. Department of Energy's Wind Powering America site provides state-by-state information on wind projects and activities, including wind working groups, validated wind maps, anemometer loan programs, small wind guides, state-specific news, wind for schools, workshops and web casts.

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: https://greenfinancesf.org/systems/energy Berkeley FIRST: http://www.ci.berkeley.ca.us/ContentDisplay.aspx?id=26580 City of Palm Desert Energy Independence Program: http://www.cityofpalmdesert.org/Index.aspx?page=484 City of Yucaipa Energy Independence Program: http://www.yucaipa.org/cityPrograms/EIP/eip.php Sonoma County Energy Independence Program: http://www.sonomacountyenergy.org/ Placer County mPower Placer: http://www.mpowerplacer.org/learn.html

In California, the state oversees a municipal loan program called Property Assessed Clean Energy Financing, where cities can loan homeowners money to make efficiency improvements to their properties. Homeowners who receive the loan pay it back through their property taxes, typically over a period of 20 years, in the form of an annual lien assessed against the property—it’s not as scary as it sounds; “lien” just means “tax obligation.”

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. Furthermore, the loan is technically lent to the property itself, so if the property is sold, the payback cost is 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. Many do, however.

San Francisco is one of the participants, and property owners 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 the property taxes. The basic guideline is that the projects funded by financing 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 more advanced projects like those, the city requires an energy audit first, and may 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 Yuciapa, Sonoma County, Placer County, and the city of Berkeley all offer similar city-issued loans for energy-efficiency improvements. In most cases, the interest rate is low (7–10 percent) and no down-payment is required. For property owners who want to upgrade efficiency and install solar power equipment in their homes but lack the cash-on-hand to make it happen, PACE programs offer an excellent option.