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California - Energy tax credit, rebates, grants, incentives

California renewable and solar energy incentives

California is serious about solar energy, wind power and energy efficiency. California was first in the US to advocate a policy, the Million Solar Roofs Program, that aims to install 3,000 megawatts of solar panels for production of electricity on rooftops across the state by 2017. Funding for the program includes both residential and commercial solar panel installations.

The Million Solar Roofs program is defined by the size of the photovoltaic (PV) solar electrc system to be installed.  For sytems under 100 kilowatts (100kW), which represents the vast majority of residential solar installations, the state's solar rebate offers up to $2.50 per watt.  This is significant because the average cost for installed solar power is roughly $6-7 per watt.  For solar power systems greater than 100 kW in size, California offers homeowners a monthly rebate of 39-cents per kilowatt generated over a 5-year period.

California Solar Initiative (Residential/Commercial)

Homeowners, commercial business owners, government organizations and non-profit organizations are offered various state rebates designed to be put toward installation and equipment costs for solar energy systems.

  • Qualifying systems: solar space heat, solar thermal process heat, solar thermal electric, solar panel (PV).
  • Rebate amounts are dependent upon the type of project (commercial, residential, etc.) and the size of the system installed. 

System requirements:

  • Equipment must be listed on the CEC qualified equipment list.
  • Solar panel installations must be grid-tied.
  • Solar panel PV modules must be listed on the UL 1703 certification list.
  • Inverters must be on the UL 1741 certification list and assessed by the Energy Commission.
  • Both solar panel modules and inverters must come with at least a 10-year warranty.

California Solar Initiative – Single Family Affordable Solar Housing Program (Residential)

The California Solar Initiative offers incentives on a per-watt AC basis for low-income residential owners who install PV systems on their property.

  • Rebate amounts range from $4.75/W-AC to $7.00/W-AC and are dependent upon the homeowner’s income and California Alternate Rates for Energy (CARE) program qualification.
  • There is a maximum incentive of $10,000 for completely subsidized PV units.  There is no maximum incentive for systems that are either non subsidized or partially subsidized.
  • Systems must be at least 1 kW in size.  

System requirements:

  • Equipment must be listed on the CEC qualified equipment list.
  • Solar panel installation must be grid-tied.
  • Solar panel PV modules must be listed on the UL 1703 certification list.
  • Inverters must be on the UL 1741 certification list and assessed by the Energy Commission.
  • Both solar panel modules and inverters must come with at least a 10-year warranty.

All systems must be installed by qualified California solar contractors who are enrolled as SASH program contractors by the SASH program administrator or self-installed by the purchaser of the system.

Sales Tax Exemption for Alternative Energy Equipment Manufacturers (Commercial/Industrial)

The State Treasurer’s Office offers a 100% use and sales tax exemption for commercial/industrial entities that produce alternative energy products.

  • Qualifying equipment: Solar space heat, solar thermal electric, solar panel (electric - PV), small hydroelectric, geothermal electric, geothermal heat pumps, biomass, wind, CHP/cogeneration, geothermal direct-use.
  • Applicants must apply for this benefit through the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA).  
  • Exemption is granted on a first come, first served basis.  The most appealing projects that will be considered for exemption are those that create new jobs, produce manufacturing equipment/facilities, display environmental conservation/remediation efforts, etc.

Green Finance Loan Program – San Francisco (Residential/Commercial)

The city of San Francisco offers low-interest loans for homeowners and small business owners who intend to buy and install a solar water heat or PV system.

  • Other qualifying equipment: furnaces, boilers, A/C, thermostats, building insulation, windows, caulking/weather stripping, duct/air sealing.
  • Residential customers may borrow from $5,000 to $50,000 or 10% of the overall value of the property (lesser value prevails).  Commercial entities may borrow up to 10% of the overall value of the property.
  • Repayment of the loans may extend up to a period of 20 years, which is received through property tax bills.

Energy Independence Program – Sonoma County (Residential/Commercial)

Residential buildings and commercial/industrial enterprises in Sonoma County are granted the option of financing a renewable energy system through a reassessment of their property tax bills.

  • Sonoma County will grant fixed low rates for loans that will remain fixed until the expiration of assessment.  Rates may reduce if the program maintains success.
  • Qualifying systems/technologies: Solar water heat, solar pool heating, geothermal heat pumps, solar panel PV, lighting, furnaces, heat pumps, A/C, building insulation, roofs, motors, windows, etc.
  • The minimum loan amount is $2,500 and there is currently no set capacity.  Projects up to $5,000 must be repaid within 10 years.  Projects over $5,000 must be repaid within up to 20 years.

Energy Independence Program – Palm Desert (Residential/Commercial)

  • Residential buildings and commercial/industrial enterprises are granted the option of financing a solar energy system through the increase of their property taxes.
  • Qualifying systems: solar water heat, solar space heat, PV.
  • Loan amounts are set at a minimum of $5,000 and a capacity of $100,000.
  • Repayment of loans must be reimbursed through property taxes within a maximum of 20 years.  The maximum interest rate is 10%, which may be subject to modification within specific program contracts.

Solar Energy Incentive Program – San Francisco (Residential/Commercial)

The city of San Francisco provides rebates for residents and businesses owners who purchase and install PV systems on their property.

Rebate amounts:

  • Residential - $1,000 to $2,500
  • Low-Income Residential - $7,000
  • Multi-family Residential (non profit-owned) - $4,500/kW
  • Commercial - $1,500/kW
  • Non-residential (non profit-owned) - $1,500/kW

Maximum incentives:

  • Multi-family Residential (non profit-owned) - $100,000
  • Commercial - $10,000

Systems must be at least 1 kW in size.  There is no maximum size restriction.

Property Tax Exclusion for Solar Energy Systems – (Residential/Commercial)

Until Decembers 31, 2016, residents and commercial business owners may apply to be excluded from property tax equivalent to the increased value of a property due to the addition of a solar energy system.

  • Applicants may receive 100% tax exclusion for a given system and 75% exclusion for dual-use equipment.
  • Qualifying technologies: solar water heat, solar space heat, solar thermal process heat, solar thermal electric, solar panel PV, solar mechanical energy.
  • This program is administrated by the California State Board of Equalization.

Utility-sponsored Loan and Solar Rebate Programs (Residential/Commercial)

  • Rebate and utility loans programs are offered all over the state, granted by utility companies and municipal cities (qualifications for programs may vary).
  • Rebate and utility loan programs are commonly offered for those installing solar PV and energy efficient technologies.
  • Utility sponsored loans are generally 0% or maintain low interests to aid in the purchase and installation cost of renewable energy systems.
  • Rebate awards are established on a per-watt AC basis.  Other considerations include location and system size.

Federal Energy Tax Credit (Residential/Commercial)

Taxpayers are granted a personal tax credit of 30% of the total expenses, which include installation of residential solar-electric systems, solar thermal systems, fuel cells and labor expenses.  Residential wind energy installations and geothermal pumps are also eligible for the Federal tax credit.  

  • Solar electric systems and solar thermal heaters have no maximum incentive.
  • If there is excess federal tax credit, it may be carried over to the subsequent taxable year.  
  • This may continue on through consecutive years until 2016, under which unused credit may or may not be expunged.

Federal Energy Conservation Subsidy Exclusion (Residential)

  • Public utilities provide residential purchasers with an exemption of 100% of energy conservation subsidies.  
  • The overall worth of an installation or renewable utility regardless of the energy conservation capacity, will be excluded from the buyer’s gross income.  
  • Customers who participate in a utility company’s energy conservation program may be given a reduced rate of electricity utilized or a nonrefundable credit of the price of electricity on the customer’s monthly electric bill.

Energy-Efficient Mortgages (Residential)

  • With this federal loan program, homeowners may utilize energy-efficient mortgages (EEM) to either supplement or completely fund renewable energy systems.

Example: 4KW System – Residential Installation Cost

Average Electric Bill: $250/mo
Projected Annual Bill Escalation: 5%
Cost Per Watt: $6.50

- Estimated System Cost: $26,000
- Federal/State Tax Credit: $6,072
- State/Utility Rebate: $5,760
- Net Cost: $14,168
- Cumulative Lifetime Savings (25 Years): $46,987
- Investment Return: 13.3%

Savings of 46% on the total cost of your solar system through incentives

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