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Home » All » California Solar Tax Credits and Incentives (2022 Update)

If you’re a solar installer operating in California, you know how competitive and busy the solar market has been in the last few years. With a closer eye on climate change, and a new government set to reduce emissions in any way possible, it has never been a better time for solar contractors and homeowners alike to be involved in the industry and what it has to offer in the Golden State.  

Here are all the must-know solar tax credits, incentives, and programs offered in California for 2022 so you can stay in the loop and make sure that you’re offering your clients the best possible deal on their solar panels so that you win the bid every time.  

Federal Solar Investment Tax Credit (ITC)

While there is currently no state-specific solar tax credit available in California right now, solar customers in the state continue to have access to the Federal Investment Tax Credit (ITC)

After many attempts to shut down this tax credit over the last few years, the ITC federal solar tax credit program has finally been extended another 10 years under the Inflation Reduction Act and expanded to include solar battery storage options, also at a 30% credit. In 2033, the ITC will step down yet again to 26%, then to 22% in 2034, and finally, 0% in 2035 and beyond.

This means that while solar professionals will no longer be able to benefit fro the extra urgency a quickly decreasing ITC created, they will now benefit from an increase of homeowners looking to take advantage of this credit and go solar, when they might not have been able to afford a system previously. 

Active Solar Energy System Property Tax Exclusion 

Set to sunset on January 1st, 2025, the Active Solar Energy System Exclusion ensures that installing a solar system doesn’t raise the homeowner’s property taxes. Not only is this just a great selling point for your residential customers, but it is another solar program available with a deadline that can help your business create some urgency in the sale. 

Since installing solar panels already increases the value of the home, the fact that they won’t also increase your client’s property taxes is a financial win-win for the homeowner no matter how they look at it.  

Self-Generation Incentive Program (SGIP) 

With solar storage options getting better and cheaper every day, this California solar incentive takes the idea of purchasing solar energy storage one step further by offering a rebate on the purchase of a solar plus battery system. 

With $1 billion set aside by the California Public Utilities Commission through to 2024, the SGIP is available to customers of PG&E, SCE, SoCalGas, and SDG&E and is prioritized to people living in fire-prone areas, those with medical conditions, and people who have seen two or more utility Public Safety Power Shut-off (PSPS) events. 

While the exact amount of the rebate varies based on the storage capacity, and the customer’s utility, solar installers can work with homeowners while they prepare their solar proposal to learn about their eligibility and the rebate they may qualify for, giving them a great opportunity to build trust and make it known that the installer cares about getting the homeowner the best deal on their PV system.  

Disadvantaged Communities – Single-family Solar Homes (DAC-SASH) 

Administrated by the non-profit GRID Alternatives, the DAC-SASH solar program was created with a $10 million per year budget ($120 million total) until 2030 and aims to help low-income homeowners with incentives to be able to participate in the “greenification” of the state.  

The program aims to offer $3/watt incentives to install a solar system as well as energy efficiency training to promote jobs in green industries in these same low-income areas.  

California solar incentives such as this one not only help to foster a greener state but also help to open up the solar market to even more homeowners than what may have been possible a few years ago when solar was really starting to take off in North America.  

Additionally, they provide the means for more people to learn the ins and outs of installing solar PV themselves so that your solar business has a bigger pool of new installers and contractors to hire from to support much-needed industry growth 

Net Energy Metering  

After a tumultuous few years of lobbying, rallying, and meetings, the final decision on whether California utilities’ proposed NEM 3.0 decision has been delayed indefinitely while the new president of the California Public Utilities Commission (CPUC), Alice Reynolds gets up to speed on the proposal and has time to hold oral arguments on the issue.  

NEM 3.0 passing as it was originally proposed would have potentially been devastating to the solar industry in California, as it would have cut the credits homeowners would have received down by a quarter of what they currently receive.  

This means that California is still under NEM 2.0 until further notice, giving homeowners under the current plan the ability to receive a credit for any excess energy generated through their solar systems and sent back to the grid.  

For a homeowner to qualify for net energy metering, they simply need to be on a time-of-use rate plan and pay a one-time interconnection fee. They will also need to agree to pay non-bypassable charges of around 2 – 3 cents per kWh for any power they send through to the grid. Any power used by the home itself is not subject to any of these charges.   

Utility-Specific Solar Programs, Incentives, and Rebates 

Since California is such a green-minded state, there is no shortage of solar incentives and rebates available from many of the utilities that operate in the region. Make sure to keep an eye on what’s currently available from the utilities that service your potential customers and the areas that you operate in to be sure that you’re always offering the best possible deal on solar power for your community.  

In Closing 

Nowadays, solar panels almost already sell themselves but it’s important to continuously be up to speed on ways to continue to increase your sales numbers while also providing an important service to our communities and customers. Cross-check your client’s needs against the tax credits and incentives listed above to make sure that you’re putting their money to work in the best and most efficient way possible, and use these 2022 California solar incentives to your advantage to close as many deals as you can. 

Looking to scope, sell and complete more solar projects than ever? Solargraf is the most user-friendly, robust, and fully integrated solution on the market. Book your free demo today to learn more about growing your business with Solargraf. 

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