At Solar Power Rocks, our dream is to turn your thoughts of solar power for your home into reality
Note: The numbers above are just estimates for a 5kW solar system, and your home is unique. The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. A friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.
With a nation-sized land area, population, and economy, California is virtually a country unto itself. While it's easy to get lost in all those people and all that GDP, California may also have more nature to protect than anywhere else in the country. From Yosemite to Tahoe, the Sierra-Nevadas to Joshua Tree, California is beautiful indeed. Heck, Woody Guthrie even sung about the Redwoods here.
Lucky for us, most Californians already know how great solar is at lowering their energy bills, saving the planet from carbon pollution, and helping them sell their homes faster and for more money. If you've been thinking about solar power for your home, you should know that the prices have never been cheaper, so why not get a quote now, before any more of California's great incentives go away?
If you're living in one of California's largest cities, you should know there are special rebates and incentives you could qualify for! We have specific pages for the following California cities:
So, how's California doing with that whole "encourage people to use renewable energy" thing? Let's see!
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $3,500/kW! This is paired with the strong California solar incentives below.
Your guide to going solar in California
We've designed this page to be a complete guide to the complicated and sometimes confusing process of installing solar panels on a home in California. Since there's a lot of important information to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
The Solar Strategy section is all about the various financial options you have in California. We've created a tool that asks you a few questions about what you hope to get out of a solar purchase and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we give you a detailed picture of how each could work for you.
The Policy Information section contains all of our latest research on the rules set by the state legislature and public utilities commission that determines how easy it is to go solar in California. These policies and rules govern everything from renewable energy mandates to whether you get paid retail or wholesale rates for the extra energy your system produces, and can have a huge effect on the viability of solar.
Finally, the Solar Incentives section lists all of the available financial benefits available to homeowners who go solar. This section includes information about money-back rebates and grants, tax credits, and tax exemptions. If you're looking for what California is doing to make solar more affordable for its citizens, you'll find it here.
We hope you find our work useful. If so, please help us keep our research and advocacy as strong as possible by sharing it with someone who might also find it interesting, contributing any amount you can, and by getting yourself personalized savings estimates from our trusted partner network.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your California Solar Strategy|
|Comparing Solar Investment Options|
|Solar PPAs in California|
|Solar Loans in California|
|Buying Solar in California|
|Solar Purchase Payback Time in California|
|California Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in California
Figuring out the best way to go solar in California can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
Compare the Return of Different Solar Investments in California
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, the purchase option leads to the highest dollar-amount returns over time, but it also requires a big up-front investment. If you take a solar loan like a PACE loan or a home equity line of credit (HELOC), though, your payments over the first several years will be only a little more than your savings, and you'll still come out tens of thousands ahead in the end.
The option with the smallest savings is for a solar lease or PPA, which means you put $0 down on a rooftop solar system and pay monthly while you accumulate electricity bill savings over time. Leases and PPAs are an excellent option if you don't have any equity or cash to put down.
Read on to find out more about each option.
Net Present Value of Solar in California
“Net Present What?!” Don’t panic, this isn’t an economics test. NPV is just a tool used to compare investments. Basically, it asks, “if you had X dollars to invest, which investment would get you the best return?” It relies on the idea that getting a return on your investment sooner is better than later, because you can reinvest your early profits and keep the gain train going.
We compare an investment in solar to a “what-if” investment in a Standard & Poor’s (S&P) 500 stock index fund, which has seen growth of about 7% per year over the past 25 years. We use the cost of solar in California and ask “how much better or worse (in 2017 dollars) is an investment in solar than stocks?” Here's what we found for the three different ways of going solar in California:
Look at all that green! When they tell you solar is a good deal in California, this is what they're talking about. A solar investment in California should provide a better return than the stock market whether you choose a PPA, a loan, or pay up front. Here's some more about how we got these numbers:
Solar PPA NPV: $5,869
Saving money without having to put anything down is always going to have a positive NPV. In California, you’ll save $12,000 by paying for electricity under a solar PPA for 20 years, which is worth $5,869 in today’s dollars. Read more about PPAs in California below.
Solar Loan NPV: $10,275
As we’re fond of saying, taking a loan for solar is a no-brainer, because it’s like agreeing to pay over time for something that is also making you money, plus you get 30% of the loan value as a tax credit (cash in your pocket) after making payments for only 1 year. In the case of California, that tax credit windfall helps push the NPV of a solar loan to over $10,000 better than a similar investment in the stock market. That's a huge amount of upside for a $0-down investment! Read more about solar loans below
Solar Purchase NPV: $7,111
The biggest reason a solar purchase in California has a positive NPV is it allows you to recoup 30% of that investment within 1 year, and reinvest that amount in whatever you choose. On top of that, the money you save on electricity is also available for future investment. But you can see above what happens to NPV if you choose a solar loan instead. Unless you need to put cash into an asset, a loan is a much smarter way to pay for solar panels. Read more about solar purchases below.
Solar Power-Purchase Agreements in California
California basically invented solar PPAs, and it's still one of the best places in the country to do it. The state legislature and public utilities commissions are way into solar, so there isn't any worries that utility companies will start trying to impose monthly fees on solar homeowners like they have in other states.
For now, leasing a solar system can save you about $35 per month, which adds up to big money over the 20-year life of the lease or PPA.
Here's how a solar lease works:
Example savings in California
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payments
Average Annual Savings
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payments
Average Annual Savings
Power-Purchase Agreements (PPAs) are the most popular form of what's called "third-party solar." A PPA just means your solar company owns the panels on your roof, and you pay for the electricity they produce. The numbers above show the savings with a solar PPA for an average home in California. The typical electric bill before solar power is super expensive, but with a PPA, your monthly expenses will be lower. You'll be saving money and saving the planet all at the same time!
Here's an estimate of the monthly savings for a solar PPA in California:
With a PPA, your solar company essentially becomes a second utility provider, only the solar electricity is sold to you at a lower rate than the fossil fuel electricity you've been buying from the electric company! Note: your PPA won't eliminate your power bill from your regular electric provider, because you'll still need energy from the grid when the sun isn't shining. But it will save you money!
The less-popular cousin of the third-party solar family is the solar lease. It's basically like renting your panels for a set monthly payment, and getting all the energy they produce—however much it is. Don't get spooked by that language, though. A typical solar lease comes with energy production guarantees that will make sure you're getting what you paid for. In fact, if you're not offered a production guarantee with a solar lease, walk away.
Here's the best part of third-party solar: whether you end up with a lease or a PPA, the installation company owns the panels and will do all the maintenance for you. Usually that means just a good cleaning every year, but if any part of that system fails, you're off the hook! That can be a great benefit to homeowners who are risk averse.
Keep in mind, the numbers above are based on an average home in California. If you're ready for a custom quote for a solar lease or PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Home Solar Power: PPA vs. Purchasing
To PPA, or not to PPA? Willsolar Shakespanels would be proud we're discussing this. Here's the basic deal. If you choose to lease your panels, you benefit from no out of pocket costs and an immediately reduced total electricity payment. Because of this, many regard this option as a no-brainer, since there isn't any downside to think of. The only hiccup you'll start to experience is when you consider the long term financial benefit of owning the solar panel system yourself.
In many situations, if you can afford the outlay or can easily secure financing, the cost of the install becomes an investment with a return outpacing even the strongest performing mutual funds. In addition, there's significantly less principal risk, since the energy credits you will be producing are tied to the sun coming up in the morning instead of our financial markets!
Additionally, if you go the PPA route, you must forfeit all the credits and performance payments you would receive by owning the system yourself to the solar PPA company (after all, that's how they can afford to give you such a no-brainer proposition in the first place).
Solar Loans in California
This is without a doubt the best option when it comes to percentage return on investment. That’s because it relies on using someone else’s money for the purchase price, which is paid back over time. The cost is similar to a new car loan, but because solar makes you money, it's a tremendous investment. A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can get a home-equity line of credit (HELOC) for $17,500, with a fixed rate of 4% or lower and a 15-year repayment period.
- You love making money without much risk
The reason this works so well is that you don’t have to put any money down, but you still get all of the incentives that go along with buying solar. You'll get the 30% federal tax credit and the energy bill savings will start right away. The bad news is your loan payments will be a tiny bit higher than those energy bill savings, so you'll end up spending about $39/month for solar in the first year. That difference will come down each year as electricity prices rise, but your system will keep on producing about the same amount of electricity.
Here’s how the numbers pencil out for a California solar purchase with a HELOC:
- Installing a typical 5-kW solar system should start at about $17,500. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $1,260, but your loan payments will total $1,553, for a difference of $293, or about $24 per month.
- That's not so bad when you consider your tax savings for the year will be $5,250! You'll come out $4,957 ahead in year 1, which should help ease the burden of loan payments for a few years, at least.
- The benefits of that early tax break are so great that you'll never actually spend that $5,250 windfall on loan payments. And after the loan is paid off, your profits stack up just like if you bought the system outright. You'll end up with $27,655 in profits over our 25-year example.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too. 123 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in California. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Buying Solar in California
An outright purchase used to be the only way to get solar, and it's still the option that provides the best dollar-for-dollar returns. The reason it's so great is that you own the system from day one and reap all the benefits. The Federal tax credit and electricity savings bring your first-year costs way down.
In our example, you put down $17,500 up front, but by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced over $33,000 in income.
But even though that sounds huge, look into the HELOC option too, because taking a loan to buy an income-generating asset means you'll be making money as you pay for it.
Here’s how the numbers pencil out when you pay up front for a 5-kW rooftop solar system in California:
- Installing a typical 5kW solar system should start at about $17,500. Don’t worry – even without rebates, your first-year costs will be considerably less than that.
- Since the feds calculate their incentive based on actual out of pocket costs, the lack of a California rebate means a bigger federal solar tax credit. Subtract $5,250 (30% of $17,500) for a new price of $12,250.
- After the tax credit we subtract your first year’s energy savings, which we estimate to be about $1,260. That reduces your cost after the first year to only $10,990.
- You'll be raking in the solar savings every year. So much, in fact, that your shiny new panels will pay for themselves in 8 years, and keep running for at least another 17 after that!
- Over the 25-year life of your system, you'll see a total net profit of $33,456, after the system pays for itself.
- And don't forget... your home's value just increased by almost $32,000, too (your expected annual electricity savings over 20 years)!
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 123 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in California. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
California Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Florida—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in California:
50% by 2030
A Renewables Portfolio Standard (“RPS”) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels.
California has one heck of a Renewables Portfolio Standard (“RPS”); 50% of electricity production must come from renewable energy by 2030. If not, the utility companies get slapped with mighty high fees. Only Hawaii and Vermont have higher goals (though California shares 3rd place, because New York has the same goal).
California’s RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state. The penalty in California for not meeting the RPS standards is 5 cents per kWh, up to $25 million per year, per utility.
Recently, the state has seen a victory for solar in the fight to keep net metering in place for new solar owners. Expect it to stay that way, at least for a couple more years, while the state continues to refine its approach as solar takes a larger and larger chunk of total electricity generation.
Next, let's llok at what makes going solar in California a great idea in 2017!
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.
RPS solar carve out
California’s strong RPS and geographic location have been a boon to residential solar. But if the RPS contained specific carve-outs for clean and efficient technologies like solar panels, or mandates for the environmentally necessary increases in distributed generation, you’d see even stronger incentives for residential solar power.
What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
California Electricity Prices
Californians currently pay an average 17 cents/kWh for electricity – one of the ten highest rates in the nation. We know you hate your electric bill. Really, we do. So please excuse us when we say that even at 17 cents, energy is way, way too cheap. Fossil fuel burning kinda cheap. As you’re seeing, however, energy is not staying cheap. Electricity costs have been going up, especially in California. In the nation overall, prices go up about 3.5% per year. That might start getting higher soon, with increased regulation and decreasing supplies of fossil fuels. The higher electricity rates go, the more money you save by producing your own electricity with solar power in California. With prices going up at the rate they have been, that’s a whole lot of cash!
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
California Net Metering
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus. California has excellent net metering rules that enusre that homeowners get credit for 100% of the electricity their system produces, even if the solar power they provide is more that their usage.
In fact, those rules just survived a major challenge, so Californians can be sure they'll get the credit they deserve for every kilowatt-hour of power they send to the grid, at least until July 1st, 2017. So make sure to get a quote for solar now to get your system installed before the changes take effect. After July 1st, the new net metering rules will result in a small increase in fees and payments to the utility company, which won't be terrible, but they certainly won't be as good as what California has now.
What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
California Interconnection Rules
In California, small renewables are exempt from paying the high costs associated with the interconnection studies, distribution system modifications or application review fees that we've seen be a problem in other states.
Only two areas remain utility companies aren't adequately restrained from overcharging you for interconnection: requiring a redundant external disconnect switch; and requiring you to carry separate liability insurance. While such safeguards make sense for very large energy systems, both of them are just a waste of money for small residential setups like yours. Whether or not you'll be required to pay for either depends on your utility company and its policies. One of our local partners can tell you for sure when you get one of your free quotes.
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
Solar Incentives in California
California Solar Power Rebates
Varies by utility
California's solar power rebate program is extensive. The state enacted the California Solar Initiative (“CSI”) to encourage the development of solar power. The Initiative’s goal is to help create 3,000MW of new solar power by 2017.
How much cash you get depends on how far along your utility is toward accomplishing its share of the Initiative’s 3,000 MW target.
Keep in mind, most solar panels are rated at about 200 watts. Therefore, when you install 5 of them, you have a 1 kilowatt (kw) system. Most Calfornians who go solar install between 5kw and 15kw systems. So, quick math, that's between 25 and 75 panels.
As of mid-2014, the the big three utilities have exhausted their funding for the rebates and have closed the waitlists for new applications. Customers of PG&E, SCE, and SDG&E are no longer eligible for the CSI rebates. Some municipal utilities still offer rebates to new customers who install solar. Check the table below to see if there is still funding in your area:
2015 solar rebates for California municipal utilities
|Utility Company||Rebate Amount||Notes|
|Anaheim Public Utilities||$1.25 per watt||Awarded by lottery if requests exceed budget|
|Bear Valley Electrical||$1.09/watt||Incentives end in 2016|
|Burbank Water and Power||$0.64/watt||Next lottery drawing in July 2016|
|City of Healdsburg Utilities||$620/kW||$2,480|
|City of Lompoc Utilities||$1,500/kW||50% of costs|
|City of Palo Alto Utilities||Fully reserved (waitlist available)||n/a|
|Corona Department of Power and Water||$980/kW||$2,940|
|Lassen Municipal Utility District||$2,800/kW||Lesser of $4,000 or 50% of costs|
|Lodi Electric Utility||Fully subscribed for 2014, TBD for 2015||n/a|
|Merced Irrigation District||$1,500/kW||$4,500|
|Modesto Irrigation District||2014 program budget expended, 2015 TBD||n/a|
|Pacific Power||$470/kW||250 kW|
|Pasadena Water and Power||$850/kW||30 kW|
|Roseville Electric||$320/kW||10 kW|
|San Francisco||$500 - $2,800||Varies by system size, additional incentives available.|
|Silicon Valley Power||$1,750/kW||50% of costs up to 10 kW|
|Truckee-Donner PUD||2014: $2,740/kW 2015:2,550/kW||First 3 kW. Currently $8,220|
|Turlock Irrigation District||$730/kW||50% of costs|
We realize these charts and tables might be a little confusing. That's why we strongly recommend getting one or more custom quotes including specific rebate amounts tailored to you, your budget and your utility. We’ll connect you with a local installer that can walk you through the process and even apply for rebates for you as part of installation. In many areas, you can go solar for $0 down!
How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
California Solar Power Tax Credits
Solar power in California used to qualify for a tax credit. Sadly, the solar tax credit went the way of the Dodo Bird in 2005. To be fair, the tax credits were probably allowed to expire because of the implementation of the huge CSI program, and all those solar rebates we just talked about. But we’d gladly take a tax credit and a rebate (nudge, nudge).
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
Solar Power Performance Payments
California has no statewide Feed-in Tariff (“FIT”) program, but some municipalities do offer a contract for buying the energy you produce. A feed-in tariff is the rate the utility company will pay you for every hour of electricity you produce, if you opt into it. The problem with feed-in tariffs is that they remain constant over the term of the contract, so it is often beneficial to consumers to instead take advantage of net metering, which tracks the amount of electricity your system generates, and pays you for any surplus over your usage at the end of the year. Given those limitations, the FIT program probably only makes sense if you’re planning a big ol’ solar farm.
For a single-home solar power system in California, you are going to be better off planning a system which zeroes out your electric bill, and taking the net metering credits explained below for any small amounts of surplus you generate.
If these numbers sound like we’re speaking a foreign language, don’t worry. Go back to the portion of the page we calculate an example for you with an average sized solar system and show you how it works. Of course, if you’re still confused after digesting that, connect with us directly and we’ll customize a return on investment analysis for you in very easy to understand terms. Depending on your location in California, you'll even be able to get solar panels up on your roof at no out of pocket cost and reap the savings they produce from your electric bill immediately!
Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
If you don’t know what an SREC is, or how they work, check out this great SREC video
Property Tax Exemption
If California isn’t giving you a tax credit anymore, it’s at least giving you some tax exemptions, right? Well.... after December 31st, 2016, new solar installations will be subject to additional property taxes. That might end up being a few dollars or a few hundred dollars added on to your bill, depending on your municipality and how they calculate the value added to your home by solar panels.
Unfortunately, there is some very good data on how and how much value is added to a home by solar power—and the most complete studies are conducted right here in sunny ol' CA. But this is still a very new concept, so look to this space for updates when we get some more information about how assessors are judging solar's value.
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Many argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing. Leasing still has a positive impact on the ability to sell your home though, in our opinion).
For many average-sized solar power systems on a house, that can mean $20,000 to your home value. (Edit April, 2014: Some companies, like Solar Mosaic, are starting to offer traditional style equity-based home loans for such a thing). An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was also sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade.
Sales Tax Exemption
One of the simplest ways for the California state legislature to encourage small scale clean energy adoption is to declare solar panel equipment exempt from state sales taxes as many other progressive states have done. Sadly, there is no such declaration.
What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
The consensus on California solar power rebates and incentives
Not too shabby California, not too shabby at all. We’re giving you an A for your overall solar policy. A few years ago you would’ve gotten highest marks, and we do love that RPS, but disappearing state solar power rebates just isn’t making for good enough payback time-frames to get to our hallowed A+ rating. Don’t feel too bad – you’re still doing a lot of great stuff, but we’re going to need to see a stronger RPS, and probably a sales tax exemption to join its property tax counterpart for you to get top marks again.
Again, if you are confused about how these numbers work and would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!
Don’t forget to check out our special page about solar in San Francisco!