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What Solar Tax Credits, Incentives, and Rebates are Available in Los Angeles?
Property Tax Exclusion for Solar Energy Systems and Solar Plus Storage System
Western Riverside Council of Governments - Home Energy Renovation Opportunity (HERO) Financing Program
Minimum financing: $5,000
The financing may not exceed fifteen percent (15%) of the market value of the property, up to the first seven hundred thousand dollars ($700,000) of the property’s market value, and ten percent (10%) of the remaining value of the Property above seven hundred thousand dollars ($700,000) minus any PACE assessment on the property The total amount of any annual property taxes and assessments shall not exceed five percent (5%) of the property's fair market value, determined at the time program financing is approved.
Local Option - Municipal Energy Districts
Self-Generation Incentive Program
Incentives will step down over time. See below for incentive amounts.
Renewable Market Adjusting Tariff (ReMAT)
LADWP - Feed-in Tariff (FiT) Program
Base price will step down over time as certain MW goals are met
California Solar Initiative - Solar Thermal Program
Single Family Residential Incentives:
Systems that displace natural gas: $29.85 per estimated therm displaced
Systems that displace electricity or propane: Funding has been exhausted
Systems that displace natural gas: $20.19 per estimated therm displaced
Systems that displace electricity or propane: $0.42 per estimated kWh displaced *** Note, funding has been exhausted in this category for SCE and PG&E
Solar Pool heating: $5.00 per estimated therm displaced
Federal Residential Renewable Energy Tax Credit
Solar incentives are meant to encourage homeowners to switch their home over to renewable energy by offering financial incentives that lower the burden of solar panel installation and use. Incentives might include things like discounts, cash back or monthly utility bill credits. Some incentives are handled federally, while others are offered by the state of California or by your specific utility company, county or municipality. Some broad categories of solar incentives include:
- Tax Exemptions: Tax exemptions can come in two forms. First, there is sales tax exemption, applied at the time you purchase your solar panels. The second is property tax exemption, which allows you to ignore the added value of your solar system when calculating property tax for your house.
- Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives are generally handled at the state level. Once your solar system meets the qualification threshold (typically a small amount of energy production), you can receive SRECs that can be sold to your utility company or other buyers. The money you make from the sale is generally considered part of your taxable income.
- Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much in taxes you owe the government.
- Rebates: A rebate is a partial refund given after you've purchased your solar system. These could be offered by your local utility company, your state or your county. The cash back that you get from the rebates is normally applied before calculating tax credits.
- Net Metering: Net metering becomes relevant once your solar system is up and running. If you've signed a net metering agreement with your Los Angeles utility company, the company will subtract the value of the excess energy produced by your solar system from your utility bill each month. In some areas, this is a dollar-for-dollar credit, while in other areas you may be refunded a percentage of the value.
Federal Solar Incentives
Federal solar incentives are likely to be the first thing that you think of when you think about solar incentives. The Federal Solar Investment Tax Credit, or ITC, is probably the most well-known federal solar incentive. The ITC offers a tax credit for a specific percentage of the cost of your solar system.
The ITC applies to the total cost of solar panel installation, including the panels themselves as well as accessories, equipment and labor. You can claim this credit for panels installed after January 1, 2006 on a primary or secondary residence that you own, as long as it is located in the United States. From its original value of 30% of the total cost, the credit has fluctuated slightly between 26-30%, and you may qualify for varying percentages depending on when your project was completed. There is no maximum claim amount.
Reaching out to your local Los Angeles solar panel installer is the best way to learn more about how the ITC could apply to your situation.
In August 2022, the Inflation Reduction Act expanded and extended the ITC, now dubbed the Clean Energy Credit. For solar system installations that begin after January 1, 2022 and are completed by the end of 2032, homeowners can apply for a credit for 30% of the total cost. This percentage will decrease annually after 2032 until the Clean Energy Credit expires in 2035. Starting in 2023, it will also be easier to obtain credits for energy storage systems under this new program.
More information about the new Inflation Reduction Act can be found here. To better understand how the new Clean Energy Credit applies to you, get in touch with your local Los Angeles solar installers.
State & Local Solar Incentives
Federal solar incentives are not your only option; rebates, tax credits and more may be offered at the state and local level. Incentives might be provided by the state of California, or by your county or municipality. Some incentives might only be available for a limited time, while others are ongoing.
Next Steps for Installing Solar in Los Angeles
Solar incentives may be provided by the federal government, the California government or your local utility company. The variety of available solar incentives has helped nationwide use of solar energy increase greatly in the last 15 years. It is a good idea to talk to your local Los Angeles solar installer to learn more about these incentives and to be sure that you're getting the largest number possible for your solar system.
EcoWatch's Los Angeles, CA Solar Incentives FAQs
Our goal is to reach as many people as we can with sensible solutions like solar energy. Our team of full-time local researchers collects solar price and installation data for every city in America then compiles it to create these digestible city guides. If you want to read our solar expert's opinion on the top solar companies featured here, follow this link.