2023 Solar Incentives Guide for Los Angeles, CA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Los Angeles.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
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By EcoWatch Local Advisors
Data Analysis: James Savino
Ranking Methodology: Karsten Neumeister
Updated March 14, 2023
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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 people to switch to renewable energy by offering financial incentives meant to lower the burden of solar panel installation and use. Different kinds of incentives, including cash back, discounts or monthly utility bill credits, might be available to you. Some incentives may be offered by the state of California, by your utility company or by county or municipality, while others are federal. You might qualify for any of the following types of solar incentives:
- Solar Renewable Energy Certificate (SREC): SRECs and similar performance-based incentives are generally handled at the state level. Once your solar system meets the threshold (usually a small amount of energy production), you can receive SRECs that can be sold to your utility company or other buyers. The money you receive from the sale is generally considered part of your taxable income.
- Net Metering: Net metering becomes relevant after your solar panels are up and running. If you have in place a net metering agreement with your Los Angeles utility company, the company will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some places, this credit is dollar-for-dollar, while in others you might receive a refund equivalent to a percentage of the value.
- Tax Exemptions: Your solar panel system may qualify for exemptions on both sales and property tax. Sales tax exemptions are effective at the time of purchase. Property tax exemptions let you ignore the added value of the solar panels when you are calculating property taxes on your house.
- Rebates: A solar rebate is a partial refund after the purchase of your solar system. Rebates may be offered by your local utility company, your county or your state. The discount that rebates offer is normally applied to the price of solar panels before tax credits are calculated.
- Tax Credits: Tax credits decrease, dollar-for-dollar, the total amount of tax you owe the government. Tax credits differ from tax deductions.
Federal Solar Incentives
When you hear the term "solar incentives," federal incentives might be the first thing that comes to mind. One of the incentives many people are probably familiar with is the Federal Solar Investment Tax Credit (ITC). This incentive is a tax credit for a given percentage of the cost of your solar system.
The ITC is applied to the total cost of installing solar panels, including the panels themselves as well as equipment, accessories and labor. This credit can be claimed for panels installed after January 1, 2006 on a primary or secondary residence located in the United States that you own. 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.
Contacting your local Los Angeles solar panel installer is the best way to learn more about how the ITC may apply to your situation.
In August 2022, the ITC (now called the Clean Energy Credit) was bolstered by the passage of the Inflation Reduction Act. Under the new program, solar installation projects begun after January 1, 2022 and finished by December 31, 2032 may be eligible for a 30% tax credit. This credit amount will then decrease slightly each year until the end of the current Clean Energy Credit in 2035. The program expansion also makes claiming credit for energy storage systems easier than ever before, beginning in 2023.
More information about the new Inflation Reduction Act can be found here. The easiest way to understand how the new Clean Energy Credit will apply to you is to get in touch with your local Los Angeles solar panel installation expert.
State & Local Solar Incentives
Some solar incentives are often also provided at the state and local level. Like with federal incentives, these may include rebates, tax credits and more. These incentives might be offered by the California government, or by your county or municipality. Certain incentives are available for a limited time, while others are ongoing.
Next Steps for Installing Solar in Los Angeles
Solar incentives can be offered by the California government, the federal government or your local utility company. The large number of solar incentives available has contributed to a large increase in solar energy use in the last 15 years. Your local Los Angeles solar panel installer can provide you with more details about which incentives you should apply for, and get you on track to switch to renewable energy today.
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EcoWatch's Los Angeles, CA Solar Incentives FAQs
Can I receive any incentives when I add solar panels to a vacation home, rental property or commercial property?
While we recommend talking to your local solar installer and/or tax professional to best understand what solar incentives apply to you, many will apply to a second home, as long as it is in the United States and owned by you. There may be other incentives available specifically for commercial properties, depending on the details.
What are the top solar panel installation companies near me?
To learn about the best solar panel installers near you, take a look at our article on Los Angeles' best solar panel companies.
What are some of the environmental benefits of switching to solar?
Solar energy is a renewable energy source — by changing where you get your energy, you help lessen the strain on our planet's resources. Solar panels can also reduce your home's CO2 emissions by 250 pounds a year, or roughly 5,000 pounds in 20 years.
I want to change out my appliances for ones that are more energy-efficient. Are there any credits I can get?
The recently passed Inflation Reduction Act provides several incentives meant to reward homeowners who make eco-friendly upgrades. Some incentives include rebates and tax credits for installing new electric appliances. You can find more details about these incentives here.
Can I use multiple types of renewable energy to power my home?
Yes, you can employ multiple types of renewable energy to power your home, such as a combination of solar and wind power. You can also use both renewable energy sources and a backup source of non-renewable energy. You should discuss the details of your plan with your local Los Angeles solar panel installer, so that you understand what you'll need and what types of incentives you will or won't qualify for.
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.
Solar incentive research was conducted by Melissa Smith and Karsten Neumeister. Local data analysis was conducted by James Savino. See something we missed or could do better? Email the editor.