2023 Solar Incentives Guide for Modesto, CA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Modesto.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
Solar installers are experts in maximizing your solar tax credits and rebates.
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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 Modesto?
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
The phrase "solar incentives" generally refers to financial incentives that are in place to encourage people to use renewable energy by making installing and using solar panels more affordable. Incentives might include things like discounts, cash back or credit towards your monthly utility bill. Some incentives are provided by the federal government, while others are offered by the state of California or by your utility company, county or municipality. Some solar incentives you might qualify for are:
- Net Metering: Don't forget to speak with your Modesto utility company about signing a net metering contract. This will allow you to get a credit towards your utility bill every month for the value of excess energy generated by your solar panels. You could receive either a dollar-for-dollar credit or a percentage of the value.
- Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives might be available to you if the solar system on your home produces over a specified (generally small) amount of electricity. This category of incentives is typically handled at the state level. You can sell SRECs to your utility company or other buyers, and the money you make is usually considered part of your taxable income.
- Tax Credits: These credits are dollar-for-dollar reductions (not deductions) in how much income tax you owe the federal government.
- Tax Exemptions: Tax exemptions may come in one of two forms. First, there is sales tax exemption, applied when you purchase solar panels. The second is property tax exemption. This allows you to ignore the value added by your solar system when calculating property tax for your home.
- Rebates: A rebate is a partial refund given after you've purchased your solar panels. Rebates could 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.
Federal Solar Incentives
When thinking about solar incentives, you probably think of federal incentives first. The Federal Solar Investment Tax Credit, or ITC, is the best-known federal solar incentive. The ITC offers a tax credit for a predetermined percentage of your solar system's cost.
The ITC can be applied to a solar system installed on your primary or secondary residence in the United States. The solar panels must have been installed on a property you own after January 1, 2006 for you to be eligible for the credit. Initially, the ITC applied to 30% of all system costs (panels, accessories, equipment and labor), although the covered amount has fluctuated over the last few years between 26-30%. The installation date of your solar system will determine what percentage you are eligible for. There is no cap on the claim amount.
To find out exactly how much money the ITC could save you, get in touch with your local Modesto solar panel installation expert.
In August 2022, the ITC (now referred to as the Clean Energy Credit) was expanded and extended by the passage of the Inflation Reduction Act. The Clean Energy Credit lasts until 2035. Your solar installation project undertaken between 2022 and 2032 may qualify for a 30% tax credit. The amount will decrease slightly each year until the end of the current program. Starting in 2023, it will also be easier to claim credits for energy storage systems with the new act.
More information about the new Inflation Reduction Act can be found here. Your local Modesto solar panel installer can answer your questions and explain how the new Clean Energy Credit applies to you.
State & Local Solar Incentives
Some solar incentives may be provided at the state and local level. Similar to federal incentives, these can include tax credits, rebates and more. These solar incentives — which might be provided by the state of California, or by your county or municipality — might be offered on an ongoing basis, or for only a limited time.
Next Steps for Installing Solar in Modesto
There are a variety of solar incentives: those given by the federal government, those given by the California government and those given by local utility companies, to name a few. The use of solar energy has grown enormously in the last 15 years, thanks to these incentives. Your local Modesto solar panel installation expert can give you more information about which incentives you might qualify for, and get you started on the path to switching to renewable energy today.
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EcoWatch's Modesto, CA Solar Incentives FAQs
What if I want to add a solar system to a vacation home, rental property or commercial property? Will I still qualify for incentives?
Many solar incentives are intended to apply to a property you own that is located within the United States, and most secondary residences will fall under this distinction. Other solar incentives may be available for commercial properties, depending on the specifics. We recommend getting in touch with your local solar installer and/or tax professional to fully understand what incentives may apply to your specific situation.
How can I learn if I qualify for specific solar incentives?
It's a good idea to talk to your local Modesto solar installer for a better understanding of which incentives your project will qualify for. Generally, solar incentives apply to new solar systems installed on a property you own (in the U.S.) within a specified date range. Some incentives, like those offered by the government of California, might have additional requirements.
If I already have a solar system installed on my house, can I still claim incentives?
Your best bet is to talk to the company that installed your system — or get in touch with a local Modesto solar installer — to learn about which incentives you might qualify for. If your solar panels were installed after January 1, 2022, you likely qualify for the recently increased 30% tax credit under the Inflation Reduction Act. Solar panels installed between 2006 and 2021 may qualify for a tax credit of 26-30%.
How much can I save on my electric bill annually if I add solar panels to my Modesto home?
Generally, Modesto homeowners who install solar panels save about $1,727.73 per year, or about $32,826.82 over 20 years after they make the switch.
Can I receive incentives both towards the initial cost of solar panels, and later as reimbursement?
The order that incentives will be applied in may vary depending on which incentives you are claiming but usually yes, you can receive multiple types of incentives for your solar project. Talk with your solar installer or a local tax professional to make sure you are claiming all the incentives you are eligible for and applying them in the correct order.
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.