2023 Solar Incentives Guide for Monterey, CA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Monterey.
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 Monterey?
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" refers broadly to financial incentives designed to encourage increased use of renewable energy by making the installation and use of solar panels more affordable. These incentives might include cash back, upfront discounts or monthly credits towards your utility bill. Some incentives are provided by the federal government, some by the state of California and some by your utility company, county or municipality. Categories of solar incentives include:
- Net Metering: Net metering is an incentive you can get once your solar system is up and running. If you've signed a net metering agreement with your Monterey utility company, they will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some areas, this is a dollar-for-dollar credit, while in other places you may make back a percentage of the value.
- Tax Exemptions: Your solar panel system may qualify for exemptions on both sales and property tax. Sales tax exemptions come into effect at the time of purchase. Property tax exemptions let you exclude the value added by your solar panels when you are calculating property taxes on your home.
- Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives are usually handled at the state level. Once your solar panel system meets a certain threshold (usually a small amount of energy production), you can receive SRECs that can then be sold to your utility company or other buyers. The money you receive from the sale is generally considered part of your taxable income.
- Tax Credits: Unlike tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the government.
- Rebates: Solar rebates can be provided by your state or county, or by your local utility company. These rebates work as cash back that is applied after your purchase of a solar system and before tax credits are calculated.
Federal Solar Incentives
Federal incentives are the kind of incentives that you are most likely to have some familiarity with. The Federal Solar Investment Tax Credit, or ITC, is probably the best-known federal solar incentive. The ITC allows you to claim a tax credit for a set percentage of your solar system's cost.
The ITC covers solar systems installed after January 1, 2006 and lets you deduct from your taxes a percentage of the total cost of solar panels, labor, equipment and accessories. You can claim this credit for solar panels installed on a primary or secondary residence in the United States that you own. The original claim amount was 30% of the total cost, although certain projects may qualify for only 26%, depending on the details. There is no maximum amount you can claim.
Your local Monterey solar panel installer can give you more information about the ITC and how it might apply to your situation.
The Inflation Reduction Act, passed in August 2022, expanded and extended the ITC (as well as retitling it the Clean Energy Credit). Now, solar installation projects begun after January 1, 2022 and finished by December 31, 2032 can qualify for a 30% tax credit. The amount of the credit will then see a slight annual decrease until the end of the current Clean Energy Credit in 2035. Starting in 2023, it will also be easier to obtain credits for energy storage systems under this new program.
Click here to learn more about the new Inflation Reduction Act. The best way to learn more about how the new Clean Energy Credit might apply to you is to get in touch with your local Monterey solar panel installers.
State & Local Solar Incentives
There are more than just federal solar incentives; tax credits, rebates and more are often offered at the local or state level. Some incentives are ongoing, while others are offered for only a limited time. These local incentives might come from your county or municipality, or from the California government.
Next Steps for Installing Solar in Monterey
There are a number of different solar incentives: those offered by local utility companies, those offered by the California government and those offered by the federal government, to name a few. The use of solar energy has increased enormously in the last 15 years, thanks to these incentives. Speaking with your local Monterey solar panel installer is the best first step towards getting the most money possible when you switch to solar energy.
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EcoWatch's Monterey, CA Solar Incentives FAQs
What if I want to add a solar system to a vacation home, rental property or commercial property? Do I still qualify for incentives?
While we recommend talking to your local solar installer and/or tax professional to better understand what solar incentives apply to you, many can be claimed on a second home, provided that it is in the United States and owned by you. There may be additional incentives available for commercial properties specifically, depending on the specifics.
How do I learn if I qualify for different solar incentives?
It's a smart idea to get in touch with your local Monterey solar installer for a better understanding of which incentives your project will qualify for. Generally, solar incentives apply to new solar panel systems installed on a property you own (in the U.S.) between the dates specified by the incentive. Some incentives, such as those given by the state of California, might have additional requirements.
My home already has solar panels installed. Are there any incentives that I qualify for?
If your solar panels were installed after January 1, 2022, you may qualify for the newly increased 30% tax credit under the Inflation Reduction Act. If your system was installed between 2006 and 2021, you may qualify for a tax credit between 26% and 30%, depending on the year it was installed. Speaking with the company that installed your system, or any local Monterey solar installer, can help you understand what incentives you might want to apply for.
When does the federal solar tax credit end?
The federal solar tax credit, formerly known as the ITC and now titled the Clean Energy Credit, is set to end January 1, 2035. The current 30% credit will end in 2032, replaced by a 26% credit in 2033 and a 22% credit in 2034.
Can I apply for incentives both towards the up-front cost of solar panels, and later as reimbursement?
The order that incentives will be applied in could vary depending on which incentives you receive but usually yes, you can receive multiple types of incentives for your solar project. Get in touch with your solar installer or a local tax professional to be sure you are claiming all of the incentives you qualify 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.