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What Solar Tax Credits, Incentives, and Rebates are Available in San Diego?
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
City of San Diego - Sustainable Building Expedited Permit Program
San Diego County - Green Building Program
Federal Residential Renewable Energy Tax Credit
The phrase "solar incentives" includes a range of financial incentives implemented to make installing and using solar panels more affordable. This is done to encourage people to switch to renewable energy. Incentives could include things like discounts, cash back or credit towards your monthly utility bill. Some incentives are handled federally, while others are provided by the California government or your specific utility company, county or municipality. You might qualify for any of the following types of solar incentives:
- Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much in taxes you owe the federal government.
- Tax Exemptions: Sales tax exemptions go into effect at the time of purchase for your solar panels. Property tax exemptions let you exclude the value added by your solar system when you're calculating the amount of property tax you need to pay.
- Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives might be available to you if you have a solar system that produces over a specified (usually small) amount of electricity. These types of incentives are generally handled at the state level. You can sell any SRECs you have to your utility company or other buyers, and the money you make is typically considered part of your taxable income.
- Net Metering: Net metering is an incentive you can get after your solar system is up and running. If you have in place a net metering agreement with your San Diego utility company, it will subtract the value of the excess energy produced by your solar system from your monthly utility bill. In some locations, this is a dollar-for-dollar credit, while in other areas you might get refunded a percentage of the value.
- Rebates: Solar rebates may be offered by your county or state, or by your local utility company. These rebates are essentially cash back that is applied after you purchase a solar system and before tax credits are calculated.
Federal Solar Incentives
Federal solar incentives are likely to be the first thing that comes to mind when you think about solar incentives. The solar incentive that you're most familiar with is probably the Federal Solar Investment Tax Credit (ITC), which provides a credit on your taxes equal to a certain percentage of the cost of your solar system.
The ITC applies to the value of a solar system installed on your primary or secondary residence in the United States. The solar panels have to 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 installation costs (panels, equipment, labor and accessories), although this amount has fluctuated slightly over the last few years between 26-30%. The amount you qualify for will depend on when your solar system was installed. There is no cap on the amount you can claim.
To better understand exactly how much the ITC could save you, get in touch with your local San Diego solar panel installer.
In August 2022, the Inflation Reduction Act made revisions to the ITC, now dubbed the Clean Energy Credit. The new Clean Energy Credit is valid until 2035. Homeowners are now eligible for a 30% credit for solar systems that began installation on or after January 1, 2022 and will be done by December 31, 2032. The total credit will then see a slight annual decrease until its expiration. The expansion also makes it easier to get credit for energy storage systems, starting in 2023.
More information about the new Inflation Reduction Act can be found here. Your local San Diego solar panel installation experts can answer any questions you have and explain how the new Clean Energy Credit applies to you.
State & Local Solar Incentives
Some solar incentives are often also provided at the state and local level. As with federal incentives, these might include tax credits, rebates and more. Some incentives are offered for only a limited time, while others are ongoing. Your local solar incentives could come from your county or municipality, or from the California government.
Next Steps for Installing Solar in San Diego
You can receive solar incentives from the California government and the federal government, as well as from your local utility company. This increase in availability of solar initiatives in the past 15 years has helped increase solar adoption nationwide. Reaching out to your local San Diego solar panel installer is a great first step towards getting all the incentives you qualify for when you switch to solar energy.
EcoWatch's San Diego, 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.