2023 Solar Incentives Guide for Santa Monica, CA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Santa Monica.
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 Santa Monica?
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
Renewable Market Adjusting Tariff (ReMAT)
LADWP - Feed-in Tariff (FiT) Program
Base price will step down over time as certain MW goals are met
Federal Residential Renewable Energy Tax Credit
Solar incentives are meant to encourage homeowners to switch their home over to renewable energy by providing incentives that lower the financial burden of solar panel installation and use. Various types of incentives, including discounts, cash back or monthly utility bill credits, may be available to you. Certain incentives may be provided via the state of California, by your utility company or by county or municipality, while others are federal. Some broad categories of solar incentives include:
- Solar Renewable Energy Certificate (SREC): SRECs can be sold to your utility company (or other buyers) for cash that normally counts as part of your taxable income. Generally, a certain (small) threshold of energy production must be met before your solar system is eligible for SRECs or similar performance-based incentives. These kinds of incentives are generally handled by your state government.
- Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in the amount of tax that you owe the federal government.
- Net Metering: You may be able to sign a net metering agreement with your Santa Monica utility company. This agreement may apply to all or a percentage of the excess electricity that is generated by your solar panels. They will then deduct this value from your utility bill each month.
- Rebates: Some solar companies will help you claim a rebate, or partial refund after purchase, for your solar panels. Counties or states will also offer limited-time rebates at various times. Any rebates you receive will usually be deducted from your total price before tax credits are calculated.
- Tax Exemptions: Sales tax exemptions are effective at the time of purchase for your solar system. Property tax exemptions let you exclude the value that your solar panels add when you calculate the amount of property tax you need to pay on your home.
Federal Solar Incentives
When thinking about solar incentives, federal incentives are likely the first thing that comes to mind. One of the incentives that most people are likely familiar with is the Federal Solar Investment Tax Credit (ITC). This is a tax credit for a specified percentage of your solar system's cost.
The ITC applies to solar panels installed after January 1, 2006 on a primary or secondary residence in the United States that you own. Originally, the tax credit was for 30% of the total cost — for panels, labor, equipment and accessories — although that amount may range from 26-30%, depending on the installation date of your solar system. There is no cap on the amount you can claim.
To better understand how the ITC could apply to you, reach out to your local Santa Monica solar panel installation expert and ask for more information.
The ITC has been renewed and expanded following the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. For solar system installations that begin after January 1, 2022 and are completed by the end of 2032, homeowners can receive a credit equal to 30% of the total cost. After 2033, the percentage will decrease annually until the Clean Energy Credit expires in 2035. Starting in 2023, the expansion to the program will also make it easier to get credit for energy storage systems.
More information about the new Inflation Reduction Act can be found here. Your local Santa Monica solar panel installation experts can answer your questions and explain how the new Clean Energy Credit will apply to you.
State & Local Solar Incentives
Some solar incentives may be provided at the state and local level. Like with federal incentives, these can include rebates, tax credits and more. These incentives might be offered by your county or municipality, or by the California government. Certain incentives are ongoing, while others are available for a limited time.
Next Steps for Installing Solar in Santa Monica
Solar incentives may be offered by the federal government, the California government or your local utility company. The variety of available solar incentives has contributed to a large increase in solar energy use in the last 15 years. We recommend talking to your local Santa Monica solar installation company to learn more about these incentives and to be sure that you're getting all of the money you can for your solar system.
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EcoWatch's Santa Monica, CA Solar Incentives FAQs
What if I add a solar system to a rental property, vacation home or commercial property? Can I still qualify for incentives?
Many solar incentives are intended to apply to a property you own that is located within the United States; most secondary residences will fall under this distinction. There may be other solar incentives available for commercial properties, depending on the details. We recommend talking to your local solar installer and/or tax professional to best understand what incentives will apply to your specific situation.
How do I know if I qualify for specific solar incentives?
Generally, solar incentives apply to:
- a new solar system
- installed on a property that you own
- within the U.S.
- within the date range specified by a particular incentive.
Specific incentives, including those run by the California government or by your county/municipality, sometimes have additional qualifications. Talk to your local Santa Monica solar installer to learn more about what incentives your project will qualify for.
How much can I save annually on my electric bill if I install solar panels on my house in Santa Monica?
When you add solar panels to your Santa Monica home, you can expect to save around $1,710.64 per year, or around $32,502.14 over the next 20 years.
When does the federal solar tax credit end?
The Clean Energy Credit (formerly named the federal solar tax credit, or ITC), is scheduled to end on January 1, 2035. Currently set at 30%, the credit will drop to 26% in 2033 and to 22% in 2034.
I want to change out my appliances for ones that are more energy-efficient. Are there any credits I can apply for?
Under the new Inflation Reduction Act, there are a number of new financial incentives to encourage you to make eco-friendly improvements to your home. More details about these incentives, including information about incentives for purchasing new appliances, can be found here.
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.