2023 Solar Incentives Guide for Solvang, CA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Solvang.
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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What Solar Tax Credits, Incentives, and Rebates are Available in Solvang?
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 help mitigate the cost of installing solar panels on your home. This category of financial incentives is intended to encourage more Americans to switch to renewable energy. You may qualify for different types of incentives, including discounts, cash back or monthly utility bill credits, depending on your situation. Some incentives come from your specific utility company, county or municipality, some from the California government and others from the federal government. Types of solar incentives might include:
- Rebates: Rebates, or cash back after a purchase, are typically applied before any solar tax credits are calculated. Solar rebates may be provided by your local utility company, by your county or by your state.
- Tax Credits: Tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the government. (A tax credit is different from a tax deduction.)
- Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives may be available to you if the solar system on your home produces more than a specified (generally small) amount of electricity. These types of incentives are typically 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 normally considered part of your taxable income.
- Tax Exemptions: Tax exemptions can come in two forms. First, there is sales tax exemption, applied when you purchase solar panels. The second is property tax exemption, which allows you to ignore the value added by your solar system when paying property tax on your home.
- Net Metering: Net metering factors in after your solar panels are up and running. If you've signed a net metering agreement with your Solvang utility company, it 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 other areas you might receive a refund equivalent to a percentage of the value.
Federal Solar Incentives
Federal incentives are the type of incentives that you are most likely to have heard of. You may have heard of the Federal Solar Investment Tax Credit, or ITC. The ITC is a tax credit that reduces your taxes by a certain percentage of the money you spend on your solar system.
The ITC applies to the total cost of solar system installation, including the panels themselves as well as accessories, labor and equipment. 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 amount you can claim.
Have questions about how the ITC applies to your specific situation? Contact your local Solvang solar panel installer to get more information.
The Inflation Reduction Act, passed in August 2022, expanded and extended the ITC (as well as retitling it the Clean Energy Credit). With the new provisions, 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 see a slight annual decrease until the end of the current Clean Energy Credit in 2035. Starting in 2023, the program expansion will also make credits for energy storage systems even easier to claim.
More information about the new Inflation Reduction Act can be found here. To best understand how the new Clean Energy Credit will apply to you, speak with your local Solvang solar installation company.
State & Local Solar Incentives
Some solar incentives are often also provided at the state and local level. As with federal incentives, these can include rebates, tax credits and more. Some incentives are ongoing, while others may only be available for a limited time. They might be provided by the California government, or by your county or municipality.
Next Steps for Installing Solar in Solvang
Solar energy use nationwide has increased enormously in the last 15 years, in part thanks to the growth in the number of solar incentives. You may get these incentives from your local utility company, the California government or the federal government. If you're ready to make the change to solar energy, reaching out to your local Solvang solar panel installation expert is an excellent place to start.
EcoWatch's Solvang, CA Solar Incentives FAQs
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