2023 Solar Incentives Guide for Sonoma, CA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Sonoma.
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 Sonoma?
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
Sonoma County Energy Independence Program (SCEIP)
Federal Residential Renewable Energy Tax Credit
The phrase "solar incentives" includes a wide range of financial incentives put in place to make installing and using solar panels more affordable. This is done to encourage people to switch to renewable energy. Various types of incentives, such as cash back, discounts or monthly utility bill credits, might be available to you. Some incentives may be provided via the California government, by your utility company or by county or municipality, while other incentives are federal. You might qualify for any of the following types of solar incentives:
- Net Metering: Net metering becomes relevant once your solar system is up and running. If you've signed a net metering agreement with your Sonoma utility company, they 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 others you might make back a percentage of the value.
- Tax Credits: Tax credits decrease, dollar-for-dollar, the amount of income tax you owe the government. Tax credits are different from tax deductions.
- Rebates: Rebates, or partial refunds after a purchase, are usually given before any solar tax credits are calculated. Solar rebates might be given by your local utility company, by your state or by your county.
- Tax Exemptions: Your solar panel system may qualify for exemptions on both sales and property tax. Sales tax exemptions are applied at the time of purchase. Property tax exemptions allow you to exclude the added value of the solar panels when calculating property taxes on your home.
- Solar Renewable Energy Certificate (SREC): SRECs can be sold to your utility company (or other buyers) for money that is generally considered part of your taxable income. Typically, you must meet a certain (small) threshold of energy production before your solar system is eligible for SRECs or other performance-based incentives. SRECs and similar incentives are normally handled by your state government.
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 likely to have heard of is the Federal Solar Investment Tax Credit (ITC), which provides a credit on your taxes equal to a specified percentage of the cost of your solar system.
The ITC applies to a solar system installed on your primary or secondary residence in the United States. The solar system 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 costs (panels, equipment, accessories and labor), although the amount has fluctuated over the years between 26-30%. The amount you qualify for will depend on when your solar system was installed. There is no cap on the claim amount.
Your local Sonoma solar panel installation expert can provide more information about the ITC and how it may apply to your situation.
In August 2022, the ITC (now called the Clean Energy Credit) was expanded and extended by the passage of the Inflation Reduction Act. The new Clean Energy Credit extends until 2035. You are now eligible for a 30% credit for solar systems installed between 2022 and 2032. The total credit will then be decreased by a few percentage points every year until it expires. Starting in 2023, it will also be easier to qualify for credits for energy storage systems under this new program.
More information about the new Inflation Reduction Act can be found here. To better understand how the new Clean Energy Credit will apply to you, reach out to your local Sonoma solar installation company.
State & Local Solar Incentives
Some solar incentives may be provided by state and local governments. As with federal incentives, these may include rebates, tax credits and more. The incentives — which may be provided by your county or municipality, or by the state of California — might be offered for only a limited time, or on an ongoing basis.
Next Steps for Installing Solar in Sonoma
There are a variety of solar incentives: those offered by the federal government, those offered by the California government and those offered by local utility companies, to name a few. Solar energy use has increased tremendously in the last 15 years, partially thanks to these incentives. If you're ready to switch over to solar energy, reaching out to your local Sonoma solar panel installation expert is a great first step.
EcoWatch's Sonoma, CA Solar Incentives FAQs
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