2023 Solar Incentives Guide for Watsonville, CA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Watsonville.
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 Watsonville?
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 to financial incentives implemented by the government and by solar companies to encourage the adoption and use renewable energy by making installing and using solar panels more affordable. These incentives can include cash back, upfront discounts or credit towards your monthly utility bill. Some incentives are handled by the federal government, some by the California government and some by your specific utility company, county or municipality. You might qualify for any of the following types of solar incentives:
- Rebates: A solar rebate is a partial refund given after you've purchased your solar system. These may be offered by your local utility company, your state or your county. The discount that rebates offer is normally applied to the price of solar panels before tax credits are calculated.
- Tax Exemptions: These can come in the form of property tax exemptions, which let you ignore the value added by your solar panels when paying property tax on your house. You may also qualify for an exemption on sales tax at the time of purchase.
- Solar Renewable Energy Certificate (SREC): Typically, solar systems that produce over a threshold (generally small) amount of electricity qualify for SRECs or similar performance-based incentives. SRECs and the like are typically provided at the state level. You can sell SRECs to your utility company or another buyer, and this is usually considered part of your taxable income.
- Net Metering: Net metering factors in after your solar panels are up and running. If you have a net metering agreement in place with your Watsonville utility company, they will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some areas, this credit is dollar-for-dollar, while in others you might make back a percentage of the value.
- Tax Credits: Unlike tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the federal government.
Federal Solar Incentives
Federal solar incentives are likely the first thing that you think of when thinking about solar incentives. You may have heard of the Federal Solar Investment Tax Credit, or ITC. This is a tax credit that reduces your taxes by a certain percentage of the money you spend on solar panels for your home.
The ITC can be credited towards the value of solar panels installed on your primary or secondary residence in the United States. The solar panels 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 slightly over the last few years between 26-30%. The installation date of your solar system will determine what percentage you are eligible for. There is no cap on the claim amount.
Your local Watsonville solar panel installer can give you more information about the ITC and how it might apply to your situation.
The ITC was both renewed and expanded by the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. Under the new program, solar installation projects begun after January 1, 2022 and finished by December 31, 2032 might qualify for a 30% tax credit. The amount of the credit will then decrease slightly each year until the end of the current Clean Energy Credit in 2035. 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. Your local Watsonville solar panel installation experts can answer your questions and explain how the new Clean Energy Credit applies to you.
State & Local Solar Incentives
Not all solar incentives are federal; rebates, tax credits and more may be offered at the state and local level. Certain incentives are ongoing, while others are available for a limited time. Solar incentives may be offered by your county or municipality, or by the California government.
Next Steps for Installing Solar in Watsonville
You can qualify for solar incentives from the California government and the federal government, as well as from your local utility company. The increased availability of solar initiatives in the past 15 years has helped increase solar adoption nationwide. When you're ready to make the change to solar energy, getting in touch with your local Watsonville solar panel installation expert is a great first step.
EcoWatch's Watsonville, 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.