California Solar Tax Credits, Battery Rebates & EV Charger Incentives
From rugged coastlines to enchanting redwoods, from picturesque vineyards to dramatic deserts — California has it all. Home to nearly 39 million people, the Golden State is a melting pot of culture, opportunity and natural beauty. But as the amount of carbon dioxide in the air causes our temperatures to warm, California is experiencing strains to its water supply, increasing wildfires, sea-level rise and greater smog in urban areas.*
To slow some of these harmful effects, the state has enacted policies to reduce the amount of carbon dioxide emissions in the air. Billions of dollars* are are being invested to mitigate changes to help our climate, from rebates on electric vehicles (EVs) and charging stations to solar mandates and tax incentives. If you’re ready to save money on your utility bills, lower your dependence on gasoline, and reduce your carbon impact, then California solar rebates and EV charger incentives can help you make those lifestyle changes sooner.
In This Article
- 1. California Solar Tax Credits
- Federal Level: ITC for Home Solar
- State Level: Net Metering
- Federal Level: ITC for Solar Storage
- 2. California Battery Storage Incentives
- Federal Level: ITC for Solar Storage
- Self-Generation Incentive Program (SGIP)
- 3. California EV Charger Incentives
- Local Level: Sonoma Clean Power
- Lower Your Cost of Solar, Storage and EV Charging in California
1. California Solar Tax Credits
With its abundant sunshine and high cost of electricity, California is the nation’s top market for rooftop energy.* In August of 2018, California enacted SB 100, which set the target of achieving 100% carbon-free electricity by the year 2045 and a move to 60% renewable energy by 2030.* Because of that bill, the California Energy Commissions began requiring that all new single-family homes and multi-family dwellings up to three stories high, built in 2020 onward, to have solar panels installed (although there are some exemptions).*
While the cost to install solar in California has fallen 4% over the last five years,* it’s still a significant investment. Homeowners who commit to solar energy may be able to take advantage of several solar incentives and reduce the cost of going solar in California.
Federal Level: ITC for Home Solar
The solar investment tax credit (ITC) is one of the most important policies to support the widespread adoption of solar power in the United States. Since it was enacted in 2006, the ITC has been extended several times, helping the industry grow an average of 52% each year.* With the passing of the Inflation Reduction Act in August of 2022, the ITC has been extended for the next decade.
The federal tax credit helps solar customers who have purchased their residential solar electric system (via cash or loan) to deduct 30% of the cost of installing solar from their federal taxes. It’s not a tax deduction, but rather, it reduces what you owe on your taxes. The ITC can be rolled over for up to five years as long as the taxes you owe are less than the credit you earn.*
If you’re considering going solar with a loan and you pay federal taxes, the ITC may enable you to get dollar-for-dollar reduction off the sticker price and can help you pay your system off sooner.
At Sunnova, we don’t give tax advice. Please consult your tax advisor to determine the incentives that you may qualify for.
State Level: Net Metering
California’s net metering program requires investor-owned utilities to credit solar customers for any excess power their panels produce and feed back to the power grid. The credits appear on homeowners’ utility bills and reduce the total amount they owe for any electricity supplied from the grid.
Net metering credits in California have been historically attractive, despite repeated attempts by utilities to limit them. The California Public Utilities Commission (CPUC) in 2016 voted to uphold retail-rate payments for their surplus solar energy (dubbed NEM 2.0), but required solar customers to move to time-of-use (TOU) rates that implement different rates throughout the day.* This means that, while solar customers will continue receiving full market value for the solar energy they export to the grid, their credit rate will better align with what it costs the power company to generate and transmit energy during periods of high demand and low demand.
Now the CPUC is considering NEM 3.0, which could impose fixed fees and reduce bill credits for solar customers in the Golden State. The final vote on the program has been postponed several times, so a decision may not be reached until late this year. For now, any solar customer in the state’s three large investor-owned utility territories can take advantage of net metering in California, regardless of whether they own their panels, or a third party does.
2. California Battery Storage Incentives
Installing solar panels in California may help you reduce your carbon footprint and reduce your electricity bills, but your solar power won’t stay on if the grid goes down unless you have a way to store it. In places like California that are prone to fires, public safety power shutoffs (PSPS), flooding and other severe weather events, solar battery backup is becoming more common - and rightfully so. Adding a battery to your solar system allows you to save the clean energy your panels produce and use that power at night, on rainy days when production is limited, or during a power outage.
As battery technology improves, solar storage is slowly coming down in price. Still, it’s a considerable up-front investment. Fortunately, there are a few California battery storage incentives you may qualify for.
Federal Level: ITC for Solar Storage
The same ITC that reduces your cost of installing solar by 30% may be available for a storage system you purchase. There is one condition — it must be powered 100% by a solar array.* Remember, the ITC was designed to encourage solar energy adoption. Therefore, if you’re charging your battery by other means, such as electricity from the power grid, your storage system won’t qualify for the federal tax credit. Bottom line: make sure your solar battery is paired with your home solar system and charge it with the energy your solar panels produce to take advantage of the full ITC.
You may still be able to claim this tax credit if you add a battery to an existing residential solar system at a later date. Be sure to discuss your tax credit eligibility with a licensed tax expert.
Self-Generation Incentive Program (SGIP)
California’s Self-Generation Incentive Program (SGIP) offers a rebate for homeowners who install energy storage technology, such as a solar battery, that can operate when the grid goes down.
In preparation for wildfire season, the CPUC has authorized more than $1 billion through 2024 to fund this program, which includes prioritizing the following:*
- Communities living areas of high fire danger
- Low income and medically vulnerable residents
- Communities that have experienced two or more Public Safety Power Shut-offs (PSPS)
The SGIP incentive is currently available to electric and/or gas customers in PG&E, SoCalGas, SCE and SDG&E service territories. How much could you save on a solar battery in California? Any residential customer of these four utilities is eligible for a general market SGIP rebate of around $250/kilowatt-hour, per the CPUC.*
Keep in mind that Sunnova doesn’t give tax advice. Be sure to consult your tax advisor to determine what rebates and incentives you may qualify for.
3. California EV Charger Incentives
Today’s electric vehicles are not only silent and sustainable, but sleek as well. Models have evolved from pricey first-generation EVs to relatively affordable all-electric SUVs. The advances in technology combined with more options made consumer interest higher than ever. They’re getting farther ranges on a single charge and are being assembled with advanced connectivity features.
In a pledge to reduce greenhouse gases and address our current climate crisis, California has set the goal of selling 5 million EVs by 2030 and phasing out traditional vehicles entirely by 2035. Helping move toward carbon neutrality will help the Golden State reduce the impact of severe fires, extreme weather and rising sea levels. While there are different incentives you can explore for purchasing an actual EV, we’re going to focus on EV charging incentives in California.
Looking for a better EV charger? Sunnova offers Level 2 EV chargers that can give you more miles, faster.
Local Level: Sonoma Clean Power
While the national EV charger tax credit ran out at the end of 2021, some utilities have introduced their own rebates and incentives. Utility-sponsored incentives change often, as they receive and run out of funding quickly. As of mid-2022, for example, Sonoma Clean Power is offering customers a Level 2 EV Charging incentive.*
Under the Sonoma Clean Power incentive, those who qualify will pay for half of the cost of an EV charger plus installation costs and a $50 shipping fee and will then be credited for the initial payment of the charging device. This means solar battery customers can receive a free smart electric EV charger minus the shipping and installation fees.*
Make sure to check with your local utility and see what EV charging incentives you may qualify for.
Lower Your Cost of Solar, Storage and EV Charging in California
If you’re ready to reduce your carbon impact and reduce your cost of solar in California, state incentives and the federal tax credit can help. Local rebates and incentive programs can also make energy storage and EV charging more appealing and accessible.
But solar credits and utility incentives won’t last forever. If you been considering solar plus storage and/or buying an electric vehicle to help lock in your energy costs — the time to act is now.
At Sunnova, we are energy service experts, not tax experts. Consult your tax advisor to determine the incentives for which you may qualify. Sunnova makes no guarantees regarding eligibility for tax benefits. Sunnova is not responsible for or liable for any errors or omissions in regard to your personal tax and finance situation or obligations. The information in this article does not, and is not intended to, constitute legal advice.