California Solar Panel Incentives: Tax Credits, Rebates, Financing and More​on April 25, 2025 at 2:50 pm

Solar panels can be a smart investment for California homeowners despite weaker net metering policies, thanks to various incentive programs that help offset installation costs.Solar panels can be a smart investment for California homeowners despite weaker net metering policies, thanks to various incentive programs that help offset installation costs. Solar panels can be a smart investment for California homeowners despite weaker net metering policies, thanks to various incentive programs that help offset installation costs.   

As spring sunshine intensifies across California and seasonal cooling needs rise, you may find yourself rethinking your energy options. While California has historically led the nation in residential solar adoption thanks to generous incentives, recent changes to the state’s net metering program have raised questions about the financial viability of new residential solar system installations. Fortunately, installing solar panels is still a worthwhile investment for most California homeowners. A recent CNET survey revealed that 78% of US adults are concerned about rising energy bills, and solar panel incentives can help offset the cost associated with switching your home energy setup.

Though California continues to dominate national solar production rankings in early 2025, these policy adjustments have knocked the Golden State off CNET’s list of top solar incentive states. However, the combination of available rebates, tax benefits and financing options still creates a compelling case for going solar in the state.

Read more: Best Solar Companies in California

All Americans who buy solar panels are eligible for the federal renewable energy tax credit, additional incentives vary significantly by geography. Here are the incentives for solar projects in California.

Note: These California incentives are for residential electric customers only. California has additional incentives for organizations, businesses and farms. The solar panel incentives listed below are accurate as of April 23, 2025. Local government and utility programs change regularly, so check program websites to make sure they are still active.

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California state solar tax credits and incentives

Several incentives, credits and rebates are available to all Californians who invest in solar energy systems. Other incentives in this list apply to multiple California counties or to lower-income energy customers.

Property tax exclusion for solar energy systems

California is among 32 states that protect against property tax increases for homeowners who install solar panels. Under California law, all qualifying active solar energy systems will be excluded from the assessment of your property, meaning that installing solar panels will not impact your property taxes one way or another. 

This property tax exclusion is currently set to expire Jan. 1, 2027.

California Self-Generation Incentive Program 

Utility customers of the four major investor-owned utilities — San Diego Gas & Electric, SoCalGas, Southern California Edison and Pacific Gas & Electric — are eligible to receive rebates for installing solar batteries using California’s Self-Generation Incentive Program. The California Public Utilities Commission offers a $150 rebate for each kilowatt-hour of your solar storage system with higher rebates ($850 or $1000 per kilowatt hour) if you meet certain income or geographic requirements.

A midsize battery like the LGES 16H Prime, one of the top picks in CNET’s list of best solar batteries, provides 16kWh storage, which would result in a $3,200 rebate under current rules in California. The battery itself will cost about $8,000 to $11,000 before installation.

Disadvantaged Communities – Single-Family Solar Homes program

California’s DAC-SASH program provides solar incentives for low-income customers in disadvantaged communities. Administered by GRID Alternatives, the program offers Californians $8.5 million in incentives annually. 

The California Public Utilities Commission says that eligible customers can receive up to $3 per watt in incentives for solar installations. The current cost per watt of solar panels in California is $3.1, so DAC-SASH participants could save about 96% on solar installations.

Watch this: How See-Through Solar Panels Could Bring Renewable Energy to Your Windows

California net metering incentives

Net metering allows homes with solar installations to receive money back for contributing surplus solar energy to the broader electricity grid. New rules for net metering cut that amount by 75%. While earlier net metering participants earned about 30 cents per kilowatt, new participants will get about 8 cents per kilowatt.

The new net metering plan comes with higher electricity rates for times when demand is high and access to renewable energy is low, making solar batteries more valuable.

Read more: Best Solar Batteries for 2024

PACE financing for solar panels

Property Assessed Clean Energy programs provide financing for solar installations that allows residents to pay back loans for solar panels with their property taxes. While commercial PACE loans are common throughout the US, only three states — California, Florida and Missouri — offer residential PACE programs.

Unlike mortgage loans, PACE loans usually require no down payment or monthly payments. Instead, borrowed money is repaid through homeowners’ property tax bills over a term of 10 to 30 years. A lien is placed on your home until the loan is fully paid off, which makes selling your home more complicated. Some lenders may not want to provide a mortgage for a home with an attached PACE lien. 

California currently has four state-licensed PACE program administrators:

• FortiFi Financial
• Home Run Financing (formerly PACE Funding Group)
• Renew Financial Group
• Ygrene Energy Fund

Local communities may provide PACE-style financing of their own. The Sonoma County Energy Independence Program functions similarly to state-licensed PACE programs, letting participants pay back solar installations via their property tax bills over 10- or 20-year terms at 7.49% interest.

Local solar tax credits and incentives in California

Beyond the solar incentives at the state level, many cities, towns and municipalities offer additional incentives for residents who invest in solar energy projects.

Alameda Municipal Power income-qualified solar rebate

Residential customers of Alameda Municipal Power can get a small rebate for installing solar panels. You’ll get $500 back for any qualifying solar installation if you earn less than $106,000 and your home was built before Jan. 1, 2020. This incentive is designed to offset fees incurred from installing solar panels.

CleanPowerSF Solar Inverter Replacement Program

The San Francisco Public Utilities Commission and CleanPowerSF are running this program to help customers replace old, damaged solar inverters. The program is available only to existing GoSolarSF customers with a solar installation that’s at least 10 years old and no longer covered by warranty. 

If your solar inverter needs replacing and you use a participating installer*, you can receive up to $3,000 to cover the cost of the replacement.

* While the solar inverter replacement program appears to be active, the CleanPowerSF fact sheet notes that participating installers are current “as of June 2023.”

Lancaster Energy Power Choice

Residential customers of Lancaster Energy who can’t afford solar panels or don’t want to pay for them can get them installed for free by Tesla with the electric company’s Power Choice program. Tesla will install rooftop solar panels and a Tesla Powerwall Battery for no money at all, and customers will pay for energy usage and storage via their usual electric bill.

Read more: Free Solar Panels: Here’s What the Fine Print Means

Customers don’t get tax incentives from the solar panels and can leave the program only by “buying out” the solar equipment and battery. Also, if a home in the Power Choice program is sold, the contract transfers to the new owner, which could make selling more complicated.

Los Angeles Department of Water and Power Solar Rooftops Program

LADWP’s Solar Rooftops Program gives its customers another way to contribute to solar power generation without spending anything on solar panels. LADWP installs, connects and maintains the solar panels on a homeowner’s property at no cost, and gives the homeowner an annual payment of $240 to $600 each year for 20 years. Customers’ electric bills are otherwise unaffected.

Sacramento Municipal Utility District battery storage incentive

Although a $150 stipend for solar panel installations has lapsed, SMUD is offering up to $10,000 for battery installations in its service area. Customers can enjoy $5,000 in incentives per battery, up to a maximum of $10,000 if you buy and install two or more. Your incentive is determined by which pricing plan you opt into and how much control over your battery you give the utility. Note that applications for the program are currently paused.

San Diego Green Building Incentive Program

The city of San Diego will waive building permit fees and plan check fees for the installation of residential solar panels.

Silicon Valley Power Low Income Solar Grant Program

Publicly-owned Silicon Valley Power, which mostly serves the city of Santa Clara, provides grant money for solar panels to residential customers enrolled in its Financial Rate Assistance Program. Eligible customers who own their solar installations can get $3.50 per watt for solar systems up to 3 kilowatts of power. Solar systems must produce at least 3,800 kWh annually.

SoCalGas Solar Thermal Water Heating System Rebate

SoCalGas customers in central and Southern California can get a rebate of $2,500 to $4,500 on qualifying solar water heaters. Your system must have a Solar Uniform Energy Factor of 1.8 or higher, and you’ll need to install a new Energy Star-certified water heater along with your solar installation.

Local solar attic fan rebates in California

Many local energy providers offer rebates for energy-efficient appliances, including solar attic fans. These fans usually connect directly to dedicated solar panels to power themselves and cool down attics. Here are the publicly owned electric utilities that are currently offering rebates for solar attic fans.

Azusa solar fan rebate: Customers of Azusa Light and Water can get up to $150 as a credit on their electric bill with the purchase of a qualified solar fan for their attic or home using this application (PDF).

Glendale Water & Power solar attic fan rebate: GWP customers who install solar attic fans can get $100 for each, or $125 if the fans were purchased in Glendale. Customers are limited to two rebates every 10 years at the same residence and can apply for the rebate online.

Gridley solar attic fan rebate: The City of Gridley Electric Utility gives customers a rebate of $0.45 per cubic foot, per minute for solar attic fans. Fill out the application (PDF) and mail or email it to the electric department.

Imperial Irrigation District solar attic fan rebate: Residential electric customers can get a $125 rebate for solar attic fans using this application (PDF).

Lodi solar attic fan rebate: The Lodi Electric Utility offers a rebate for solar attic fans based on the capacity of your fan — $0.15 per cubic foot, per minute. You’ll need to complete this form (PDF) to apply for the rebate.

Modesto Irrigation District solar attic fan rebate: Residential customers of MID can get some money back after purchasing a solar attic fan — $100 for appliances with 20 watts of power or greater; $50 for fans with 10 to 19 watts. The application form (PDF) must be snail-mailed back to the electric company.

Pasadena solar attic fan rebate: If you’re a Pasadena Water & Power customer, you can get $80 back on a rebate for solar attic fans, plus another $20 if you purchased the fan in Pasadena. You’ll need to sign into your online account to apply for the rebate.

Riverside solar attic fan rebate: The electric company of Riverside provides a number of rebates for energy-efficient appliances, including solar attic fans. To claim the $100 rebate for a solar attic fan, complete and mail or email this form (PDF).

Ukiah solar attic fan rebate: Ukiah also provides a rebate for solar attic fans based on their capacity. The city utility pays $0.20 per cubic feet per minute. Residential customers can apply for the solar attic fan rebate with this form (PDF).

Federal solar tax credits and incentives for Californians

The federal solar tax credit might be more valuable than any of the state and local incentives currently offered in California. It gives you 30% back in the form of a tax credit for expenses related to installing solar panels and batteries.

The official name of the federal solar tax credit is the Residential Clean Energy Credit, and though it was expected to expire in 2022, the Inflation Reduction Act extended the tax credit until 2035.

Applying for the federal solar tax credit is simple. Fill out IRS Form 5695 and include it with your tax return for the year in which you installed your solar system, or let the best tax software handle it for you.

The Inflation Reduction Act of 2022 keeps the federal solar tax credit at 30% until 2033 when it will drop to 26%. The credit will further decrease to 22% in 2034 and expire in 2035.

The solar tax credit is nonrefundable, meaning the credit you receive cannot be more than the amount you pay in taxes. You can carry over any additional credit beyond your tax burden into future tax years.

** Values of incentives are based on a national $24,000 solar installation average ($2.99 per watt for an 8kWh system). State property tax is estimated at 1% of home value.

California power purchasing agreements

If you don’t want to install solar panels yourself, a solar power purchasing agreement lets another company install solar on your property, and then charge you a predetermined amount for that solar energy.

Solar power purchasing agreements are an easy way to get solar power at no cost upfront, but you won’t get any of the tax incentives related to solar panels, and you’ll need to watch out for potential rate hikes over time.

Here are a few of the local public solar power purchasing programs available in California.

Santa Clara Solar Water Heating Program

For homeowners who don’t want to install their own solar water heaters, the city of Santa Clara leases and maintains solar water heating equipment for its residents. Homeowners pay an installation fee and a monthly utility fee for the equipment, and the city takes care of the rest.

Community solar programs in California

California has allowed community solar programs by law since 2013. Community solar projects let people use solar energy without installing solar panels on their property. The electricity comes from a large shared solar installation.

California recently passed the Community Renewable Energy Act, a law that aims to make community solar projects more accessible for renters and homeowners who cannot afford solar panels.

The Community Solar Green Tariff program provides a 20% discount on community solar energy for people living in disadvantaged communities. Also, some municipal power companies in California, such as the city of Anaheim, provide community solar discount programs for residential customers.

California solar FAQs

CNET’s Andrew Blok contributed to this story.