There are a variety of California tax credits and incentives you can apply to lower the cost of your solar investment. We’ve listed some of the most significant statewide incentives below.
As a note, solar panel incentives are not currently available from the four largest California utilities: Southern California Edison (SCE), Southern California Gas (SCG), San Diego Gas and Electric (SDG&E) and Pacific Gas and Electric (PG&E). However, you may find incentives from municipal utilities and electric cooperatives with smaller territories.
Officially called the Investment Tax Credit (ITC), the federal tax credit is available nationwide and was extended through 2034 with the passage of the Inflation Reduction Act of 2022. In short, if you install a home solar system, you can claim 30% of the total cost as a federal tax credit. So if you install a 6 kW solar system for $15,060 in California, you would get a $4,518 tax credit and your net system cost drops to $10,542.
California used to have a favorable net metering policy that paid residents nearly 100% of the value of excess solar energy sent back to the grid. Unfortunately, net metering tariffs have been drastically reduced with the introduction of NEM 3.0 in April 2023. As a result, it now makes more sense to store excess energy in batteries instead of selling it to a utility company. However, NEM 3.0 was not retroactive so solar owners who qualified for the older tariffs can still benefit from the initial rates.
California has two major incentive programs that can benefit solar panel and home battery owners.
California also offers the DC-SASH and Equity Resilience Incentive programs, which are exclusive for low-income households that meet certain requirements.
Your solar panel's product warranty (sometimes called the materials or equipment warranty) guarantees the manufacturer will replace your panel if it fails due to manufacturing defects or environmental issues within a specific timeframe. Today, most solar panels come with a 25-year product warranty.
Its performance warranty guarantees that its panels will produce a certain percentage of their original output by a specified warranty term. The best solar panels offer performance warranties above 90% by year 25.
You may also see labor included in your solar panel's warranty. The conditions of a labor warranty vary significantly from brand to brand and will likely depend on you choosing an installer that your solar panel company authorizes. It's also possible that your installer will offer their own workmanship warranty covering labor components should one of your panels fail. Because SunPower is both an installer and a solar panel brand, they cover everything, making their labor warranty one of the best in the industry.
After considering the output, efficiency, temperature coefficient, and warranty on any particular solar panel, you should consider your home's circumstances. It's no secret that solar panels are more prevalent in the Sun Belt than other parts of the country, but they're still an excellent investment if you live in the Northeast or Midwest.
Your region and climate influence several factors that affect solar panel efficiency, including irradiance, shading, panel orientation, temperature, location and latitude, time of year, and dust and dirt. For example, if you live in an area that doesn't get a lot of sunlight and your home is prone to shade and overcast clouds, your solar power system's clean energy production will be low. Even light shading can have a negative impact: Subtle shading that covers a few cells or a single panel can reduce solar energy production by 50% or more, which is why the orientation of your home in relation to the shade and wet weather patterns is so important.
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