Energy Credits Summary
When you install a solar panel system, you are likely eligible to receive cash rebates from the State of California and energy tax credits from the U.S. Treasury IRS.
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California rebate of $2,500 per kW or $2.50 per watt. |
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Federal tax credit up to $2,000 or 30% of costs for solar panels. |
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Federal tax credit up to $2,000 or 30% of costs for solar water heating. Excludes pool or hot tub heating. |
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County and City rebates vary from $0 to $500. |
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Ask your professional solar installer about assistance with State, Local and utility paperwork. |
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Always consult your tax professional. |
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See our Simple Solar Cost & Savings table for examples. |
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Click here to receive free quotes from top-rated lenders or professional local installers.
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The California Solar Initiative (CSI)
CSI allows for a cash rebate incentive for your residential system. You can qualify for $2.50 a watt, about 30% of a typical residential installation, or $2,500 per kWh installed. Therefore, a 4 kWh system would qualify for a $10,000 cash incentive upon installation.
All electric customers of PG&E, Southern California Edison (SCE), and SDG&E are eligible to apply for incentives. If a municipal natural gas customer takes electric service from PG&E, SCE, or SDG&E, that customer is also eligible for solar incentives. Many publicly owned utilities also offer solar incentives. All other municipal electric utilities must develop such programs no later than January 2008.
For your existing home and all non-residential facilities, a solar installer typically will contact a California Solar Incentive program administrator on your behalf to apply for an incentive and arrange for your system to be interconnected to your utility company's power grid. The installer may also apply for local permits, if applicable.
IMPORTANT Be sure to read all of the terms of your installation contract to see if it requires you to sell or transfer your Renewable Energy Credits as a condition of installation. As the owner of your RECs, you do not need to agree to any contract language that requires you to sell or transfer your RECs as a condition of installation.
The program administrator will provide you or your installer with an incentive application form. After the program administrator receives your completed application, it will reserve funds based on the size of your solar project. These funds will be reserved for periods of time indicated in each program, by which time you must provide adequate proof of progress towards installing your system. The administrator will require you to provide documentation to show that you are moving forward with the project.
When your system is installed, you or your installer will contact the administrator for permission to connect your system to your utility company's grid. Once your system is approved, you will provide proof of payment to the program administrator and receive your incentive.
The new California Solar Initiative Handbook (Acrobat PDF file, 95 pages, 1.5 megabytes) provides detailed information on the CSI eligibility, application requirements, payment process, and more.
If you are unsure of your utility's name, please check your utility bill, or refer to the map here (Acrobat PDF file, 1 page, 1 megabyte).
U.S. Treasury and IRS Guidance for Energy Credits for Homeowners
Taxpayers are allowed one credit equal to 30 percent of the qualified investment in solar panels up to a maximum credit of $2,000, and another equivalent credit for investing in a solar water heating system.
- 30 percent of the cost of solar equipment that generates photovoltaic electricity, up to a $2,000 maximum tax credit for each tax year.
- 30 percent of the cost of solar water-heating equipment, up to a $2,000 maximum tax credit for each tax year.
- No part of either system can be used to heat a pool or hot tub.
- Additionally, taxpayers are also allowed a 30 percent tax credit for the purchase of qualified fuel cell power plants. The credit may not exceed $500 for each .5 kilowatt of capacity.
- Source: IRS allowable expenses for homeowner energy credits IR-2006-34, Feb. 21, 2006.
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Always consult your tax professional. |
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