If you’ve had your eye on solar energy here in California at all in the last decade, you may have heard about the California Solar Incentive program, or the CSI. This program was designed to incentivize the installation of 2,000 megawatts of solar photovoltaic (PV) systems for homes and businesses by offering big savings on the expected and actual performance of solar PV systems throughout the state.
The good news is that it worked—really well. The bad news is that it worked so well that the California Solar Incentive has now been exhausted and is no longer available. But that doesn’t mean you can’t still take advantage of California solar rebates, tax credits, and other solar incentives with the local guys and gals at Greiner—as long as you hurry! The biggest California solar tax credit is going the way of California Solar Incentive: away!
The Federal Solar Installation Tax Credit
Back in 2006, the Federal Government put the Federal Investment Tax Credit (also known as the ITC) into effect. The ITC, which is both a commercial and residential solar energy tax credit, offers to reduce the cost of any installation by 26%, by allowing for a deduction totaling 26% of the cost of installation from the owner’s federal taxes.
The basic math is for every dollar you spend on solar installation, you can deduct 26 cents from what you owe the Federal government, come tax season. So, for example, every $10,000 you spend on your solar installation, you can deduct $2,600, or if you spent $25,000 installing a custom solar PV system, you could deduct $6,500 from your taxes and so on. The Federal ITC also allows one year of rollover on that deduction, so if your federal taxes add up to less than that 26% deduction, you can save the remainder for use the next year.
How Does the Federal Solar Tax Credit Work in 2020?
So what’s the hurry? Potential savings from the Federal ITC are decreasing each year. If your solar installation ends after December 31, 2020, the maximum deduction will drop to just 22% for the year 2021, and then in 2022 is completely eliminated as a residential solar tax credit and lowered to a permanent 10% deduction for commercial installation. This is why those looking to save the most should choose 2020 as the year to go solar.
The State of Net Metering in California
The State of California requires all electric utility companies to offer net metering to their customers, in order to utilize the excess electricity your newly installed solar system will generate.
During the daytime, your solar panels will more than likely convert more electricity than your home can use. So that extra electricity is sent back to the grid, for use in other homes. In exchange, your utility company will buy back that energy as a credit on your electricity bill, which can often offset the cost of the electricity you use overnight while the sun is down.
PACE Financing in California
Property Assessed Clean Energy financing, also known as PACE, is an innovative and popular way for homeowners to spread the cost of their solar installation over the course of up to 30 years. The innovative aspect of PACE financing is that the payments are paid as a line item on your property taxes. This allows you to contribute to the clean energy initiative here in California, without having to front the tens of thousands of dollars it can cost to install solar panels!
The Bright Future of Solar in California
From now on, any new homes built in California are required to include a solar PV system, and by the year 2045 California has plans to be 100% powered by clean energy. It is pretty clear—solar energy is no fad; it is here to stay!
As your local solar experts, Greiner has installed custom designed, highly efficient solar PV systems throughout Davis, Dixon, Vacaville, and Woodland, CA. Whether you’re wondering if there is a California tax credit for solar energy on your home or just want to make sure you qualify for as many incentives as possible, we are here to make sure you don’t spend a penny more than you need to when it comes to your solar installation.