Solar Guide

California’s Active Solar Energy System Property Tax Exclusion prevents your property taxes from increasing when you install a qualifying solar energy system on your home. This state incentive works as a “new construction exclusion,” meaning that while your solar system adds value to your property, that added value won’t be assessed for property tax purposes. Your existing property tax assessment stays the same, saving you money every year for as long as you own your home.

The financial benefit varies based on your solar system’s value and local property tax rates, but it can save homeowners hundreds to thousands of dollars annually. For example, if you install a $30,000 solar system in an area with a 1.2% property tax rate, you could save approximately $360 per year in property taxes. The exclusion applies to solar systems used for electricity production, water heating, space conditioning, and other qualifying purposes, but excludes solar pool heaters and hot tub heaters.

Most homeowners don’t need to file any paperwork – the exclusion is automatically applied when your county assessor receives your building permit. However, if you’re the first buyer of a newly constructed home with solar installed by the builder (completed after January 1, 2008), you may need to file form BOE-64-SES to claim the exclusion. The program is currently extended through the 2025-26 fiscal year and is scheduled to sunset on January 1, 2027, so systems must be installed before this date to qualify.

The Disadvantaged Communities Single-Family Affordable Solar Homes (DAC-SASH) Program is a California state initiative designed to make solar energy more accessible to low-income homeowners in disadvantaged communities. This program provides upfront cash incentives to help offset the cost of installing a solar energy system, making clean energy more affordable for families who might otherwise struggle to afford it.

Eligible homeowners can receive up to $3 per watt in fixed, capacity-based incentives. For example, if you install a 6-kilowatt solar system, you could receive up to $18,000 in upfront incentives to help cover the installation costs. To qualify, you must own and live in your home, receive electricity service from PG&E, SCE, or SDG&E, be enrolled in or eligible for the CARE or FERA income-qualified utility programs, and live in a designated disadvantaged community area.

The program is administered through GRID Alternatives, and there are no specific deadlines mentioned, though funding may be limited. This incentive can be combined with other solar incentives like the federal Residential Clean Energy Credit, potentially making solar installation very affordable or even free for qualifying families. If you think you might qualify, you can visit the GRID Alternatives website to learn more about the application process and determine if your area is eligible.

The Equity Fund is a California state program that provides battery storage rebates specifically for low-income households and disadvantaged communities. Created in 2022 with $630 million in funding under Assembly Bill 209, this program addresses the criticism that previous solar incentives mainly benefited higher-income families by focusing support on those who need it most.

Eligible homeowners can receive rebates of $150, $850, or $1,000 per kilowatt-hour of battery storage capacity they install. The higher rebate amounts ($850-$1,000 per kWh) are available for customers enrolled in CARE or FERA utility assistance programs, residents of disadvantaged communities, California tribal areas, fire-prone areas, or areas with frequent power outages. To qualify, you must be enrolled in California’s CARE/FERA programs, live in a designated disadvantaged community, or reside in a California tribal area. Additionally, participants in these programs receive enhanced net billing credits under California’s NEM 3.0 program and can save approximately 18-35% on their electric bills through CARE/FERA discounts.

Net Billing in California is the current system that determines how much credit you receive for excess solar energy your system sends back to the electric grid. Unlike the previous net metering system, Net Billing provides export credits based on the time-of-day value of the electricity you produce, rather than a simple one-to-one credit. The credit rates change hourly and are calculated using each utility’s Avoided Cost Calculator, which reflects the actual value your solar energy provides to the grid at different times.

The financial benefits vary significantly by utility company and time of export. For the three major investor-owned utilities (PG&E, SCE, and SDGE), Net Billing (also called ‘NEM 3’) began on April 15, 2023, and export credits are typically much lower than retail electricity rates – often ranging from 3-5 cents per kWh during annual true-up periods. However, some municipal utilities offer more favorable rates: LADWP provides 1:1 net metering with indefinite credit rollover, SMUD offers 7.4 cents per kWh, and Imperial Irrigation District provides $0.0698 per kWh with monthly settlement.

Important timing considerations include that applications submitted before April 14, 2023, may qualify for the more favorable NEM 2.0 grandfathering, but any system size increases or decreases of more than 20% will move you to Net Billing. Most utilities conduct annual ‘true-up’ settlements where excess credits are paid out at lower avoided cost rates, though Net Billing customers can now select their preferred true-up month by contacting their utility. Municipal utilities like LADWP and SMUD operate under different rules and weren’t affected by the April 2023 changes to state policy.