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 means that while your solar panels add value to your property, you won’t pay higher property taxes because of them. The exclusion applies automatically when you get a building permit for your solar installation – no additional paperwork is required.

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

To qualify, your solar system must be an ‘active’ system that uses solar devices to collect, store, or distribute solar energy. The system can be owned or leased, and there are no residency requirements for property owners. The exclusion is currently scheduled to expire on January 1, 2027, so systems must be installed before this sunset date. If you purchase a newly constructed home with solar already installed, you may be eligible for the exclusion as the initial buyer if you file the appropriate form and meet specific timing requirements.

The Disadvantaged Communities Single-Family Affordable Solar Homes (DAC-SASH) Program is a California state initiative designed to make solar energy more accessible to 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 qualifying households.

Eligible homeowners can receive up to $3 per watt in fixed, capacity-based incentives. For example, if you install a 7-kilowatt solar system, you could receive up to $21,000 in upfront incentives to reduce your installation costs.

To qualify for DAC-SASH, you must own and live in your home, receive electricity service from PG&E, SCE, or SDG&E, and be enrolled in or eligible for the CARE or FERA income-qualified utility programs. Additionally, your property must be located in a designated disadvantaged community area. If you think you might qualify, you can visit the GRID Alternatives website to learn more about the application process and check your eligibility.

The Equity Fund is a California state program that provides battery storage rebates specifically for low-income households and disadvantaged communities. Created in 2022 through Assembly Bill 209, this $630 million program addresses the concern that previous solar incentives primarily 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 installed. The higher rebate amounts ($850-$1,000 per kWh) are available for customers enrolled in CARE or FERA utility assistance programs, those living in disadvantaged communities (DAC-SASH areas), California tribal communities, or areas with high fire risk or frequent power outages. To qualify, you must be enrolled in California’s CARE/FERA program, 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-ups. However, some utilities offer better rates: Imperial Irrigation District provides $0.0698 per kWh with monthly settlement, while Sacramento Municipal Utility District offers 7.4 cents per kWh. Los Angeles Department of Water & Power still operates under traditional 1:1 net metering as a municipal utility.

Important timing considerations include that applications submitted before April 14, 2023, may qualify for the more favorable NEM 2.0 program, but any system size increases or decreases of more than 20% will move you to Net Billing. Most utilities conduct annual ‘true-ups’ where excess credits are paid out at lower avoided cost rates, though some utilities like LADWP allow credits to roll over indefinitely. Homeowners should understand that Net Billing generally provides lower compensation for excess solar production compared to previous programs, making battery storage and energy usage optimization more important for maximizing solar savings.