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 panels add value to your property, that added value won’t be assessed for property tax purposes. Your existing property tax assessment stays the same, protecting you from higher tax bills due to your solar investment.

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 (completed after January 1, 2008), you may need to file form BOE-64-SES to claim the exclusion. The program is currently set to expire on January 1, 2027, so systems must be installed before this sunset date. There are no residency requirements, and the exclusion applies whether you own or lease your solar system.

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 6-kilowatt solar system, you could receive up to $18,000 in upfront incentives to help cover the installation costs.

To qualify for DAC-SASH, you must own and live in your home, receive electricity service from Pacific Gas & Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (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 verify 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 with $630 million in funding under Assembly Bill 209, this program addresses the fact 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 they install. 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, California tribal areas, or areas with high fire risk or 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, customers in these qualifying groups 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 actual value of your solar energy to the grid at the time it’s produced, rather than a simple 1:1 credit against your electric bill.

The financial benefits vary significantly by utility company and time of day. For the three major investor-owned utilities (PG&E, SCE, and SDGE), the new ‘NEM 3’ system launched April 15, 2023, provides hourly export credits that change based on grid demand – typically ranging from 3-5 cents per kWh during annual true-up periods. Other utilities like SMUD offer a fixed export rate of 7.4 cents per kWh, while Imperial Irrigation District provides 6.98 cents per kWh with monthly settlement.

If you submitted a complete interconnection application before April 14, 2023, you may be grandfathered under the more favorable NEM 2.0 rules. However, any system size increases or decreases of more than 20% will move you to the new Net Billing system. Municipal utilities like LADWP still operate under traditional 1:1 net metering and are not subject to the NEM 3 changes.

The key consideration for homeowners is that Net Billing generally provides lower compensation for excess solar production compared to previous programs, making battery storage and energy usage timing more important for maximizing savings. Each utility uses an Avoided Cost Calculator to determine hourly export values, so the actual credits you receive will fluctuate throughout the day and seasons.