If you own property in California and are interested in going solar solar you’re in luck. Home and business owners in California have a bevy of incentives to choose from to install solar power. California’s robust renewable portfolio standard (RPS), which requires all utilities in the state to source 33 percent of their electric generation from renewable resources by 2020, is a leading driver for the incentives offered throughout the state. Incentives in California are offered by utilities, the state, counties and even some municipalities. A very popular option in California are residential power-purchase agreements or leases, which allow third-parties to own the system and give the home or building owner a fixed price for the system or the electricity it produces over the lifetime of the contract, which can range from 10 to 25 years. Basically, there’s something out there for almost everybody in the Golden State.
In most cases, the state wants homeowners to maximize the efficiency of existing systems on the property—like insulation, windows, and appliances—before installing solar. Bearing that in mind, those seeking to participate in one of California’s solar-power incentives should get an energy audit of their home to make sure it meets or exceeds California’s current HERS building efficiency standards.
In addition, those with solar systems can exempt the equipment from their property taxes, they can also net-meter with their local utility selling excess electricity their system puts on the grid to the power company, and they even get reimbursed for a chunk of the cost of purchase and installation through the California Solar Initiative. However, the popularity of solar in California has led to significant drops in the amount of money available for reimbursement. While such subsidies are subsiding, however, the drop in the cost of photovoltaics and rising energy costs mean that solar remains an incredibly attractive option in the state, and in 2012 solar began coming into parity with grid-supplied electricity in the state.
The state of California through the California Solar Initiative (CSI) and its Go Solar California sites has offered a cash rebate or performance-based incentive through utility companies to customers who install solar power-generating equipment on their property. The difference is the cash rebate is based on expected performance, the performance-based incentive is paid out over time, based on actual system performance.
As part of the RPS California mandated that all power utilities in California offer some form of rebate, though the terms and rates of rebates vary slightly from utility to utility. For customers of California’s three major utilities, Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric, the rebate started at $2.50 per installed watt. It is significantly less at all of them now. As of September 2012 it’s between 20 and 35 cents per installed watt.
Getting the rebate for a photovoltaic system involves taking a few preliminary steps. First, you need an energy efficiency audit of your property in order to maximize the efficiency of what you already have. Second, order a green power system installation. We will apply for the incentive on your behalf. After the state informs you of approval you have a year to install or have the system installed. When that’s done, we send in the paperwork and wait for the rebate to arrive.
Residential customers can also opt for the PBI, meaning you’ll get a monthly payment for five years based on how much power your system is actually generating. If you opt for the lump-sum rebate you can recoup up-front costs quicker, but you will not be paid the extra PBI incentive over the first five years.
California also offers rebates for solar water heaters. A single-family home solar hot water heater that displaces a natural-gas-powered water heater, can receive a rebate of up to $1,875, one that displaces and electric water heater can receive up to $1,250. Solar hot water heaters can reduce water heating costs by 75 percent or more.
Feed-in tariffs (FiT) generally pay customers a premium price for generating power from renewable energy like solar or wind. They are different than net-metering rates, which are calculated differently and are generally at a lower rate. California carved out a 480 megawatt FiT from renewable facilities smaller than 1.5 megawatts. However, because of new legislation California’s feed-in tariff is in flux as of September 2012. That being said, where available, the FiT is offered 10- to 25-year contracts. For contracts starting in 2012 systems are reimbursed for generation at a base of 7.7 cents per kilowatt hour produced under 10-year contracts. Under 25 year contracts, they’re reimbursed for generation at a rate of 9.2 cents per kilowatt hour produced.
Under the California tax code, the state does not consider solar-energy-generating equipment to add value to a piece of property. What that means is that, if you install such equipment on your property, you won’t get taxed for the value it adds.
Only “active” solar systems can qualify, which the state defines as “solar devices, which are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy.” That definition will cover most solar systems, including photovoltaics, hot-water heaters, solar heating and cooling and others. Also covered under the exclusion are related storage devices, power conditioning equipment, transfer equipment, and parts. However, solar pool or hot-tub heaters do not qualify. Auxiliary equipment that makes the system work, like ducts or pipes (also called “dual-use” equipment), can be exempted from property tax at a rate of 75 percent of its value. The exemption applies to both existing properties and new properties, as long as the seller has not already claimed the exemption.
This exemption is valid, under current California tax law, until 2016. To apply, property owners should contact their county assessor. There’s no limit on this exemption—you can add as much solar-power-generating equipment to your property as you want, property tax-free.
While Property Assessed Clean Energy (PACE) Financing programs across the country are determined on a state and local basis, most programs were halted when the Federal Housing Financing Agency (FHFA) said such programs could invalidate Freddie Mac and Fannie Mae leases. However, some local programs still exist and more are being introduced. Under California’s PACE rules cities can set up PACE programs and loan homeowners and businesses money at low interest rates to make efficiency improvements, including installing photovoltaics and other forms of solar power to their properties. To be eligible, a property owner must have a clean property title and they must be current on property taxes and mortgages. Property owners who receive a PACE-based loan pay it back through their property taxes, typically over a period of 20 years, in the form of a lien assessed against the property and paid annually as part of the property owner’s annual taxes.
Interest is calculated at a fixed rate at the time of the loan, and borrowers are allowed to deduct the interest on their income taxes in the same way homeowners can deduct the interest on a home-equity line of credit. If the property is sold during the PACE loan, the PACE assessment is generally transferred to the buyer.
The purpose of the PACE program is to defray the cost of making energy improvements to properties, and to encourage property owners to do so. The California Energy Commission oversees the program, but it’s up to municipalities to implement it—not all cities in California participate.
San Francisco is one of the participants, and property owners there can seek a loan by applying to be a part of a “tax district” that allows the city to recover the cost of the loan through a special line item on local property taxes. Under that program projects funded by financing must make the property 20 percent more energy-efficient, and the city wants property owners to start with the basics—insulation, windows, and so forth. solar water-heating, solar energy, and almost any other renewable-energy-generating equipment is eligible for financing, but for such projects the city requires an energy audit first, and may first require more basic efficiency improvements to the property to accompany the equipment. Such improvements can, of course, be covered by the loan.
The city of Palm Desert, the city of Yuciapa, Sonoma County, Placer County, and the city of Berkeley also offer city-issued loans for energy-efficiency improvements. In most cases, the interest rate is low (7 to 10 percent) and no down-payment is required. For property owners who want to upgrade their property’s efficiency and install solar but lack the up front capital PACE programs, where available, are an excellent option.
STATE OF CALIFORNIA
Conservation and Development Commission
NOTICE OF CHANGES TO THE GUIDELINES FOR THE
EMERGING RENEWABLE RESOURCES ACCOUNT
At its May 16, 2001, Business Meeting the California Energy Commission (CEC) approved an increase in rebates available through the Emerging Renewable Resources Account. The rebate has been increased to the lessor of $4.50/watt or 50 percent of the total installed cost for all sizes of systems.
This increase in rebates was made possible by the passage of Assembly Bill 29x (AB 29x), which was signed by Governor Davis last month. The bill also provides $22 million in additional funding to the program. With this increase in program funding there is now approximately $54 million in rebates available for customers of PG&E, SCE, SDG&E and Bear Valley Electric Service.
To be eligible for this increased rebate level, the funding must be reserved and the system must be installed on or after February 8, 2001 — the date Governor Davis announced his intent to augment program funding to increase rebate levels. In this context, “reserved” means the date the Commission’s Accounting Office receives an application for funding for a proposed system.
Small systems (10 kilowatt [kw] or less) with reservations filed with the Commission’s Accounting Office before February 8th or which were installed before February 8th will receive rebates of $3.00/watt or 50 percent of the
total installed cost of the system (whichever is less). Systems larger than 10kw with reservations filed with the Commission before February 8th or which were installed before February 8th will be eligible for rebates of $2.50/watt or 40 percent of the total installed cost of the system (whichever is less).
Rebates are subject to funding availability from the current account. Other account criteria will also be maintained. For example, from the original $54 million allocation, a minimum of 60 percent is for small systems (10kw or less) and a minimum of 15 percent will be reserved for systems above 10kw but less than 100kw. All monies from AB29x transferred directly into the Emerging Renewables Resources Account, $22 million, are to be reserved for
systems 10kw or less.
AB29x also provides an additional $8 million for rebates to customers of municipal and other local publicly owned electric utilities. Staff has scheduled a workshop on May 23, 2001, to receive comments from these utilities.