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Green Home Systems Inc
8510 Balboa Blvd Suite 220, Northridge, CA 91325
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#1
California ranked first in total solar installations as of 2022
27%
of the state’s energy is produced by solar.
10m
The solar sector powers over 10 million Californian homes.
Why is California a Leader in Solar Power?
The Golden State of California has long been touted as intensely solar friendly. Known as one of the pioneers of a nationwide solar revolution, California ranked first in total solar installations as of 2022. California has one of the largest and most competitive solar markets in the United States. However, with only about 27% of the state’s energy being produced by solar, there is still significant room for solar growth.
The solar industry in California has been active since the 1970s, though in its early days solar was largely financially inaccessible for residents due to its historically high prices. However, in 1996, statewide net-metering laws came into effect which aided in making solar more affordable. Then, in 2007, the California Solar Initiative (CSI) introduced lucrative solar rebates which drove additional growth throughout the state.
Though the California Solar Initiative was, in some ways, a finite solution, the initial rebates lasted long enough, and were beneficial enough, to demonstrate that solar was a reliable energy source, a valuable contribution to the grid, and cost effective enough for homeowners to install. These factors, combined with continuous strong Federal tax incentives, have helped the state’s solar industry to experience steady growth.
Currently, California’s solar sector has created approximately 75,712 jobs powering over 10 million Californian homes making it the largest solar market in the United States and securing it as #1 with the Solar Energy Industry of America’s top 10 best solar states in the nation.
Mandates & Incentives
Net Metering
A strong net-metering program is also essential to the success of solar growth in any given state.
As such, net-metering is one of the most important solar concepts to understand.
A quality net metering program is one of the keystone pieces of an effective solar policy and is defined as a “utility rate structure that requires your utility to purchase the excess solar energy that your solar panels produce at the full retail rate of electricity.” Net-metering is a critical part of keeping solar as an affordable option for homeowners.
When a rooftop distributed solar energy system produces excess electricity, the excess power will ultimately be pushed out onto the power grid, for other nearby customers to consume at utility rates, and net-metering ensures that the utility company will adequately compensate the homeowner for the excess energy their system has produced.
Federal Investment Tax Credit
The long-standing Federal Investment Tax Credits (ITC), which were originally established in 2006, have been instrumental in the growth of the solar energy industry.
The ITC program was specifically designed to drive economic growth in the solar sector by helping both residential and commercial solar energy purchasers offset their solar energy costs.
In California, residential solar owners with a federal tax liability may be eligible for the residential Federal ITC, which is now also known as the Residential Clean Energy Credit, under section 25D of the Federal tax code.
This dollar-for-dollar tax credit program has helped American solar industry to grow over 200x since the ITC was first instituted, creating hundreds of thousands of jobs throughout the nation and encouraging billions of dollars in investment in renewable energy.
If the homeowner is eligible, this Federal incentive allows the residential solar owner a one-time 30 percent dollar-for-dollar deduction of the system cost from the federal taxes that they would otherwise owe.
Homeowners that can not claim the entire credit in the first year have up to five years to finish claiming the credit.
As of 2023, the residential federal ITC, which allows a full 30 percent credit, will be available in its entirety until 2033. As of 2033, the residential federal ITC will decrease to only cover 26 percent of the total system cost for eligible residential purchasers.
Additionally, commercial solar purchasers with a Federal tax liability can also be found eligible for a separate commercial investment tax credit incentive under Section 48 of tax code.
It is important to note that before installing solar, home and business owners should consult with a knowledgeable tax professional to confirm their eligibility for any available credits.
New Construction Solar Mandate
One important initiative that has notably driven the adoption of solar throughout California is the state’s new construction solar mandates. In an effort to “provide $1.5 billion in consumer benefits” over the next three decades, the following mandates aim to reduce pollution and reduce reliance on fossil fuels.
The residential mandate, created by the California Energy Commission (CEC) in 2018, required that as of 2020 all newly built single-family homes and multi-family dwellings up to three stories in height come complete with solar energy. This mandate was the first of its kind and has since become part of California’s building code. Additionally, as of 2023, new commercial buildings will be required come equipped with solar panels and battery storage.
Self-Generation Incentive Program (SGIP)
To prepare for the state’s infamous wildfire season, California’s Public Utilities Commission (CPUC) has allocated over $1 billion in funding for the state’s Self-Generation Incentive Program (SGIP) which provides rebates for the installation of energy storage systems.
Batteries can be an important part of a robust emergency preparedness plan and as such, battery storage systems, either on residential or non-residential facilities, can qualify for the SGIP.
Applicants must be commercial, industrial, residential, or agricultural customers of Pacific Gas & Electric, SoCalGas, Southern California Edison or San Diego Gas & electric.
Single-Family Affordable Solar Homes Program (DAC-SASH)
The Single-Family Affordable Solar Homes (DAC-SASH) program is currently managed by GRID Alternatives. As part of the California Solar Initiative (CSI) the DAC-SASH program provides “qualified low-income homeowners fixed, up front, capacity-based incentives to help offset the upfront cost of solar electric systems” by offering eligible homeowner’s systems at $3/watt.
As of January 2023, the DAC-SASH program is currently closed but has been successful in installing and interconnecting over 9,600 photovoltaic systems, equating to over 30 MW of solar capacity and approximately $137.9 million in incentives.
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Electricity costs are on the rise, so solar power can save you a lot. Over the lifespan of a solar system, an average home in the US saves
around $10,000 to $30,000.
Current Energy Providers & Policies
The three largest investor-owned utility companies in California are: Pacific Gas and Electric Co., San Diego Gas & Electric Co., and Southern California Edison. Unfortunately, conventional energy sourced from these heavy hitters is known to be incredibly expensive and has become increasingly unreliable throughout the years. However, installing solar panels is a cost conscious and practical solution to rising utility rates. If the solar industry can keep overcoming rate increases from the utility companies, solar will prove to be an incredibly advantageous addition to an otherwise unreliable power grid.
The California Solar Initiative (CSI) works to provide helpful incentives for solar customers that reside within these three utility territories. Since the CSI program’s inception, PV solar costs throughout the state have decreased by approximately 27% in the residential sector and 17% in the non-residential sector.
Gov. Newsom says rooftop solar ‘essential’ for California’s future
Pacific Gas and Electric Co. (PG&E) Solar Policy
Pacific Gas and Electric Co. (PG&E) is the largest investor-owned utility company in California and, despite their categorically high energy costs, the utility is outwardly solar supportive. Currently, the company has over 5,000 customers with private interconnected rooftop solar systems as well as over 370,000 of PG&E customers utilizing solar energy through one of their two community solar programs, PG&E Solar Choice and Regional Renewable Choice.
San Diego Gas & Electric Co. (SDG&E) Solar Policy
Another top Californian utility, San Diego Gas & Electric Co. (SDG&E) is also an outward supporter of solar energy. With San Diego ranked #2 in rooftop solar cities in the state. SDG&E carries energy credits forward from month to month until the end of a 12-month period before determining the final balance due, whether from the consumer to the utility or vice versa. Currently, San Diego Gas & Electric Co. is proud to note that 40% of the electricity delivered by the utility is from utility-owned renewable sources.
Southern California Edison (SCE) Solar Policy
The last of the three largest utilities in California, Southern California Edison (SCE) serves approximately 15 million Californians with the average homeowner in SCE territory paying approximately $200 each month for their electricity. Solar customers operating in SCE territory are credited for excess energy at retail rate but are subject to a 2.5 cent/kWh loss due billing charges. Of all the largest investor-owned utility companies, it could be argued that Southern California Edison is the least receptive to renewables.
Maximizing Home Value with Solar Energy: Insights and Trends in California
Self-Generation Incentive Program (SGIP)
Along with giving homeowners a reduced carbon footprint, lower energy bills and energy independence, solar energy also helps them to increase their home’s value. Recent studies by Berkeley Lab determined that 67% of people in the market for home ownership placed a huge emphasis on having a home that was energy efficient with homebuyers open to paying $15,000 (or more) for a solar powered home.
The Bottom Line
Financially, the average solar system installation in California costs between $12,000 and $16,000 with the average cost per watt ranging from $2.43 to $3.29. The price of solar in California has fallen approximately 52% over the last decade and the state is predicted to install upwards of 27,369 MW of solar in the next five years.
New Net Energy Metering Policy (NEM 3.0)
NEM 3.0 is a new net-metering policy in California that will decrease electricity export rates by 75% and allow utilities to charge fixed fees to solar homeowners. This means that solar owners will earn approximately 75% less for any excess electricity pushed back onto the grid. Additionally, new solar customers will now incur an unavoidable fixed grid access fee of $15/month.
es, under NEM 3.0, the payback period for solar energy systems with battery storage will be roughly the same as the payback period found with solar only systems. Utility providers designed this new pricing structure to optimize the grid and incentivize the adoption of solar systems with battery storage included, as a more robust battery storage network will allow for increased grid reliability during emergencies.
NEM 3.0 will dramatically impact the solar market throughout America’s largest solar state, as it decreases electricity export rates and allows utilities to charge fixed fees to solar homeowners.
No, it is not too late for new solar customers to still see some of the benefits of NEM 2.0. Californians who submit an interconnection application for their solar only systems by April 13, 2023, will be grandfathered into NEM 2.0, a much more financially beneficial net-metering policy.
Yes, there are still benefits to installing solar after the implementation of NEM 3.0. Solar can still be an incredibly savvy financial decision that allows for locked-in energy costs, increased home value, and a more environmentally conscious home.
If you are considering installing solar energy systems in California, it’s important to be aware of the changes to the net-metering policy. The new policy, NEM 3.0, which will go into effect in mid-April 2023, will decrease electricity export rates and allow utilities to charge fixed fees to solar homeowners. However, there are still benefits to installing solar after the implementation of NEM 3.0, including locked-in energy costs, increased home value, and a more environmentally conscious home. In this article, we’ll answer some common questions about NEM 3.0 and how it impacts solar customers in California.
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California solar FAQ
Solar panels won’t eliminate your energy bills, but they can drastically reduce the total amount paid towards energy bills, usually by 20-30% each month. However, the aim of solar energy providers is to create a net-zero energy bill over the course of a 12 month period. This means that the energy produced by the solar panels and the energy consumed by the homeowner will be equal by the end of a 12 month period, thus, “eliminating” their energy bill. It is important to not that with the introduction of NEM 3.0, all new solar customers will be subject to a grid access fee of $15/month and will technically still receive a bill for these interconnection charges from their utility company each month.
The price of a solar energy system varies for each home and is dependent on several things such as your current energy consumption, your future energy goals, any “extras” included with the system (such as an electric vehicle charger or battery) as well as the type of system that the homeowner selects. A common misconception is that the solar energy system is sized based on the square footage of the house, however, this is generally not an accurate way to assess the system size needed to offset the homeowner’s energy costs. Instead, a solar sales technician will want to review your last 12-months of energy bills to assess how many kilowatt hours your home is using. With all factors taken into consideration, the average cost of solar in California ranges between $2.43 and $3.29 per watt with an average payback period ranging between 5 and 11 years.
California residents with a Federal tax liability can qualify for the Federal Incentive Tax Credit (ITC). Essentially, this tax credit program is a dollar-for-dollar decrease in the amount of Federal income tax that would otherwise be owed. Californian homeowner’s that owe Federal taxes are eligible for this ITC and have up to five years to claim the entire credit. Furthermore, California offers a number of income-based and solar+ solar energy incentive programs through the California Solar Initiative.
A study by the National Renewable Energy Laboratory (NREL) discovered that on average home value increases by $20 for every $1 saved on utility bills, thus solar-powered homes often experience a higher market value than traditionally powered homes. Additionally, energy efficiency is becoming increasingly important to Americans with 67% of those in the market for a new home considering the efficiency of their potential home as “very to extremely important”. Energy efficiency has become such an important consideration for homeowners that studies now reflect that a prospective buyer will, on average, spend 4.1% more for a solar powered home, thus, when selling your home in the future, it will not only be more appealing to potential buyers, it will fetch a higher price – all while saving you money on energy bills!
California is an extremely solar friendly state. The average solar homeowner in California will save upwards of $26,000 over 20 years with an installed and operational system. The installation of solar energy essentially allows purchasers to lock in their energy costs at competitive rates that will not be subject to future rate increases. With high rates coming from utility companies, competitive rates coming from solar providers, a strong net-metering program, and ongoing beneficial incentives, solar continues to be a good investment in California.
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