Fortunately, there are major financial incentives available from the state and federal governments to encourage
investment in solar energy: a rebate, property tax exemption and Net Energy Metering law from the state of California;
and an investment tax credit and accelerated depreciation schedule from the federal government
California Incentives
California Solar Inititive (CSI) Overview
California Senate Bill 1 (SB 1) was signed into law in 2006 and provides $2.1 billion to be used over 10 years for
incentives to build commercial and residential solar systems in a program called the California Solar Initiative (CSI).
Pacific Gas and Electric (PG&E), Southern California Edison (SCE) and San Diego Regional Energy Office (SDREO)
will be the administering entities for these incentives, and beginning January 1st, 2007 the CSI will pay performance-
based incentives and estimated performance-based incentives for new solar installations.
Residential / Small Commercial Incentives: For systems less than 100 kW AC in size the CSI program will pay an up-
front, one time payment based on the system's expected performance known as the Expected Performance Based
Buydown (EPBB). The EPBB is based on system-specific design factors including location, tilt, azimuth and shading.
Commercial Incentives: For systems over 100 kW AC to 1 Megawatt in size, monthly payments will be made based on
the actual system performance in kilowatt hours (kWh) of solar power produced and measured monthly over a 5 year
period.
The solar project's site must be within the service territory of and receive current or future retail level electric service
from Pacific Gas and Electric (PG&E), Southern California Edison (SCE) or San Diego Gas and Electric (SDG&E). At
this time, municipal utilities (SMUD, LADWP, etc.) do not qualify for CSI incentives, but municipalities may have
separate solar incentives beyond the CSI program.
These incentives are designed to decline over time. Please contact an USG Solar Energy Consultant for further
details on eligibility requirements and for more details on solar incentives available for your area.
Rebates for Residential Solar Systems
For Customers in the PG&E Utility Territory
Residential solar systems are eligible for a maximum $2.20/watt or under rebate, based on system-specific design
factors determined by the EPBB, or a PBI at $0.34/kWh.
For Customers in the SCE Utility Territory
Residential solar systems are eligible for a maximum $2.50/watt or under rebate, based on system-specific design
factors determined by the EPBB, or a PBI at $0.39/kWh.
For Customers in the SDG&E Utility Territory
Residential solar systems are eligible for a maximum $2.20/watt or under rebate, based on system-specific design
factors determined by the EPBB, or a PBI at $0.34/kWh.
Rebates for Commercial Solar Systems
For Customers in the PG&E Utility Territory
Commercial (includes agricultural and industrial) solar systems under 100 kW are eligible for a maximum $1.90/watt or
under rebate, based on system-specific design factors determined by the EPBB. Commercial solar systems 100kW
and over are eligible to receive a PBI at $0.26/kWh.
For Customers in the SCE Utility Territory
Commercial (includes agricultural and industrial) solar systems under 100 kW are eligible for a maximum $1.90/watt or
under rebate, based on system-specific design factors determined by the EPBB. Commercial solar systems 100kW
and over are eligible to receive a PBI at $0.26/kWh.
For Customers in the SDG&E Utility Territory
Commercial (includes agricultural and industrial) solar systems under 100 kW are eligible for a maximum $1.90/watt or
under rebate, based on system-specific design factors determined by the EPBB. Commercial solar systems 100kW
and over are eligible to receive a PBI at $0.26/kWh.
Rebates for Government and Non-Profit Solar Systems
For Customers in the PG&E Utility Territory
Government and non-profit solar systems under 100 kW are eligible for a maximum $2.65/watt or under rebate, based
on system-specific design factors determined by the EPBB. Government and non-profit solar systems 100kW and over
are eligible to receive a PBI at $0.37/kWh.
For Customers in the SCE Utility Territory
Government and non-profit solar systems under 100 kW are eligible for a maximum $2.65/watt or under rebate, based
on system-specific design factors determined by the EPBB. Government and non-profit solar systems 100kW and over
are eligible to receive a PBI at $0.37/kWh.
For Customers in the SDG&E Utility Territory
Government and non-profit solar systems under 100 kW are eligible for a maximum $2.65/watt or under rebate, based
on system-specific design factors determined by the EPBB. Government and non-profit solar systems 100kW and over
are eligible to receive a PBI at $0.37/kWh.
California Solar Property Tax Exemption
The cost of a solar system adds to the appraised value of the property on which it is installed, but not to the assessed
value, so the increased value cannot be taxed in California. This tax exemption extends for the life of the solar system.
This provision can be found in the California Revenue and Taxation Code, section 73. The National Appraisal Institute
notes that the value added to a home by a solar PV system is 20 times the value of the electricity costs saved in the
first year. A solar installation is one of the few ways that you can increase the value of your home or building without
increasing your property taxes. Appraisal Journal, October 1999.
California Net Energy Metering
California’s Net Energy Metering law allows solar PV system owners to sell excess electricity back to the utility
company at retail rates, for a credit to owners’ accounts. This is literally saving for a rainy day: When a solar system
makes more electricity than is used, such as a summer afternoon, the extra electricity goes onto the utility grid, and
the utility company credits the system owner. On rainy days or at night when the system isn’t producing enough to
keep up with demand, the utility grid supplies the electricity, and the credit is drawn down.
Federal Incentives
Investment Tax Credit
For solar systems installed from January 2006 through December 2008, the federal government offers an Investment
Tax Credit (ITC) of 30% of the net system cost for commercial systems.
For the same time period, residential systems are also eligible for an ITC of 30% of the net system cost, up to a ceiling
of $2,000.
Government and non-profit systems are not eligible for the 30% ITC.
5-Year Accelerated Depreciation Schedule
The federal Internal Revenue Code (IRC) has special depreciation provisions for solar systems. They can be
depreciated on a 5-year accelerated schedule, or on the regular depreciation schedule. The depreciable basis is
calculated as the system cost minus one-half of any federal tax credit, or 85% of the system cost. These provisions
are found in IRC section 179.
Eligibility for the above solar incentives vary from individual to individual. Please consult your tax advisor regarding
your system-specific eligibility.
investment in solar energy: a rebate, property tax exemption and Net Energy Metering law from the state of California;
and an investment tax credit and accelerated depreciation schedule from the federal government
California Incentives
California Solar Inititive (CSI) Overview
California Senate Bill 1 (SB 1) was signed into law in 2006 and provides $2.1 billion to be used over 10 years for
incentives to build commercial and residential solar systems in a program called the California Solar Initiative (CSI).
Pacific Gas and Electric (PG&E), Southern California Edison (SCE) and San Diego Regional Energy Office (SDREO)
will be the administering entities for these incentives, and beginning January 1st, 2007 the CSI will pay performance-
based incentives and estimated performance-based incentives for new solar installations.
Residential / Small Commercial Incentives: For systems less than 100 kW AC in size the CSI program will pay an up-
front, one time payment based on the system's expected performance known as the Expected Performance Based
Buydown (EPBB). The EPBB is based on system-specific design factors including location, tilt, azimuth and shading.
Commercial Incentives: For systems over 100 kW AC to 1 Megawatt in size, monthly payments will be made based on
the actual system performance in kilowatt hours (kWh) of solar power produced and measured monthly over a 5 year
period.
The solar project's site must be within the service territory of and receive current or future retail level electric service
from Pacific Gas and Electric (PG&E), Southern California Edison (SCE) or San Diego Gas and Electric (SDG&E). At
this time, municipal utilities (SMUD, LADWP, etc.) do not qualify for CSI incentives, but municipalities may have
separate solar incentives beyond the CSI program.
These incentives are designed to decline over time. Please contact an USG Solar Energy Consultant for further
details on eligibility requirements and for more details on solar incentives available for your area.
Rebates for Residential Solar Systems
For Customers in the PG&E Utility Territory
Residential solar systems are eligible for a maximum $2.20/watt or under rebate, based on system-specific design
factors determined by the EPBB, or a PBI at $0.34/kWh.
For Customers in the SCE Utility Territory
Residential solar systems are eligible for a maximum $2.50/watt or under rebate, based on system-specific design
factors determined by the EPBB, or a PBI at $0.39/kWh.
For Customers in the SDG&E Utility Territory
Residential solar systems are eligible for a maximum $2.20/watt or under rebate, based on system-specific design
factors determined by the EPBB, or a PBI at $0.34/kWh.
Rebates for Commercial Solar Systems
For Customers in the PG&E Utility Territory
Commercial (includes agricultural and industrial) solar systems under 100 kW are eligible for a maximum $1.90/watt or
under rebate, based on system-specific design factors determined by the EPBB. Commercial solar systems 100kW
and over are eligible to receive a PBI at $0.26/kWh.
For Customers in the SCE Utility Territory
Commercial (includes agricultural and industrial) solar systems under 100 kW are eligible for a maximum $1.90/watt or
under rebate, based on system-specific design factors determined by the EPBB. Commercial solar systems 100kW
and over are eligible to receive a PBI at $0.26/kWh.
For Customers in the SDG&E Utility Territory
Commercial (includes agricultural and industrial) solar systems under 100 kW are eligible for a maximum $1.90/watt or
under rebate, based on system-specific design factors determined by the EPBB. Commercial solar systems 100kW
and over are eligible to receive a PBI at $0.26/kWh.
Rebates for Government and Non-Profit Solar Systems
For Customers in the PG&E Utility Territory
Government and non-profit solar systems under 100 kW are eligible for a maximum $2.65/watt or under rebate, based
on system-specific design factors determined by the EPBB. Government and non-profit solar systems 100kW and over
are eligible to receive a PBI at $0.37/kWh.
For Customers in the SCE Utility Territory
Government and non-profit solar systems under 100 kW are eligible for a maximum $2.65/watt or under rebate, based
on system-specific design factors determined by the EPBB. Government and non-profit solar systems 100kW and over
are eligible to receive a PBI at $0.37/kWh.
For Customers in the SDG&E Utility Territory
Government and non-profit solar systems under 100 kW are eligible for a maximum $2.65/watt or under rebate, based
on system-specific design factors determined by the EPBB. Government and non-profit solar systems 100kW and over
are eligible to receive a PBI at $0.37/kWh.
California Solar Property Tax Exemption
The cost of a solar system adds to the appraised value of the property on which it is installed, but not to the assessed
value, so the increased value cannot be taxed in California. This tax exemption extends for the life of the solar system.
This provision can be found in the California Revenue and Taxation Code, section 73. The National Appraisal Institute
notes that the value added to a home by a solar PV system is 20 times the value of the electricity costs saved in the
first year. A solar installation is one of the few ways that you can increase the value of your home or building without
increasing your property taxes. Appraisal Journal, October 1999.
California Net Energy Metering
California’s Net Energy Metering law allows solar PV system owners to sell excess electricity back to the utility
company at retail rates, for a credit to owners’ accounts. This is literally saving for a rainy day: When a solar system
makes more electricity than is used, such as a summer afternoon, the extra electricity goes onto the utility grid, and
the utility company credits the system owner. On rainy days or at night when the system isn’t producing enough to
keep up with demand, the utility grid supplies the electricity, and the credit is drawn down.
Federal Incentives
Investment Tax Credit
For solar systems installed from January 2006 through December 2008, the federal government offers an Investment
Tax Credit (ITC) of 30% of the net system cost for commercial systems.
For the same time period, residential systems are also eligible for an ITC of 30% of the net system cost, up to a ceiling
of $2,000.
Government and non-profit systems are not eligible for the 30% ITC.
5-Year Accelerated Depreciation Schedule
The federal Internal Revenue Code (IRC) has special depreciation provisions for solar systems. They can be
depreciated on a 5-year accelerated schedule, or on the regular depreciation schedule. The depreciable basis is
calculated as the system cost minus one-half of any federal tax credit, or 85% of the system cost. These provisions
are found in IRC section 179.
Eligibility for the above solar incentives vary from individual to individual. Please consult your tax advisor regarding
your system-specific eligibility.
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