Government Support

Federal Tax Credits and State Rebates

There are state and federal programs in place to offset the cost of going solar.  The federal government offers a tax credit of 30% of the system cost.  State rebates focus on the amount of power the system could produce, either as a single upfront payment or based on the metered production amount.

Federal Tax Credit

All residential and commercial systems are eligible for a 30% tax credit that offsets the individual income taxes that are owed. [1]

• A 30% tax credit is available to owners of solar systems (note: the system owner is not the homeowner under a  lease or PPA)
• Unused credits may be carried forward for 1 year
• Credits can be used to offset the Alternative Minimum Tax (AMT)
• This credit will not effect on property taxes
• The program expires at the end of 2016

State Rebates through the California Solar Initiative (CSI)

Solar system owners in California can choose to receive either the Expected Performance Based Buydown (EPBB) or the Performance Based Incentive (PBI) through the California Solar Initiative.

The EPBB is a one-time payment made after the system is fully installed and based on the estimated production of the system.  It incorporates the individual circumstances of location, panel efficiency, orientation, tilt of the array, etc.

The Performance-based Incentive (PBI) pays the system owner for every kWh produced, paid once a month for five years.

Most homeowners select EPBB because it offers an immediate reduction to up-front cost; however, if the system is under 50 kW (30 kW after 2010) one has the choice of selecting a PBI.  Systems over 50kW are only eligible for PBI payments.  CollectiveSol has calculated that a PBI in California tends to provide a 12% premium over EPBB. 

The California Solar Initiative was funded in California in 1998 and is now the official state incentive program for investor-owned utilities, namely SCE, PG&E, and SDG&E.   CSI has a 2007-2016 budget of $2.2 billion, of which $1.7 billion is for direct investment in projects targeting a goal of 1,750 MW.  This program is funded through rate-payers, so it will not be affected  by the ups and downs of California’s budget and budgeting process. [2]  As additional solar is installed, the incentives reduce over 10 steps and eventually phase-out completely. Step 1 is $3.50 EPBB or $0.60/kWh PBI. The current status and incentives is available on CSI Trigger Tracker

Other State Incentives

Municipal utilities such as the LA Department of Water and Power often have their own incentive programs.  CollectiveSol will determine the appropriate incentive levels for you based on your property’s location.