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California Solar Subsidies: Understanding Solar Incentives

Incentives continue to evolve and change with the industry

cleantechnica.comCalifornia is ground zero for solar energy in the United States. So, it seems logical to start our state-level solar energy deep dives here. In the article below, I’ll provide as thorough a look at California solar incentives + solar installers + solar costs as I’ve seen anywhere. Actually, it is more thorough than anything I’ve seen. Naturally, if you read through this and know of more California solar energy facts or resources I should look at and include, let me know in the comments! The first thing to know is that there’s a solar investment tax credit (ITC) available across the United States that offers a credit from the federal government of up to 30% of the cost of a solar installation. However, you have to have that much tax liability in a single year in order to take advantage of the full credit. Additionally, the 30% credit runs through 2019, after which, a phaseout of the incentive begins (under current law). Here are some more details from the US Department of Energy: Across California, certain solar energy systems are exempt from property taxes, so no need to worry about increasing your tax bill. Probably the second-biggest incentive for California solar consumers is the state’s net metering policy — hence the reason fossil fuel & monopolistic utility companies have been routinely attacking it and trying to remove or change it. The policy exists in the jurisdictions of all of the state’s utilities except LADWP, which has a feed- in tariff program in place and its own net metering policy. Under the state net metering policy, excess electricity a consumer generates with her/his solar power system (or other renewable energy system) is treated as follows: Credited to customer’s next bill at retail rate. After 12-month cycle, customer may opt to roll over credit indefinitely or to receive payment for credit at a rate equal to the 12-month average spot market price for the hours of 7 am to 5 pm for the year in which the surplus power was generated. (If customer makes no affirmative decision, credit is granted to utility with no compensation for customer.) While consumers using net metering were exempted from connection charges for years, the rules recently changed, and will coming into effect in July 2017 at the latest. Here are more details from DSIRE: In January 2016, the California Public Utilities Commission issued a decision on its net metering successor tariff. Customers on the new net metering successor tariff will have to pay an interconnection fee, estimated at $75-$150; pay all non-bypassable charges for all electricity consumed from the grid (~$0.02-0.03/kWh); and go on a time-of-use rate. The net metering successor tariff will take effect for California’s three large investor-owned utilities (IOU) on July 1, 2017, or when 5% of the sum of non-coincident customer peak demand is reached for the IOU, which translates to an installed net-metered capacity of 2,409 MW for Pacific Gas and Electric, 2,240 MW for Southern California Edison, and 617 MW for San Diego Gas and Electric.  Energy Storage (IOUs Only) California allows renewable energy systems coupled with energy storage to qualify for net metering. A chief concern when introducing storage to net metering is the risk that a customer would store grid electricity during times when electricity costs are low and export that same grid electricity during times when electricity costs are high. The CPUC developed rules to address this and other concerns. The CPUC developed different rules for PV systems paired with storage devices 10 kW or less, and PV systems paired with storage devices larger than 10 kW or other forms of renewable energy paired with storage of any size.  As hinted above, though, not all installers are equal. Last year, SolarCity’s MyPower prices were found to be 34% higher than the California average. (Note: SolarCity later ended its MyPower program and just launched another home solar loan program.) Keys to evaluate are the types of financing options installers offer (and try to push on you): internally provided solar loans vs solar leases/PPAs vs solar loans from other companies. Then you have to evaluate how those options compare to other financing options you could use, weighing upfront costs, interest rates, timeframes (a 30-year loan is sure to cost you a lot more than a 20-year loan), and what’s included. Based on the Pick My Solar research noted above regarding SolarCity, the average price of a SolarCity system is $5.10 per watt, while the company found the average price in the state to be $3.60 per watt. That matches up closely with GTM Research & SEIA’s Q4 average of $3.50 per watt. So, I think it’s safe to say that the California average is somewhere between $3.40 per watt  and $3.70 per watt (but remember that soft costs have been coming down, and if the trend has continued in 2016, the overall average could be dropping).


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