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Rebates & Tax Credits
In August 2004, Governor Schwarzenegger affirmed his support for solar energy, and announced the Million Solar Roofs program. 

In January 2006, the CPUC collaborated with the Energy Commission to develop the framework of the California Solar Initiative Program through 2016.

In January 2007, the State of California launched Go Solar California, which included two new solar incentive programs, with slightly modified program requirements compared to the older programs. The Energy Commission provides incentives to energy efficient new home construction under the New Solar Homes Partnership. All other facilities in investor-owned utility territories receive rebates from the CPUC-administered program, the California Solar Initiative.

The California Solar Initiative pays solar consumers their incentive either all-at-once for smaller systems, or over the course of five years, for larger systems. The program's two incentive payment types are:

Expected Performance-Based Buy-Down (EPBB) :

In 2008-9, systems smaller than 50kW in capacity can receive a one-time, up-front incentive based on expected performance, and calculated by equipment ratings and installation factors (geographic location, tilt and shading). EPBB payments are provided on a $ per watt basis. EPBB is available for systems under 30 KW after 2010. Systems eligible for EPBB can choose to opt-in to the PBI system described below.

Performance Based Incentive (PBI) :

As of January 1, 2008, all systems over 50 kW must take the PBI, and by 2010 all system over 30 kW must be on PBI. Any sized system can elect to take PBI. The PBI pays out an incentive, based on actual kWh production, over a period of five years. PBI payments are provided on a $ per kilowatt-hour basis.

Click this link for the official Statewide CSI rebate tracker:




Federal Tax Credit:

Established by the Energy Policy Act of 2005, the federal tax credit for residential energy property initially applied to solar electric systems, solar water heating systems and fuel cells. The Energy Improvement and Extension Act of 2008 (H.R. 1424, Division B) extended the tax credit to small wind energy systems and geothermal heat pumps, effective January 1, 2008. Other key revisions included an eight-year extension of the credit to December 31, 2016, the ability to take the credit against the alternative minimum tax, and the removal of the $2,000 credit limit for solar electric systems beginning in 2009. 

A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the U.S. used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for onsite preparation, assembly, or original system installation and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year.  

The maximum allowable credit, equipment requirements, and other details vary by technology as outlined below. 

Solar electric property

  • Maximum credit of $2,000 for systems placed in service from January 1, 2006, through December 31, 2008. 
  • No maximum credit limit for systems placed in service from January 1, 2009, through December 31, 2016. 
  • In case of joint occupancy, the maximum qualifying cost that can be taken into account by all occupants for figuring the credit is $6,667. This does not apply to married individuals filing a joint return. The credit that may be claimed by each individual is proportional to the costs he or she paid. 
  • The home served by the system does not have to be the taxpayer’s principal residence.

Solar water heating property

  • Maximum credit of $2,000. 
  • Systems must be placed in service from January 1, 2006, through December 31, 2016. 
  • Equipment must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed. 
  • At least half the energy used to heat the dwelling's water must be from solar in order for the solar water-heating property expenditures to be eligible. 
  • The tax credit does not apply to solar water heating property for swimming pools or hot tubs. 
  • In case of joint occupancy, the maximum qualifying costs that can be taken into account by all occupants for figuring the credit is $6,667. This does not apply to married individuals filing a joint return. The credit that may be claimed by each individual is proportional to the costs he or she paid. 
  • The home served by the system does not have to be the taxpayer’s principal residence.

History 

The Energy Policy Act of 2005 (Section 1335) established a 30% tax credit up to $2,000 for the purchase and installation of residential solar electric and solar water heating property and a 30% tax credit up to $500 per 0.5 kilowatt for fuels cells. Initially scheduled to expire at the end of 2007, the tax credits were extended through December 31, 2008 by Section 206 of the Tax Relief and Health Care Act of 2006. 

In October 2008, through the Energy Improvement and Extension Act of 2008 (Division B, Section 106), the tax credits were extended once again –- until December 31, 2016 –- and a new tax credit for small wind energy systems and geothermal heat pump systems was created.

Source:  DSIRE
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