New California Solar Incentives and Tax Credits: Will These Affect Home Insurance?

California is the nation’s leading solar producer, and roughly 29% of its electricity consumption is solar generated. In fact, solar energy is California’s largest source of renewable electricity generation. This is why, despite its size, California is the fourth lowest per-capita energy user in the country.⁽¹⁾ To maintain and even improve its commitment to renewable energy, there are many local incentives to go solar, whether you purchase solar panels outright or if you lease them. Here’s what you need to know if you’re a homeowner in California.

Property Tax Exemption for California Homeowners

California homeowners who have solar panels are excluded from property tax increases but have no state exemption for sales tax. This means that because you have a solar system, the county assessor cannot re-assess the property. This does not mean that you will never get a hike in property taxes, because the exemption ends January 1, 2027.

Do Property Tax Exemptions Affect Homeowners Insurance?

The assessed value of a home impacts the amount of taxes you pay on your property, so the tax exemptions prevent the state or county from reassessing your home, which would otherwise be at a higher value and therefore taxed more heavily.

Does this affect homeowners insurance? Not really, because you should not be buying coverage based on the value of the home and property in the first place. Only buy as much coverage as you’d need to rebuild your home and bring it back to the state it was in prior to an accident, fire or natural disaster.

If you already have a policy with coverage limits based on the assessed value of the home, it’s time to do some math and figure out what the insured value should be. Take the next three steps to find out how much home insurance you actually need:

1. Ask your insurance agent which parts of your property besides the dwelling (the lawn, trees, garden, shrubbery, garage, shed, etc.) are covered by the policy, because some of the listed items here may be excluded if you were to file a claim.
2. Next, figure out what it would cost to rebuild your home from scratch, considering the high cost of materials (which ones is your home made of?) and labor.
3. If you don’t already, create an inventory of your personal possessions, which would have to be replaced if a disaster occurred. Only then will you know what it would cost to replace what are sometimes called “contents” in a home policy.

Are Solar Panels and Batteries Covered by Homeowners Insurance

Whether or not solar panels are covered by a homeowners insurance policy depends on how the panels are installed. If, for example, they are attached to the roof, you are most likely covered under the dwelling portion of the policy. If your panels are ground mounted, you would be covered by the other structures portion of your home insurance policy.

However, your limits may not suffice, in which case buying a rider may be necessary.

If you’re leasing to own the solar panels, you will be covered by a warranty, which covers installation problems and other damages.

Batteries are covered by homeowners insurance, depending on the location of the batteries. If it’s a part of the home and is attached, it will be covered by the dwelling portion of the home insurance policy. If it’s stored inside the home, it’ll be covered by the contents portion of your policy, which covers all belongings.

It’s important to buy a rider if you’re going over the amount needed to either rebuild your home or to cover the battery in addition to all your other belongings.

Local Solar Incentives in California

There are federal, state and local incentives to buy California solar panels. When you hire a solar company to install paneling, they can help you apply for these. Here are some local providers that offer incentives for residents. Check your town or city’s power company to see what’s available to you if it is not listed here.

Solar Incentive in Alameda

Alameda Municipal Power income qualified solar means a rebate of $500 for any qualifying solar installation if the homeowner earns less than $106,000 and the home was built before January 1, 2020.

Solar Incentive for SoCal Gas Customers in Los Angeles, San Bernardino, Riverside, Orange, Tulare, Kings, San Luis Obispo, Kern and Santa Barbara counties

SoCalGas Solar Thermal Water Heating System Rebate is worth $2,500 to $4,000. They will give money back to SoCalGas customers for eligible solar water heaters.

Solar incentive in Lancaster

Lancaster Energy Power Choice Program offers a free Tesla solar panel and Powerwall installation. First, you must buy the energy the system produces and pay a monthly battery cost.

Solar Incentive in Los Angeles

Los Angeles Department of Water and Power Solar Rooftops Program offers free solar panel installation and maintenance of solar panels and you pay $240 to $600 per year lease. You’ll earn cash each year but your electricity bills will not be affected.

Solar Incentive in Rando Mirage

Rancho Mirage Energy Authority offers a $500 rebate to homeowners who install or expand a solar panel system.

Solar Incentive in Sacramento

Sacramento Municipal Utility District battery storage incentives include up to $10,000 for battery installations, $5,000 per battery, if you buy and install two or more batteries. Eligibility depends on the customer’s pricing plan.

Solar Incentive in San Diego

San Diego Green Building Program will provide financing with 7.5% savings in permit fees with renewable upgrades like solar panels.

Solar Incentive in San Francisco

GreenFinanceSF (San Francisco PACE financing) offers financing through property taxes. With this type of loan you will pay less in interest rates. Savings will vary depending on the solar loan term and market interest rates.

Solar Incentive in Silicon Valley

Silicon Valley Power Low Income Solar Grant Program offers customers enrolled in its Financial Rate Assistance Program grants to install solar panels. If you’re eligible, you can get $3.50 per watt for up to 3 kilowatts of power. Solar systems must produce 3,800 kWh or more annually.

Solar Incentives by Manufacturers

CleanPowerSF Solar Inverter Replacement Program will replace broken solar inverters for no money, worth up to $3,000.

Solar Fan Incentives

Solar Fan Incentive in Azusa

Azusa light and water customers are eligible for $150 as a credit on their next electric bill when they buy a qualified solar fan.

Solar Fan Incentive in Glendale

Glendale Water & Power customers get $100 back for each solar fan they buy. If the fan was bought in Glendale, they get $125 per fan. You can only claim this offer on two fans every 10 years.

Solar Fan Incentive in Gridley

Customers of The City of Gridley Electric Utility get rebate of $0.45 per cubic foot, per minute for installing solar attic fans. Apply for the rebate on the website.

Solar Fan Incentive in Imperial

Imperial Irrigation District offers a solar attic fan rebate of $125. You must apply on the website.

Solar Fan Incentive in Lodi

The Lodi Electric Utility company offers a rebate of $0.15 per cubic foot, per minute. Applications are available on the website.

Solar Fan Incentive in Modesto

Modesto Irrigation District customers get a $100 rebate for solar fans with 20 watts of power or greater and $50 for fans with 10 to 19 watts. Applications are on the website and must be mailed in.

Solar Fan Incentive in Pasadena

Pasadena Water & Power customers get an $80 rebate for solar attic fans and another $20 if it's purchased in Pasadena. Customers can apply on the website.

Solar Fan Incentive in Riverside

Riverside Public Utilities is offering a rebate for energy-efficient appliances and $100 back for solar fans. Apply on the website.

Solar Fan Incentive in Ukiah

Ukiah’s Electric Department will pay $0.20 per cubic feet per minute for solar attic fans. Apply for the rebate directly on the website.

Rebates on Net Metering

When a homeowner has solar power, they can get paid for the surplus power they contribute to the electricity grid in their area. Currently, participants in California receive roughly 8 cents per kilowatt of solar energy production. A high-power solar battery can be profitable.

California Net Metering 101

Net metering allows consumers who own a solar energy system to generate an excess of electricity to be added to the grid in exchange for credits and a reduction in future bills. The home must be net-metered. Most people with solar power generate more electricity than they use, especially during summers, and by net metering they can save thousands of dollars over the lifetime of the panels.

Net Metering vs. Solar Batteries

The difference between net metering and solar batteries is that with net metering, the excess electricity that is generated from your solar panels is credited towards your next bill and put back into the grid. The energy you metered out may be used by someone nearby, but you get money back on future electricity bills. With solar batteries, you store the excess electricity and use it yourself, later. California uses a full retail net metering system, the Net Energy Metering (NEM) program, so it makes more financial sense than using solar batteries for excess storage. In states where there are alternatives to net metering, solar batteries may make more sense financially.

Enroll in Net Metering

To enroll in California’s NEM program, contact your current electricity provider.

Alternative energy that is eligible includes: solar photovoltaic, wind, fuel cell, biogas, biomass, digester gas, geothermal, hydroelectric (up to 30MW), landfill gas, municipal solid waste conversion, ocean thermal, ocean wave, solar thermal, tidal current.⁽²⁾

You’ll need to provide documentation, the forms for which will be available on your provider’s website. You’ll also need Permission To Operate (PTO) from the provider.

California Solar Incentives for Disadvantaged Communities: DAC-SASH program

Eligible customers get $3 per watt in incentives for solar installations. The cost of solar panels per watt in California is currently. $3.47, so DAC-SASH participants could pay for most of the cost. The program is run by GRID Alternatives.

Self-Generation Incentive Program (SGIP)

The California Public Utilities Commission offers a $150 rebate for each kilowatt-hour of your solar storage system and $850 or $1000 per kilowatt hour. Customers must meet certain income or geographic requirements. Participating companies include San Diego Gas & Electric, SoCalGas, Southern California Edison and Pacific Gas & Electric.

Customers with a mid-size battery with 16kWh storage can get a $3,200 rebate. The battery itself will cost $8,000 to $11,000.

Federal Solar Tax Credit

More valuable than any of the local credits is the federal solar tax credit, which pays back 30% of the installation costs for solar panels and batteries. The tax credit is valid anytime from 2022 through 2032.

The tax credit is nonrefundable. The amount credited can't exceed the amount you owe in taxes. You can, however, carry any excess unused credits over to taxes you owe in future years.⁽³⁾