California Solar Rebates 2025: Complete Incentive Guide
Complete guide to California solar incentives in 2025: SGIP battery rebates ($200-$400/kWh), NEM 3.0 billing, property tax exemption, and how to stack incentives.
Quick Answer
California homeowners can access three major solar incentives in 2025: 30% federal solar tax credit (no cap), SGIP battery rebates ($200-$400 per kWh = $2,700-$5,400 for 13.5 kWh battery), and property tax exemption (saves $1,500-$3,000 over 30 years). NEM 3.0 reduces solar export rates by 75% compared to old NEM 2.0, making battery storage essential for maximizing ROI.
California remains one of the best states for solar despite the shift to NEM 3.0 in April 2023. While solar-only systems see lower returns than previous years, adding battery storage with SGIP rebates creates a compelling financial case.
This guide covers every incentive available to California homeowners installing solar and battery systems in 2025, how to stack them for maximum savings, and critical considerations for NEM 3.0.
California Solar Incentives at a Glance
| Incentive | Type | Value | Status |
|---|---|---|---|
| Federal Solar Tax Credit | Tax credit | 30% of system cost | Available through 2032 |
| SGIP Battery Rebate | Upfront rebate | $200-$400 per kWh | Active (limited funding) |
| Property Tax Exemption | Tax exemption | 100% of added value | Active through 2026 |
| Sales Tax Exemption | Tax exemption | 7.25%+ equipment cost | Active indefinitely |
| NEM 3.0 Export Credits | Bill credits | $0.05-$0.08/kWh average | Active (reduced from NEM 2.0) |
1. SGIP Battery Rebate ($2,700-$5,400 per Battery)
California's Self-Generation Incentive Program (SGIP) provides upfront rebates for battery storage systems. This is the most valuable state-specific incentive for California homeowners.
SGIP Rebate Amounts 2025
| Customer Type | Rebate per kWh | 13.5 kWh Battery | Wait Time |
|---|---|---|---|
| General Market | $200/kWh | $2,700 | Waitlist (6-18 months) |
| Equity Budget | $300/kWh | $4,050 | Active funding |
| Equity Resiliency | $400/kWh | $5,400 | Active funding |
Who Qualifies for Equity Budgets
Higher SGIP rebates are available for qualifying households:
- •Equity Budget ($300/kWh): Homes in disadvantaged communities OR low-income households (≤80% area median income)
- •Equity Resiliency ($400/kWh): Low-income + high fire threat district OR medically vulnerable + disadvantaged community
General Market Waitlist Alert
As of December 2024, the General Market budget ($200/kWh) has a waitlist of 6-18 months in most utility territories. You can still reserve your spot - you'll receive payment once funding becomes available. Equity budgets have active funding with no waitlist.
SGIP Requirements
- •Must be new battery: Used or refurbished batteries don't qualify
- •Must be paired with renewable energy: Solar required (cannot charge from grid only)
- •10-year commitment: Battery must remain installed and operational for 10 years
- •Utility customers only: PG&E, SCE, SoCalGas, or SDG&E customers (LADWP has separate program)
2. NEM 3.0: Net Energy Metering Changes
California's Net Billing Tariff (NEM 3.0) went into effect April 2023, drastically reducing compensation for solar exports to the grid. Understanding these changes is critical for system sizing.
NEM 2.0 vs NEM 3.0 Comparison
| Feature | NEM 2.0 (Grandfathered) | NEM 3.0 (Current) |
|---|---|---|
| Export rate | ~$0.30/kWh (retail rate) | ~$0.05-$0.08/kWh average |
| Time-of-use impact | Minimal (1:1 credit) | Huge (75-90% lower midday exports) |
| Battery value | Nice to have | Essential for ROI |
| Payback period | 6-8 years (solar only) | 10-15 years (solar only), 8-10 years (with battery) |
| Grandfathered? | Yes (20 years from install) | N/A |
Why NEM 3.0 Makes Batteries Essential
Under NEM 3.0, excess solar generation during the day (10am-3pm) earns $0.05-$0.08/kWh. Evening electricity (4pm-9pm) costs $0.50-$0.60/kWh. Without a battery:
- •You sell solar power for $0.08/kWh during the day
- •You buy grid power for $0.55/kWh in the evening
- •Net loss: $0.47/kWh on every kWh cycled
With a battery, you store cheap midday solar and use it during expensive evening hours - keeping that $0.47/kWh difference.
NEM 3.0 Export Rates by Time
Export rates vary dramatically by time of day. Peak solar production (noon) has the lowest export value:
- •9am-3pm (peak solar): $0.03-$0.06/kWh export rate
- •4pm-9pm (peak demand): $0.12-$0.25/kWh export rate (but still 50-75% below retail)
- •Night (9pm-9am): $0.08-$0.12/kWh export rate
3. Property Tax Exemption
California's Active Solar Energy System Property Tax Exclusion prevents solar systems from increasing your property taxes through 2026.
How Much You Save
Without this exemption, a $25,000 solar system would add ~$250-$300/year to your property taxes (1% of added value in California). Over 30 years, that's $7,500-$9,000.
| System Cost | Annual Tax Increase (without exemption) | Savings with Exemption |
|---|---|---|
| $15,000 | $150/year | $150/year ($4,500 over 30 years) |
| $25,000 | $250/year | $250/year ($7,500 over 30 years) |
| $35,000 | $350/year | $350/year ($10,500 over 30 years) |
Important Details
- •Automatic application: No separate filing needed - assessor automatically excludes solar value
- •Expires 2026: Currently set to expire in 2026 unless extended by legislature
- •Includes batteries: Battery storage systems qualify if paired with solar
4. Sales Tax Exemption
California exempts solar equipment from state sales tax (7.25%). This saves $1,800+ on a typical $25,000 system.
| System Cost | Sales Tax (7.25%) | Savings |
|---|---|---|
| $15,000 | $1,088 | $1,088 |
| $25,000 | $1,813 | $1,813 |
| $35,000 | $2,538 | $2,538 |
Important Notes
- •Exemption applies to equipment only (panels, inverters, batteries)
- •Installation labor is NOT subject to sales tax (services aren't taxed in CA)
- •Your installer should apply this automatically - verify it's not in your quote
Total Savings Example: Stacking All Incentives
Here's a real-world example of total savings for a typical California solar + battery installation:
System: 8kW Solar + 13.5 kWh Battery (Tesla Powerwall 3)
Incentives Applied:
Utility-Specific Programs
Some California utilities offer additional incentives beyond state programs:
PG&E Territory
- •Medical Baseline Allowance: Extra 16.5 kWh/day at lower rates for medically vulnerable customers
- •Emergency Load Reduction Program: Get paid to reduce usage during grid emergencies ($1-$2/kWh)
SCE Territory
- •Charge Ready Program: For EV chargers (separate from solar, but can bundle)
- •Demand Response Programs: Earn credits for allowing utility to manage battery charging
LADWP (Los Angeles)
- •Solar Incentive Program: LADWP has its own solar rebate ($0.20/watt for residential = $1,600 for 8kW system)
- •Note: LADWP customers do NOT qualify for SGIP (different utility)
How to Apply for California Solar Incentives
Federal Tax Credit
File IRS Form 5695 with your tax return. Your installer provides documentation of system cost. See our complete federal tax credit guide.
SGIP Battery Rebate
Your installer typically handles SGIP application. Process:
- Installer submits reservation application before installation
- You receive reservation confirmation (locks in rebate amount)
- System installed and inspected
- Installer submits incentive claim with documentation
- Rebate paid directly to you (or applied to installer invoice) within 60-90 days
SGIP Application Tips
- •Submit reservation BEFORE purchasing equipment (required)
- •Check if you qualify for Equity budgets (higher rebates, no waitlist)
- •Use SGIP's online portal to check funding availability: selfgenca.com
Property Tax Exemption
Automatically applied by county assessor. No application needed - your solar system won't increase property tax assessments.
Sales Tax Exemption
Your installer applies this automatically. Verify your quote doesn't include sales tax on equipment.
Frequently Asked Questions
Can I get both federal tax credit and SGIP rebate?
Yes! They stack. Federal tax credit = 30% of total system cost. SGIP = upfront rebate for battery only. You can claim both on the same installation. Total incentives can reach 50-60% of system cost.
Is solar still worth it in California under NEM 3.0?
Yes, but ONLY with battery storage. Solar-only systems now have 12-18 year payback periods. Solar + battery systems achieve 8-10 year payback by storing cheap midday solar and using it during expensive evening hours. The battery essentially "arbitrages" the $0.47/kWh difference between export and retail rates.
What happens if I install solar now but add battery later?
You can add battery later and still qualify for both federal tax credit (30% of battery cost) and SGIP (if funding still available). However, you'll have suboptimal performance under NEM 3.0 until the battery is installed. Better to install together if possible.
How long does SGIP rebate take to receive?
60-90 days after installation and inspection for Equity budgets. General market waitlist is 6-18 months from reservation to payment (you get on waitlist before installation, receive payment months later). Some installers offer bridge financing to cover the wait.
Can renters get solar incentives in California?
Generally no - you must own the property. Exception: Community solar programs where you subscribe to a solar farm and get bill credits. Check if your utility offers community solar (PG&E and SCE have programs).