California Solar & Storage Incentives in 2022
California Solar & Battery Storage Incentives in 2022
Wondering how you can reduce the cost of solar for your business? With rising electricity prices and falling costs of panels and other solar equipment, solar has become a smart investment for saving money on electricity while reducing your carbon footprint. In fact, the cost of installing a commercial solar system has fallen two-thirds since 2010. But the savings don’t have to stop there - with the various incentives available in California, solar can be even more valuable.
Thinking about adding battery energy storage? California has one of the most generous and developed energy storage incentive programs in the country, which can drastically reduce the upfront cost of a system.
In this article, we break down the top solar and battery storage incentives available in the Golden State in 2022.
Solar Incentives
There are a variety of incentives for those looking to go solar in the State of California. From tax credits, to rebates, to local programs, California encourages solar installation by providing a wide range of incentives for installing a solar system. In fact, California was ranked the #1 state for solar by the Solar Energy Industries Association (SEIA)!
The Federal Investment Tax Credit (ITC)
You may have heard of the Federal Investment Tax Credit, more commonly known as the ITC. This credit, offered by the federal government, provides a tax deduction equal to 26% of the cost of your solar system. This means that you could save roughly $52,000 on a 100 kilowatt system! An added benefit of the ITC is the fact that it can be rolled over for five years, until it is used up. Act fast - the ITC is set to decrease to 22% in 2023, and end in 2024.
California’s Solar Property Tax Exclusion
Under Section 73 of California’s taxation code, the added value of a solar system is excluded from property taxes. To put it in context, while most major additions would result in increased property taxes, a solar system counts as a new construction exclusion, excluding it from assessment. Keep in mind that only active solar systems are excluded, which includes systems for space conditioning and electricity generation.
Net Energy Metering (NEM)
Perhaps solar’s greatest ally, net energy metering (commonly referred to as net metering or NEM) allows solar owners in California to get paid for the extra electricity their system produces. Through NEM, the electricity that you don’t use is sold back to the grid in exchange for credits on your electricity bill. At the moment, California’s NEM 2.0 program is in place. The California Public Utilities Commission is actively reviewing NEM 3.0, which many say will greatly reduce the benefits for those hoping to go solar. However, if you sign up while NEM 2.0 is still in effect, you can reap the benefits for the next 20 years.
Energy Storage Incentives
Pairing your solar system with a storage option is a great way to increase your energy flexibility and add to your savings. Here are some incentives available to those who pair energy storage with their solar system:
The Federal ITC for Energy Storage
For customers who pair storage with solar, the same 26% ITC is available for the storage system, as long as your battery is charged by your solar panels at least 75% of the time. You will then benefit from a portion of the ITC, depending on how much of your battery is charged by solar. This means that if your battery is charged from solar 100% of the time, the system is eligible for 100% of the ITC.
Self Generation Incentive Program (SGIP)
California’s Self Generation Incentive Program (SGIP) is the state’s most popular storage incentive, providing commercial customers an upfront rebate on the purchase of a storage system. The program operates on a block-tier system, meaning the rebate value declines as more storage is installed across the state.
At the moment, the program offers a rebate of $350 per kilowatt-hour of storage for its general market. For qualifying commercial customers, the program also includes “Equity” and “Equity Resiliency” tiers:
Virtual Power Plants and Grid Participation
In addition to using your solar and energy storage for your facility’s on-site needs, your business can tap into an additional revenue stream by dispatching your system’s produced or stored energy for grid support services.
Virtual Power Plants (VPPs) are essentially a network of distributed energy resources (DERs) such as onsite solar, energy storage, and combined heat and power systems that dispatch power during specific times when the grid needs support. While these DERs are still owned and operated independently, they can be dispatched in a coordinated way via a centralized signal (i.e. virtually) from your utility. This type of flexible capacity can help your local utility address grid peaks in electricity demand sustainability in lieu of firing up a gas-powered plant. VPP opportunities vary depending on your location and utility.
Solar and storage savings in California
California’s various incentive programs make investing in a solar or energy storage system lucrative. From the Federal ITC to California’s Self Generation Incentive Program, there are quite a few places to look for solar and solar incentives. Look into the incentives mentioned above, and do your own research to make the most out of your solar and storage!
Ready to see how much you can save with solar and storage? Contact Promise Energy at info@promiseenergy.com for a free evaluation.
At Promise Energy, we don’t believe that one size fits all. We pride ourselves in designing and installing customized energy solutions that provide the greatest long-term value and energy control for our customers.