Renewable Energy Technology Incentives in California | The Renewable Energy Hub USA

Renewable Energy Technology Incentives in California


Compared to many other states in the US, California has done more than its fair share to ensure that businesses and homeowners have every opportunity to invest in all aspects of renewable energy uptake including solar and wind, not to mention cost cutting measures such as better LED lighting. The State Governor has set bold targets for California, hoping to get as much as 50% of energy from renewables by 2030. Progress has so far been right on track.

The state energy mix is split between solar PV and thermal, small hydro and geothermal, biomass and wind, and these have been supported by programs such as the Self-Generation Incentive, the California Solar Initiative and the New Solar Homes Partnership. Along with reasonably generous utility Feed in Tariffs, there’s plenty for renewable energy supporters to smile about here.

Solar PV Incentives in California

Because of the long hours of sunshine, you’d expect Californians to be advocates for solar PV and there are good incentives around to ensure that homeowners and businesses lock into the benefits of this particular industry.

  • California Solar Initiative (CSI): If you are a SDG&E, PG&E, and SCE or Pacific Power customer you get some of the best deals with rebates around $2 per watt but other companies offer similar arrangements for those who have solar installed on an existing building.
  • Federal Tax Credit: Combine incentives from the power companies with a 30% federal tax credit and investing in solar power suddenly becomes quite an attractive proposition. There may also be specific incentives tailored to particular neighborhoods for solar so it’s worth checking out what local counties offer.

Solar PV Case Study in California

The cost of a typical 3W solar pv installation is around $19,000 if you include the price of permits and labor. Once initial incentives are applied, including the Federal Tax Credit, this brings the price down to around $10,248. By selling the energy generated back to the utility companies, most people will see a payback time of around nine and a half years with a return on investment over 25 years of 215%. In California there is more enthusiasm for solar than in other parts of the US and property’s with panels installed should increase their sale value by as much as 16%.

Solar Thermal Incentives in California

Part of the Go Solar Initiative in California provides for solar thermal installations with rebates of up to $4,366 for domestic properties and up to $800,000 available for businesses who want to swap their water heating systems. The average rebate for homes that decide to switch from natural gas to solar thermal is currently estimated at $3,500 but these levels could well go down in the next few years as uptake increases. Low income families can also get help with the Low Income Program.

Small Hydro Incentives in California

California has a range of large and small (below 30MW) hydroelectric installations though there are permitting issues surrounding the impact on water resources, particularly since the recent drought. Most are built and managed by utility water and energy companies and provide some 8-9% of the state’s electricity. There are a number of projects ongoing or developing that are exploring the use of tidal power which could provide a good proportion of the electricity needs for the State. There are problems to be overcome though such as the effect on the environment as well as the economic viability.

Geothermal Incentives in California

Domestic geothermal installations such as ground heat pumps are becoming more popular in California with a number of incentives provided including the Federal Tax rebate. Consumers need to take into account the extra installation costs which could well add several thousand dollars onto the price with the need for excavation and drilling to lay the heat pump system. The average cost of a heat pump will be between $4,000 and $7,000 depending on the size of the installation and excluding installation but homeowners can benefit from various renewable energy incentives whilst cutting down on their heating bills in the long term.

Biomass Incentives in California

Biomass technologies are on the increase in the state and businesses benefit from support via the Self-Generation Incentive which currently pays $1.07 for each watt produced. Biomass projects can cost any business a considerable outlay and the development so far has been limited to the utility companies building large plants that currently account for 3.36% of the state’s electricity production.

Wind Power Incentives in California

With large tracts of open land, California is an ideal location for wind turbines and there is plenty of opportunity for homes and businesses, particularly along the coast, to have their own renewable energy source installed. With an attractive Federal Tax Credit for wind generated power as well as access to the Self-Generation Incentive for businesses, the initial cost can still be prohibitive for many. A 10KW wind turbine costs anywhere between $48,000 and $65,000 to install and return on investment can take up to 30 years. They do however reduce the level of fuel bills and are thought to be a sound investment for property values.

While most of the domestic attention is on the development of solar, California is a state that is thriving on renewable energy technology and has plenty of incentives in place to push the industry forward.

Find out more from the California Energy Commission.

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