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State

Californians have been long time advocates for solar power. So much so, California has become the nation’s pioneer and leader when it comes to “going solar”. Other states look to California to see the trail that’s been blazed with their California Solar Initiative, a statewide rebate program that’s now over.

Nonetheless, all Californians can take advantage of the 26%
Federal Tax Credit
, which will allow you to recoup 26% of
your equipment AND installation costs for an unlimited amount.

There may still be other local rebates from your city, county, or utility. Check below!

California Solar PV Rebates & Incentives

Data from DSIRE. Last updated: 03/28/2024

NameAdministratorBudgetLast UpdatedEnd DateDSIRE ID
Summary
Self-Generation Incentive ProgramCalifornia Public Utilities Commission$166 million annually03/10/2303/29/24552

Note: A.B. 209 of 2022 extended eligibility for this program to residential solar photovoltaic systems paired with energy storage systems. The CPUC will need to develop rules before these new incentives are available. 

Initiated in 2001, the Self-Generation Incentive Program (SGIP) offers incentives to customers who produce electricity with wind turbines, fuel cells, various forms of combined heat and power (CHP) and advanced energy storage. Retail electric and gas customers of San Diego Gas & Electric (SDG&E), Pacific Gas & Electric (PG&E), Southern California Edison (SCE) or Southern California Gas (SoCal Gas) are eligible for the SGIP. Beginning in May 2012, all technologies previously eligible for the expired Emerging Renewables Program are now eligible for the SGIP program. Originally set to expire at the end of 2011, SB 412 of 2009 extended the expiration date to January 1, 2016, and SB 861 of 2015 further extended the expiration date to January 1, 2021. The program was later extended through January 1, 2026. 

Systems less than 30 kW will receive their full incentive upfront. Systems with a capacity of 30 kilowatts (kW) or greater will receive half the incentive upfront, and the the other half will be paid over the following five years based on the actual performance. The following technologies will receive the corresponding upfront incentive (or half of this figure if the system is 30 kW or larger): 

Generation Technologies as of October 2022:

  • Wind turbines: $2.00/W
  • Other Generation: $2.00/W
  • Max Biogas Adder: $0.60/W

Storage Technologies as of October 2022:

  • Large Scale Storage Not Claiming ITC: $0.25/Wh - $0.30/Wh depending on utility
  • Large Scale Storage Claiming ITC: $0.18/Wh - $0.22/Wh depending on utility
  • Small Residential Storage: $0.15/Wh - $0.20/Wh depending on utility
  • Residential Storage Equity: $0.85/Wh 
  • Non-Residential Storage Equity: $0.85/Wh  
  • Equity Resiliency: $1.00/Wh  

The biogas incentive is an adder and may be used in conjunction with fuel cells or any conventional CHP technology. For example, a gas turbine that uses biogas is eligible for an incentive of $1.73/W. An additional incentive of 20 percent will be provided for the installation of eligible distributed generation or advanced energy storage technologies produced by California supplier. 

There is no minimum or maximum eligible system size, although the incentive payment is capped at 3 MW. Further, the first megawatt (MW) in capacity will receive 100% of the calculated incentive, the second MW will receive 50% of the calculated incentive, and the third MW will receive 25% of the calculated incentive. Applicants must pay a minimum of 40% of eligible project costs (the biogas adder is not included in calculating the limit). Projects using the Federal Investment Tax Credit (ITC) must pay 40% of the eligible project costs after the ITC is subtracted from the project costs (i.e., the SGIP credit is limited to 30% of project costs).

PG&E, SCE, and SoCal Gas administer the SGIP program in their service territories, and the California Center for Sustainable Energy administers the program in SDG&E's territory. Customers of PG&E, SDG&E, SCE and SoCal Gas should contact their program administrator for an application, program handbook and additional eligibility information.

Program Administrator Contact Information:

Pacific Gas & Electric (PG&E)
Web: http://www.pge.com/en/mybusiness/save/solar/sgip.page
Phone: 415-973-6436
Email: [email protected]
Fax: (415) 973-2510
Mailing Address: Self-Generation Incentive Program
P.O. Box 770000
Mail Code B27P
San Francisco, CA 94177-001

Center for Sustainable Energy (CSE)
Web: http://energycenter.org/sgip
Phone: (858) 244-1177
Fax: (858) 244-1178
Email: [email protected]
Address: Center for Sustainable Energy
Attn: SELFGEN Program
9325 Sky Park Court, Suite 100
San Diego, CA 92123

Southern California Edison (SCE)
Web: http://www.sce.com/sgip
Phone: 1-866-584-7436
Fax: (626) 302-6132
Email: [email protected]
Address: Program Manager Self-Generation Incentive Program
Southern California Edison
1515 Walnut Grove Avenue
Rosemead, California 91770

Southern California Gas Company (SoCalGas)
Web: http://www.socalgas.com/innovation/self-generation/
Phone: 1-866-347-3228
Email: [email protected]
Fax: (213) 244-8222
Address: Self-Generation Incentive Program Administrator
Southern California Gas Company
555 West Fifth Street, GT22H4
Los Angeles, CA 90013-1011

Property Tax Exclusion for Solar Energy Systems and Solar Plus Storage SystemCalifornia State Board of Equalization03/16/2301/01/25558

Section 73 of the California Revenue and Taxation Code allows a property tax exclusion for certain types of solar energy systems installed between January 1, 1999, and December 31, 2024. This section was amended by AB 1451 in September 2008 to include the construction of an active solar energy system incorporated by an owner-builder in the initial construction of a new building that the owner-builder does not intend to occupy or use. This only applies if the owner-builder did not already receive an exclusion for the same active solar energy system and only if the initial purchaser purchased the new building prior to that building becoming subject to reassessment to the owner-builder. ABX1-15 of 2011 clarified that systems installed through sale-leaseback arrangements or partnership flip structures can benefit from this exclusion. Click here and here for Letters to Assessors from the State Board of Equalization that further explain the impact of ABX1-15.   

Qualifying active solar energy systems are defined as those that "are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy." These include solar space conditioning systems, solar water heating systems, active solar energy systems, solar process heating systems, photovoltaic (PV) systems, and solar thermal electric systems, and solar mechanical energy. Solar pool heating systems and solar hot-tub-heating systems are not eligible.

Components included under the exclusion include storage devices, power conditioning equipment, transfer equipment, and parts. Pipes and ducts that are used to carry both solar energy and energy derived from other sources qualify for the exemption only to the extent of 75% of their full cash value. Likewise, dual-use equipment for solar-electric systems qualifies for the exclusion only to the extent of 75% of its value.

System owners should contact the applicable county assessor's office for further information. Click here for a listing of County Assessor offices in California, and here for a December 2008 letter to the assessor that further clarifies the terms of the exclusion.

Business Energy Investment Tax Credit (ITC)U.S. Internal Revenue Service08/29/2303/29/24658

Note: The Inflation Reduction Act of 2022 (H.R. 5376) made several significant changes to this tax credit, including expanding the eligible technologies, extending the expiration date, modifying the scheduled step-down in its value, providing for new bonus credits, and establishing new criteria to qualify for the full credit. It also phases out this tax credit under section 48 of the Internal Revenue Code and replaces it with a new technology-neutral tax credit under section 48E of the Internal Revenue Code. The summary below describes the current section 48 tax credit as modified by the Inflation Reduction Act, and below that, the new 48E tax credit.   

The federal Business Energy Investment Tax Credit (ITC) has been amended a number of times, most recently and most significantly by the Inflation Reduction Act of 2022. That bill established new prevailing wage and apprenticeship requirements for larger system to qualify for the full 30% tax credit. The Department of the Treasury issued Initial Guidance on these requirements on November 30, 2022 . According to law, the labor provisions apply to projects for which construction begins 60 days or more after Treasury publishes its guidance. Given the publishing date of November 30, 2022, the effective date for the labor provisions is January 30, 2023. The credit for different project types and available bonus credits is described below.


Base Credit

Projects under 1 MW (or larger projects that are commenced no more than 60 days after the Treasury Secretary develops labor guidelines) do not need to meet the new labor standards established by the Inflation Reduction to receive the full 30% tax credit. Such projects that begin construction after 2021 and before 2025 can receive the full tax credit of 30%. Note, projects that commence construction on or after January 1, 2025 can receive a tax credits under the new Clean Electricity Investment Tax Credit (48E) described below. 

Projects over 1 MW that begin construction 60 days after the Treasury Secretary releases labor guidelines (January 29, 2023) and no later than January 1, 2025 will receive a base tax credit of 6%. However, projects can qualify for the full 30% tax credit if they ensure that all laborers and mechanics involved in the construction of the project or the maintenance of the project for 5 years after project completion are paid wages at rates not less than prevailing wages. Projects must also ensure that a percentage of total labor hours are performed by qualified apprentices. The percent of hours increases over time to a maximum requirement of 15% in 2024 and thereafter. Note, projects that commence construction on or after January 1, 2025 can receive a tax credits under the new Clean Electricity Investment Tax Credit (48E) described below. 

Bonus Credits

Projects in which 100% of any steel or iron that is a component of the facility and 40% of the manufactured products that are components of the facility were produced in the United States can qualify for the Domestic Content Bonus. For projects that are under 1 MW and projects that are larger than 1 MW and meet the labor requirements specified above, the Domestic Content Bonus increases the tax credit by 10 percentage points. For larger projects that do not meet the labor requirements, the Domestic Content Bonus increases the tax credit by 2 percentage points. Note, the 40% requirement for manufactured products increases over time, eventually requiring 55% domestic content for projects commenced after 2026, The IRS issued Notice 2023-38 in May 2023, which provides further guidance on the domestic content bonus.     

Projects that are located within an energy community can receive the Energy Community Bonus. To qualify, a facility must be located at one of the following: (i) a brownfield site, (ii) a metropolitan or non-metropolitan statistical area which (A) has (or, at any time during the period beginning after December 31, 2009, had) 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas, or (B) has an unemployment rate above the national average for the previous year, or (iii) a census tract or a census tract that is adjoining a census tract in which a coal mine has closed after 1999 or a coal-fired electric generating unit was retired after 2009. For projects that are under 1 MW and projects that are larger than 1 MW and meet the labor requirements specified above, the Energy Community Bonus increases the tax credit by 10 percentage points. For larger projects that do not meet the labor requirements, the Energy Community Bonus increases the tax credit by 2 percentage points. 

The Treasury Department issued Notice 2023- 29 in April 2023, which provides initial guidance on the Energy Community Bonus Credit. The Treasury Department later updated and clarified its guidance in June 2023 with Notice 2023-45. The Treasury Department also issued Notice 2023-47 in June 2023, which includes lists of information that taxpayers may use to determine whether they meet certain requirements under the Statistical Area Category or the Coal Closure Category. The Department of Energy has also released a GIS map showing the locations of qualifying energy communities.  

Solar and wind facilities less than 5 MW may also be eligible for low-income bonuses. A project built in a low-income community as defined by the New Markets Tax Credit or on Indian Land can receive an increased tax credit of 10 percentage points. The Department of Energy has also released a GIS map showing qualifying low-income communities. A project associated with a low-income residential building project or a low-income economic benefit project can receive an increased tax credit of 20 percentage points. These bonuses are capped at 1.6 GW of projects per year.  The IRS issued Notice 2023-17 in February 2023, to allocate the cap across different categories of projects. The IRS also issued final regulations in August to provide further guidance on the iow-income communities bonus credit. Additional information can be found on the U.S. Department of Energy's webpage dedicated to the ow-income communities bonus credit.

Eligible Technologies

  • Solar Technologies
  • Fuel Cells
  • Wind Turbines 
  • Geothermal Systems
  • Microturbines
  • Combined Heat and Power (CHP)
  • Offshore Wind
  • Waste Energy Recovery. Qualified waste energy recovery property means property that generates electricity solely from heat from buildings or equipment if the primary purpose of such building or equipment is not the generation of electricity. The term “waste energy recovery property” does not include any property that has a capacity in excess of 50 megawatts.
  • Energy Storage Systems, both paired with generation and installed as a stand-alone system
  • Thermal Energy Storage Systems
  • Qualified Biogas Property
  • Microgrid Controllers
  • Interconnection Property associated with the installation of energy property with a maximum net output of not greater than 5 MW-AC to provide for the transmission or distribution of the electricity produced or stored by such property, and which are properly chargeable to the capital account of the taxpayer.

Credit Monetization

Section 13801 of The Inflation Reduction Act of 2022 also established procedures for other parties to monetize certain tax credits, including this one, for equipment placed in service on or after January 1, 2023 and through December 31, 2032. 

The direct pay option allows non-taxable entities to directly monetize certain tax credits. The provisions apply to nonprofits, a state or political subdivision thereof, the Tennessee Valley Authority, Indian tribal governments (as defined in Section 30D(g)(9)), any Alaska Native Corporation (as defined in Section 3 of the Alaska Native Claims Settlement Act), or any corporation operating on a cooperative basis which is engaged in furnishing electric energy to persons in rural areas. Such applicable entities can elect to be treated as having made a tax payment equal to the value of the tax credit they would otherwise be eligible to claim. The entity can then claim a refund for the excess taxes they are deemed to have paid. The option effectively makes this tax credit refundable for these entities. 

The act also allows eligible taxpayers to transfer all or a portion of their eligible tax credits to an unrelated taxpayer. Transfers must be reported to IRS and only one transfer is permitted. Must be elected no later than the due date for tax filing for the tax year the tax credit is claimed.

Clean Electricity Investment Tax Credit (48E)

Section 13702 of the Inflation Reduction Act created a new tax credit, the Clean Electricity Investment Tax Credit to replace the traditional ITC for systems placed in service on or after January 1, 2025. The tax credit is functionally similar to the ITC, but is not technology-specific. It applies to all generation facilities and energy storage systems that have an anticipated greenhouse gas emissions rate of zero. The credit amount is generally calculated in the same manner as described above, but will be phased out as the U.S. meets greenhouse gas emission reduction targets. For a project whose construction is commenced in the year following the year in which greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25% of the 2022 levels, the tax credit will not be reduced. However, for projects commenced in the second year following the target being met, the tax credit will be worth 75% of what it would otherwise be. Projects commenced in the third year will receive a credit worth 50%, and all projects commenced after then will not be eligible for a tax credit. 


Residential Energy Conservation Subsidy Exclusion (Personal)U.S. Internal Revenue Service07/20/2203/29/24666

According to Section 136 of the U.S. Code, energy conservation subsidies provided (directly or indirectly) to customers by public utilities* are non-taxable. This exclusion does not apply to electricity-generating systems registered as "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 (PURPA). If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).

The term "energy conservation measure" includes installations or modifications primarily designed to reduce consumption of electricity or natural gas, or to improve the management of energy demand. Eligible dwelling units include houses, apartments, condominiums, mobile homes, boats and similar properties. If a building or structure contains both dwelling units and other units, any subsidy must be properly allocated.

The definition of "energy conservation measure" implies that utility rebates for residential solar-thermal projects and photovoltaic (PV) systems may be non-taxable. However, the IRS has not ruled definitively on this issue. Taxpayers considering using this provision for a renewable energy system should discuss the details of the project with a tax professional. Other types of utility subsidies that may come in the form of credits or reduced rates might also be non-taxable, according to IRS Publication 525.


* The term "public utility" is defined as an entity "engaged in the sale of electricity or natural gas to residential, commercial, or industrial customers for use by such customers." The term includes federal, state and local government entities.

Modified Accelerated Cost-Recovery System (MACRS)U.S. Internal Revenue Service07/12/2303/29/24676

Note: The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023. Bonus depreciation steps down by 20% each year beginning with 80% in 2023..  

Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property (26 USC § 168(e)(3)(B)(vi)) under the MACRS, which refers to 26 USC § 48(a)(3)(A), often known as the energy investment tax credit or ITC to define eligible property. Such property currently includes*:

  • a variety of solar-electric and solar-thermal technologies
  • fuel cells and microturbines
  • geothermal electric
  • direct-use geothermal and geothermal heat pumps
  • small wind (100 kW or less)
  • combined heat and power (CHP)
  • the provision which defines ITC technologies as eligible also adds the general term "wind" as an eligible technology, extending the five-year schedule to large wind facilities as well.

In addition, for certain other types of renewable energy property, such as biomass or marine and hydrokinetic property, the MACRS property class life is seven years. Eligible biomass property generally includes assets used in the conversion of biomass to heat or to a solid, liquid or gaseous fuel, and to equipment and structures used to receive, handle, collect and process biomass in a waterwall, combustion system, or refuse-derived fuel system to create hot water, gas, steam and electricity. Marine and hydrokinetic property includes facilities that utilize waves, tides, currents, free-flowing water, or differentials in ocean temperature to generate energy. It does not include traditional hydropower that uses dams, diversionary structures, or impoundments.

The 5-year schedule for most types of solar, geothermal, and wind property has been in place since 1986. The federal Energy Policy Act of 2005 (EPAct 2005) classified fuel cells, microturbines and solar hybrid lighting technologies as five-year property as well by adding them to § 48(a)(3)(A). This section was further expanded in October 2008 by the addition of geothermal heat pumps, combined heat and power, and small wind under The Energy Improvement and Extension Act of 2008.

Bonus Depreciation

Bonus Depreciation has been sporadically available at different levels during different years. Most recently, The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023.

Bonus Depreciation History

The 50% first-year bonus depreciation provision enacted in 2008 was extended (retroactively for the entire 2009 tax year) under the same terms by the American Recovery and Reinvestment Act of 2009 (H.R. 1), enacted in February 2009. It was renewed again in September 2010 (retroactively for the entire 2010 tax year) by the Small Business Jobs Act of 2010 (H.R. 5297). In December 2010 the provision for bonus depreciation was amended and extended yet again by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R. 4853). Under these amendments, eligible property placed in service after September 8, 2010 and before January 1, 2012 was permitted to qualify for 100% first-year bonus depreciation. The December 2010 amendments also permitted bonus depreciation to be claimed for property placed in service during 2012, but reverted the allowable amount from 100% to 50% of the eligible basis. The 50% first-year bonus depreciation allowance was further extended for property placed in service during 2013 by the American Taxpayer Relief Act of 2012 (H.R. 8, Sec. 331) in January 2013. The Tax Increase Prevention Act Of 2014 (H.R. 5771, Sec. 125)extended  these provisions through to December 31, 2014, and thus retroactively for the 2014 tax year.

For more information on the federal MACRS, see IRS Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562. The IRS web site provides a search mechanism for forms and publications. Enter the relevant form, publication name or number, and click "GO" to receive the requested form or publication. For guidance on bonus depreciation, including information relating to the election to claim either 50% or 100% bonus depreciation, retroactive elections to claim 50% bonus depreciation for property placed in service during 2010, and eligible property, please see IRS Rev. Proc. 2011-26.


*Note that the definitions of eligible technologies included in this entry are somewhat simplified versions of those contained in tax code, which often contain additional caveats, restrictions, and modifications. Those interested in this incentive should review the relevant sections of the code in detail prior to making business decisions.

Residential Energy Conservation Subsidy Exclusion (Corporate)U.S. Internal Revenue Service05/19/2303/29/24727

According to Section 136 of the U.S. Code, energy conservation subsidies provided (directly or indirectly) to customers by public utilities* are non-taxable. This exclusion does not apply to electricity-generating systems registered as "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 (PURPA). If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).

The term "energy conservation measure" includes installations or modifications primarily designed to reduce consumption of electricity or natural gas, or to improve the management of energy demand. Eligible dwelling units include houses, apartments, condominiums, mobile homes, boats and similar properties. If a building or structure contains both dwelling units and other units, any subsidy must be properly allocated.

The definition of "energy conservation measure" implies that utility rebates for residential solar-thermal projects and photovoltaic (PV) systems may be non-taxable. However, the IRS has not ruled definitively on this issue. Taxpayers considering using this provision for a renewable energy system should discuss the details of the project with a tax professional. Other types of utility subsidies that may come in the form of credits or reduced rates might also be non-taxable, according to IRS Publication 525. 


* The term "public utility" is defined as an entity "engaged in the sale of electricity or natural gas to residential, commercial, or industrial customers for use by such customers." The term includes federal, state and local government entities.

Renewable Electricity Production Tax Credit (PTC)U.S. Internal Revenue Service08/29/2303/29/24734

Note: The Inflation Reduction Act of 2022 (H.R. 5376) made several significant changes to this tax credit, including extending the expiration date, providing for new bonus credits, and establishing new criteria to qualify for the full credit. It also phases out this tax credit under section 45 of the Internal Revenue Code at the end of 2024 and replaces it with a new technology-neutral tax credit under section 45Y of the Internal Revenue Code. The summary below describes the current section 45 tax credit as modified by the Inflation Reduction Act, and below that, the new 45Y tax credit.   

The federal renewable electricity production tax credit (PTC) is an inflation-adjusted per-kilowatt-hour (kWh) tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year. The duration of the credit is 10 years after the date the facility is placed in service.

Originally enacted in 1992, the PTC has been renewed and expanded numerous times, most recently by the Inflation Reduction Act of 2022. That bill established new prevailing wage and apprenticeship requirements for larger system to qualify for the full value of the tax credit -- 2.6 cents per kilowatt-hour (kWh) for wind, closed-loop biomass, and geothermal energy; 1.3 cents per kWh for open-loop biomass facilities, small irrigation power facilities, landfill gas facilities and trash facilities. In late-2022 or 2023, the Treasury Secretary will issue guidance for these new labor provisions. The credit for different project types and available bonus credits is described below.

Base Credit

Projects under 1 MW (or larger projects that are commenced no more than 60 days after the Treasury Secretary develops labor guidelines) do not need to meet the new labor standards established by the Inflation Reduction to receive the full 1.3 or 2.6 cents/kWh (depending on the facility type) tax credit. This amount may be adjusted annually for inflation. Such projects that begin construction after 2021 and before 2025 can receive the full tax credit. Note, projects that commence construction on or after January 1, 2025 can receive a tax credit under the new Clean Energy Production Tax Credit (45Y) described below. 

Projects over 1 MW that begin construction 60 days after the Treasury Secretary releases labor guidelines and no later than January 1, 2025 will receive a base tax credit of 0.5 cents/kWh. However, projects can qualify for the full tax credit if they ensure that all laborers and mechanics involved in the construction of the project or the maintenance of the project for the entire 10-year PTC period are paid wages at rates not less than prevailing wages. Projects must also ensure that a percentage of total labor hours are performed by qualified apprentices. The percent of hours increases over time to a maximum requirement of 15% in 2024 and thereafter. Note, projects that commence construction on or after January 1, 2025 can receive a tax credit under the new Clean Energy Production Tax Credit (45Y) described below. 

Bonus Credits

The Domestic Content Bonus increases the credit amount by 10% for projects in which 100% of any steel or iron that is a component of the facility and 40% of the manufactured products that are components of the facility were produced in the United States. Note, the required percentage of domestic manufactured products for offshore wind facilities is 20%. The IRS issued Notice 2023-38 in May 2023, which provided guidance on the domestic content bonus.     

The Energy Community Bonus increases the credit amount by 10% for projects that are located at one of the following: (i) a brownfield site, (ii) a metropolitan or non-metropolitan statistical area which (A) has (or, at any time during the period beginning after December 31, 2009, had) 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas, or (B) has an unemployment rate above the national average for the previous year, or (iii) a census tract or a census tract that is adjoining a census tract in which a coal mine has closed after 1999 or a coal-fired electric generating unit was retired after 2009. 

The Treasury Department issued Notice 2023- 29 in April 2023, which provided initial guidance on the Energy Community Bonus Credit. The Treasury Department later updated and clarified its guidance in June 2023 with Notice 2023-45. The Treasury Department also issued Notice 2023-47 in June 2023, which includes lists of information that taxpayers may use to determine whether they meet certain requirements under the Statistical Area Category or the Coal Closure Category. The Department of Energy has also released a GIS map showing the locations of qualifying energy communities.  

Credit Monetization

Section 13801 of The Inflation Reduction Act of 2022 also established procedures for other parties to monetize certain tax credits, including this one, for equipment placed in service on or after January 1, 2023 and through December 31, 2032. 

The direct pay option allows non-taxable entities to directly monetize certain tax credits. The provisions apply to nonprofits, a state or political subdivision thereof, the Tennessee Valley Authority, Indian tribal governments (as defined in Section 30D(g)(9)), any Alaska Native Corporation (as defined in Section 3 of the Alaska Native Claims Settlement Act), or any corporation operating on a cooperative basis which is engaged in furnishing electric energy to persons in rural areas. Such applicable entities can elect to be treated as having made a tax payment equal to the value of the tax credit they would otherwise be eligible to claim. The entity can then claim a refund for the excess taxes they are deemed to have paid. The option effectively makes this tax credit refundable for these entities. 

The act also allows eligible taxpayers to transfer all or a portion of their eligible tax credits to an unrelated taxpayer. Transfers must be reported to IRS and only one transfer is permitted. Must be elected no later than the due date for tax filing for the tax year the tax credit is claimed.

Clean Energy Production Tax Credit (45Y)

Section 13701 of the Inflation Reduction Act created a new tax credit, the Clean Energy Production Tax Credit to replace the traditional PTC for systems placed in service on or after January 1, 2025. The tax credit is functionally similar to the PTC, but is not technology-specific. It applies to all generation facilities that have an anticipated greenhouse gas emissions rate of zero. The credit amount is generally calculated in the same manner as described above, and all technologies that satisfy the labor requirements will be eligible for the full value of the tax credit as adjusted for inflation. The credit will be phased out as the U.S. meets greenhouse gas emission reduction targets. For a project whose construction is commenced in the year following the year in which greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25% of the 2022 levels, the tax credit will not be reduced. However, for projects commenced in the second year following the target being met, the tax credit will be worth 75% of what it would otherwise be. Projects commenced in the third year will receive a credit worth 50%, and all projects commenced after then will not be eligible for a tax credit. 


Energy-Efficient Mortgages08/05/2003/29/24742

Homeowners can take advantage of energy efficient mortgages (EEM) to either finance energy efficiency improvements to existing homes, including renewable energy technologies, or to increase their home buying power with the purchase of a new energy efficient home. The U.S. federal government supports these loans by insuring them through Federal Housing Authority (FHA) or Veterans Affairs (VA) programs. This allows borrowers who might otherwise be denied loans to pursue energy efficiency, and it secures lenders against loan default.

FHA Energy Efficient Mortgages
The FHA allows lenders to add up to 100% of energy efficiency improvements to an existing mortgage loan with certain restrictions. FHA mortgage limits vary by county, state and the number of units in a dwelling. See their website for more details. These mortgages were previously limited to $8,000.The maximum amount of the portion of an energy efficient mortgage allowed for energy improvements is now the lesser of 5% of:

  • The value of the property,
  • 115% of the median area price of a single-family dwelling, or
  • 150% of the Freddie Mac conforming loan limit

Loan amounts may not exceed the projected savings of the energy efficiency improvements. These loans may be combined with FHA 203 (h) mortgages available to victims of presidentially-declared disasters and with financing offered through the FHA 203 (k) rehabilitation program. FHA loan limits do not apply to the EEM. Borrowers must obtain a home energy assessment by a qualified energy rater, assessor, or auditor using whole-assessment standards, protocols, and procedures. 

Borrowers may include closing costs and the up-front mortgage insurance premium in the total cost of the loan. The loan is available to anyone who meets the income requirements for FHA’s Section 203 (b), provided the applicant can meet the monthly mortgage payments. New and existing owner-occupied homes of up to two units qualify for this loan. Cooperative units are not eligible. Homebuyers should submit applications to their local HUD Field Office through an FHA-approved lending institution.

Department of Veterans Affairs (VA) Energy Efficient Mortgages
The VA insures EEMs to be used in conjunction with VA loans either for the purchase of existing homes or for refinancing loans secured by the dwelling. Homebuyers may borrow up to $3,000 if only documentation of improvement costs or contractor bids is submitted, or up to $6,000 if the projected energy savings are greater than the increase in mortgage payments. Loans may exceed this amount at the discretion of the VA. Applicants may not include the cost of their own labor in the total amount. No additional home appraisal is needed, but applicants must submit a HER, contractor bids and certain other documentation. The VA insures 50% of the loan if taken by itself, but it may insure less if the total value of the mortgage exceeds a certain amount.

This mortgage is available to qualified military personnel, reservists and veterans. Applicants should secure a certificate of eligibility from their local lending office and submit it to a VA-approved private lender. If the loan is approved, the VA guarantees the loan when it is closed.

Conventional EEMs
Conventional mortgages are not backed by a federal agency. Private lenders sell loans to Fannie Mae and Freddie Mac, which in turn allows homebuyers to borrow up to 15% of an existing home’s appraised value for improvements documented by a HER.

Fannie Mae also lends up to 5% for Energy Star new homes. Fannie Mae EEMs are available to single-family, owner-occupied units, and Fannie Mae provides EEMs to those whose income might otherwise disqualify them from receiving the loans by allowing approved lenders to adjust borrowers’ debt-to-income ratio by 2%. The value of the improvements is immediately added to the total appraised value of the home.

Freddie Mac offers GreenChOICE mortgages to "provide greater affordability for borrowers, offer more flexibility and combine the flexibilities of Home Possible Mortgages to offer borrowers additional affordable financing opportunities." Borrowers should apply directly to the lender. Click here for more details.

ENERGY STAR Partnership for Lenders
To promote EEMs and lenders who offer them, the federal ENERGY STAR program offers a partnership program for lenders who provide EEMs to borrowers. Becoming a partner allows lenders to utilize the Energy Star brand to promote themselves as Energy Star partners offering EEMs. To become a lender, partner lenders must first provide proof that they know how to write EEMs. To maintain their partnership benefits, lenders must write a certain number of EEMs per year. Energy Star does not have a lender certification program or process. Click here for more information about ENERGY STAR's lender partnership program, and here to access the partner locator tool. ENERGY STAR requires that its lender partners provide EEMs to qualified borrowers regardless of whether it is an FHA EEM, Fannie Mae EEM, or VA EEM.

USDA - Rural Energy for America Program (REAP) GrantsU.S. Department of Agriculture$600 million for FY 201808/21/1803/29/24917

Note: The U.S. Department of Agriculture's Rural Development issues periodic Notices of Solicitation of Applications for the Rural Energy for America Program (REAP) in the Federal Register. The FY 2018 solicitation for the REAP program includes a total budget of approximately $800 million. 

The Rural Energy for America Program (REAP) provides financial assistance to agricultural producers and rural small businesses in America to purchase, install, and construct renewable energy systems, make energy efficiency improvements to non-residential buildings and facilities, use renewable technologies that reduce energy consumption, and participate in energy audits and renewable energy development assistance.

Renewable energy projects for the Renewable Energy Systems and Energy Efficiency Improvement Guaranteed Loan and Grant Program include wind, solar, biomass and geothermal, and hydrogen derived from biomass or water using wind, solar, or geothermal energy sources. These grants are limited to 25% of a proposed project's cost, and a loan guarantee may not exceed $25 million. The combined amount of a grant and loan guarantee must be at least $5,000 (with the grant portion at least $1,500) and may not exceed 75% of the project’s cost. In general, a minimum of 20% of the funds available for these incentives will be dedicated to grants of $20,000 or less. For more information on grant, loan guarantees, loan financing, and opportunities for combinations thereof, visit the USDA website. 

Application due dates are published annually in the Notice of Funding Availability. 

Eligibility

Grants and Guaranteed Loans are generally available to small businesses and agricultural producers and other entities as determined by USDA. To be eligible for REAP grants and guaranteed loans, applicants must demonstrate sufficient revenue to cover any operations and maintenance expense as well as any applicable debt service of the project for the duration of the guaranteed loan or grant. Rural small businesses must be located in rural areas, but agricultural producers may be located in non-rural areas.

Eligible project costs include purchasing energy efficiency improvements or a renewable energy system, energy audits or assessments, permitting and licensing fees, and business plans and retrofitting. For new construction the replacement of older equipment with more efficient equipment may be eligible as a project cost only when a new facility is planned to be more efficient and similarly sized than the older facility. Working capital and land acquisition are only eligible for loan guarantees.

For more information regarding applicant and project eligibility for loans and grants, visit the USDA REAP eligibility webpage, read the eligibility requirements in the most recent Solicitation of Applications for REAP funding in the Federal Registry, and/or contact your state rural energy coordinator.

Regional rural energy coordinators provide loan and grant applications upon request.

History

The Food, Conservation, and Energy Act of 2008 (H.R. 2419), enacted by Congress in May 2008, converted the federal Renewable Energy Systems and Energy Efficiency Improvements Program,* into the Rural Energy for America Program (REAP). Similar to its predecessor, the REAP promotes energy efficiency and renewable energy for agricultural producers and rural small businesses through the use of (1) grants and loan guarantees for energy efficiency improvements and renewable energy systems, and (2) grants for energy audits and renewable energy development assistance. Congress has allocated funding for the new program in the following amounts: $55 million for FY 2009, $60 million for FY 2010, $70 million for FY 2011, and $70 million for FY 2012. REAP is administered by the U.S. Department of Agriculture (USDA). In addition to these mandatory funding levels, up to $25 million in discretionary funding may be issued each year. The American Taxpayer Relief Act of 2012 (H.R. 8) extended discretionary funding for FY 2013. The 2014 Farm Bill reauthorized the USDA to offer these programs and removed the mandate to offer grants for feasibility studies.

* The Renewable Energy Systems and Energy Efficiency Improvements Program was created by the USDA pursuant to Section 9006 of the 2002 federal Farm Security and Rural Investment Act of 2002. Funding in the amount of $23 million per year was appropriated for each fiscal year from FY 2003-2007. In March 2008, the USDA announced that it would accept $220.9 million in applications for grants, loan guarantees, and loan/grant combination packages under the Renewable Energy Systems and Energy Efficiency Improvements Program. The application deadline was June 16, 2008.

Land grant colleges and universities are referred to in the summary table as "schools" and "institutional" eligible sectors. K-12 schools are not eligible for this grant.

Office of Indian Energy Policy and Programs - Funding OpportunitiesU.S. Department of Energy02/26/2003/29/24918

The U.S. Department of Energy's (DOE) Office of Indian Energy Policy and Programs promotes tribal energy sufficiency, economic growth, and employment on tribal lands through the development of renewable energy and energy efficiency technologies. The program provides financial assistance, technical assistance, and education and training to tribes for the evaluation and development of renewable energy resources and energy efficiency measures.

DOE's program offerings consist of program management through DOE headquarters, program implementation and project management through DOE's field offices, and technical support through DOE laboratories. Program management is carried out by DOE's Weatherization and Intergovernmental Program, which provides programmatic direction and funding to DOE field offices for program implementation. DOE's Golden Field Office solicits, awards, administers, and manages financial assistance agreements.

Program funding is awarded through a competitive process. Click here to view current program funding opportunities, and here to apply for technical assistance.

San Diego County - Green Building ProgramCounty of San Diego07/21/2203/29/241105

The County of San Diego has a Green Building Incentive Program designed to promote the use of resource efficient construction materials, water conservation and energy efficiency in new and remodeled residential and commercial buildings. As part of the program, for qualifying resource conservation measures, the County will reduce building permit and plan check fees by 7.5% and grant expedited plan checks. To qualify for these conservation incentives, the project must comply with the program requirements for either natural resources conservation, water conservation, or energy conservation

Other rebates and incentives may be available to those building greener and more efficient homes and buildings. For more information, see program website above.

Residential Renewable Energy Tax CreditU.S. Internal Revenue Service08/16/2212/31/341235

Note: Section 13302 of The Inflation Reduction Act of 2022 (H.R. 5376) extended the expiration date and modified the phase down of this tax credit. It also made stand-alone energy storage systems eligible for the credit, and biomass heaters ineligible for the credit. Biomass heaters are now eligible for the residential energy efficiency tax credit. The summary below reflects the credit after the enactment of H.R. 5376.

A taxpayer may claim a credit for a system that serves a dwelling unit located in the United States that is owned and 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 at a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site 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

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2022
  • 30% for systems placed in service after 12/31/2021 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Solar water-heating property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2022
  • 30% for systems placed in service after 12/31/2021 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
  • 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.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Fuel cell property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2022
  • 30% for systems placed in service after 12/31/2021 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
  • The maximum credit is $500 per half kilowatt (kW).
  • The fuel cell must have a nameplate capacity of at least 0.5 kW of electricity using an electrochemical process and an electricity-only generation efficiency greater than 30%.
  • In case of joint occupancy, the maximum qualifying costs that can be taken into account by all occupants for figuring the credit is $1,667 per 0.5 kW. 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 must be the taxpayer’s principal residence.

Small wind-energy property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2022
  • 30% for systems placed in service after 12/31/2021 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Geothermal heat pumps

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2022
  • 30% for systems placed in service after 12/31/2021 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2034.
  • The geothermal heat pump must meet federal Energy Star criteria.
  • The home served by the system does not have to be the taxpayer’s principal residence

Battery Storage Systems (Standalone Systems)

  • 0% for systems placed in service before 1/1/2023
  • 30% for systems placed in service after 12/31/2022 and before 01/01/2033
  • 26% for systems placed in service after 12/31/2032 and before 01/01/2034
  • 22% for systems placed in service after 12/31/2033 and before 01/01/2035
  • The system must have a capacity of at least 3 kilowatt hours
  • The home served by the system does not have to be the taxpayer’s principal residence.


Significantly, The American Recovery and Reinvestment Act of 2009 repealed a previous limitation on the use of the credit for eligible projects also supported by "subsidized energy financing." For projects placed in service after December 31, 2008, this limitation no longer applies.

Energy Storage

Prior to the enactment of the Inflation Reduction Act of 2022, the federal tax code did not explicitly reference energy storage, so stand-alone energy storage systems did not qualify for the tax credit.  However, the IRS issued Private Letter Rulings in 2013 and 2018, which address energy storage paired with PV systems. In both cases, the IRS ruled that the energy storage equipment when paired with PV met the statutory definition of a "qualified solar electric property expenditure," as was eligible for the tax credit. It is important to note that Private Letter Rulings only apply to the taxpayer who requested it, and do not establish precedent. Any taxpayer considering the purchase of an energy storage system should consult their accountant or other tax professional before claiming a tax credit.  


History

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 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. The credit was further enhanced in February 2009 by The American Recovery and Reinvestment Act of 2009, which removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.

Burbank Water & Power - Green Building Incentive ProgramRebates01/25/2303/29/241660

The U.S. Green Building Council is a non-profit organization that promotes the design and construction of buildings that are environmentally responsible, profitable, and healthy places to live and work. The Green Building Council developed the Leadership in Energy and Environmental Design (LEED) Green Building Rating System in order to more accurately provide incentives those using these practices. The LEED Green Building Rating System issues points across five categories to those striving to attain LEED status for new commercial construction or major renovation of commercial buildings, as well as multifamily and mixed-use developments that are five units or greater, or four stories or higher.  Rebates provided by Burbank Water & Power correspond to the following point totals and LEED certification levels:

  • Certified (40–49 points) - $15,000
  • Silver (50–59 points) - $20,000
  • Gold (60–79 points) - $25,000
  • Platinum (80 points and above) - $30,000

Incentives are on a first come first serve basis. More information can be found on the web site listed above.

LADWP - Non-Residential Energy Efficiency Incentive ProgramLos Angeles Department of Water and Power08/11/2303/29/241866

Los Angeles Department of Water and Power offers prescriptive and custom incentives to non-residential customers for the installation of energy saving measures, equipment, or systems through a variety of programs, including:

  1. Technical Assistance Program (TAP)
  2. Water Conservation Rebate Program (WCRP)
  3. Save on Lighting Program (SOLP)
  4. Savings in Action (SIA)
  5. Customer Performance Program (CPP)

 

 

USDA - Rural Energy for America Program (REAP) Loan GuaranteesU.S. Department of Agriculture08/21/1803/29/242511

The Rural Energy for America Program (REAP) provides financial assistance to agricultural producers and rural small businesses in rural America to purchase, install, and construct renewable energy systems, make energy efficiency improvements to non-residential buildings and facilities, use renewable technologies that reduce energy consumption, and participate in energy audits and renewable energy development assistance.

Renewable energy projects for the Renewable Energy Systems and Energy Efficiency Improvement Guaranteed Loan and Grant Program include wind, solar, biomass and geothermal, and hydrogen derived from biomass or water using wind, solar, or geothermal energy sources. These grants are limited to 25% of a proposed project's cost, and a loan guarantee may not exceed $25 million. The combined amount of a grant and loan guarantee must be at least $5,000 (with the grant portion at least $1,500) and may not exceed 75% of the project’s cost. In general, a minimum of 20% of the funds available for these incentives will be dedicated to grants of $20,000 or less. For more information on grant, loan guarantees, loan financing, and opportunities for combinations thereof, visit the USDA website.

Application due dates are published annually in the Notice of Funding Availability.

Eligibility

Grants and Guaranteed Loans are generally available to small businesses and agricultural producers and other entities as determined by USDA. To be eligible for REAP grants and guaranteed loans, applicants must demonstrate sufficient revenue to cover any operations and maintenance expense as well as any applicable debt service of the project for the duration of the guaranteed loan or grant. Rural small businesses must be located in rural areas, but agricultural producers may be located in non-rural areas.

Eligible project costs include purchasing energy efficiency improvements or a renewable energy system, energy audits or assessments, permitting and licensing fees, and business plans and retrofitting. For new construction the replacement of older equipment with more efficient equipment may be eligible as a project cost only when a new facility is planned to be more efficient and similarly sized than the older facility. Working capital and land acquisition are only eligible for loan guarantees.

For more information regarding applicant and project eligibility for loans and grants, visit the USDA REAP eligibility webpage, read the eligibility requirements in the most recent Solicitation of Applications for REAP funding in the Federal Registry, and/or contact your state rural energy coordinator.

Regional rural energy coordinators provide loan and grant applications upon request.

History

The Food, Conservation, and Energy Act of 2008 (H.R. 2419), enacted by Congress in May 2008, converted the federal Renewable Energy Systems and Energy Efficiency Improvements Program,* into the Rural Energy for America Program (REAP). Similar to its predecessor, the REAP promotes energy efficiency and renewable energy for agricultural producers and rural small businesses through the use of (1) grants and loan guarantees for energy efficiency improvements and renewable energy systems, and (2) grants for energy audits and renewable energy development assistance. Congress has allocated funding for the new program in the following amounts: $55 million for FY 2009, $60 million for FY 2010, $70 million for FY 2011, and $70 million for FY 2012. REAP is administered by the U.S. Department of Agriculture (USDA). In addition to these mandatory funding levels, up to $25 million in discretionary funding may be issued each year. The American Taxpayer Relief Act of 2012 (H.R. 8) extended discretionary funding for FY 2013. The 2014 Farm Bill reauthorized the USDA to offer these programs and removed the mandate to offer grants for feasibility studies.

* The Renewable Energy Systems and Energy Efficiency Improvements Program was created by the USDA pursuant to Section 9006 of the 2002 federal Farm Security and Rural Investment Act of 2002Funding in the amount of $23 million per year was appropriated for each fiscal year from FY 2003-2007. In March 2008, the USDA announced that it would accept $220.9 million in applications for grants, loan guarantees, and loan/grant combination packages under the Renewable Energy Systems and Energy Efficiency Improvements Program. The application deadline was June 16, 2008.

Land grant colleges and universities are referred to in the summary as "schools" and "institutional" eligible sectors. K-12 schools are not eligible for this grant.

U.S. Department of Energy - Loan Guarantee ProgramU.S. Department of Energy09/08/2203/29/243071
Note: The Inflation Reduction Act (H.R. 5376) made several changes to this program. It appropriated approximately $11.7 billion in total for the Loan Programs Office (LPO) to support issuing new loans. This, in turn, increased the loan authority in LPO’s existing loan programs by approximately $100 billion. The Inflation Reduction Act also adds a new loan program, the Energy Infrastructure Reinvestment (EIR) Program (section 1706), to help retool, repower, repurpose, or replace energy infrastructure that has ceased operations or to improve the efficiency of infrastructure that is currently operating. 

Title 17 Program

Section 1703 of Title 17 of the Energy Policy Act (EPAct) of 2005 created the Department of Energy's (DOE's) Loan Guarantee Program. The program was reauthorized and revised by the American Recovery and Reinvestment Act (ARRA) of 2009 by adding Section 1705 to EPAct. The 1705 Program was retired in September 2011, and Loan Guarantees are no longer available under that authority. DOE, however, still has authority to issue Loan Guarantees under the old Section 1703 Program.  

Under Section 1703, DOE is authorized to issue loan guarantees for projects with high technology risks that "avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases; and employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the guarantee is issued." Loan guarantees are intended to encourage early commercial use of new or significantly improved technologies in energy projects. The loan guarantee program generally does not support research and development projects.

The Inflation Reduction Act added an additional $40 billion of loan authority to Section 1703 program. The legislation appropriated $3.6 billion in credit subsidy to support the cost of those loans and set aside a percentage of these amounts for administrative expenses to help carry out the program, including monitoring and originating new loans. This new loan authority is open to all currently eligible Title 17 Innovative Clean Energy technology categories, including fossil energy and nuclear energy. The Inflation Reduction Act appropriations also support the expanded activities authorized by the Bipartisan Infrastructure Law that required these new appropriations to go into effect. These expanded activities support projects involving critical minerals processing, manufacturing, and recycling, and removing the innovation requirement for State Energy Financing Institution-backed projects. Click here for more information about how a project that reduces greenhouse gas emissions can be eligible without meeting the innovative technology requirement if the project receives support from a State Energy Financing Institution . 

Energy Infrastructure Reinvestment (EIR) Program (Section 1706)

The Inflation Reduction Act also created a new program under Title 17, the Energy Infrastructure Reinvestment (EIR) Program. The new program targets projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations, or enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases. The Inflation Reduction Act appropriated $5 billion through September 30, 2026, to carry out EIR, with a total cap on loans of up to $250 billion. 

Advanced Technology Vehicles Manufacturing Loan Program

LPO initially had $15.1 billion in loan authority to support the manufacture of eligible light-duty vehicles and qualifying components under the Advanced Technology Vehicles Manufacturing Loan Program (ATVM), authorized by the Energy Independence and Security Act of 2007.  To date, the program has loaned $8 billion for projects that have supported the production of more than 4 million advanced technology vehicles. Read more about LPO's ATVM portfolio. The Inflation Reduction Act removed the $25 billion cap on the total amount of loans it can award and appropriated $3 billion to remain available through September 30, 2028 for the costs of direct loans under ATVM. In addition to amounts supported by currently appropriated credit subsidy, this $3 billion is estimated to provide for an additional ~$40 billion in loan authority for a total estimated available loan authority under ATVM of ~$55.1 billion. 

Tribal Energy Projects

The Tribal Energy Loan Guarantee Program (TELGP) supports tribal investment in energy-related projects by providing direct loans or partial loan guarantees to federally recognized tribe, including Alaska Native village or regional or village corporations; or a Tribal Energy Development Organization (TEDO) that is wholly or substantially owned by a federally recognized tribe federally recognized Indian tribe or Alaska Native Corporation. Under this solicitation, The Inflation Reduction Act increased the aggregate amount of loans available at any time under the Tribal Energy Loan Guarantee Program (TELGP) from $2 billion to $20 billion. It also provided $75 million to remain available through September 30, 2028 to carry out TELGP under section 2602(c) of the Energy Policy Act of 1992.

Sonoma County Energy Independence Program (SCEIP)01/15/2403/29/243334

Note:  In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENation for more information about PACE financing and a comprehensive list of all PACE programs across the country.

Sonoma County's Energy Independence Program (SCEIP) gives property owners the option of financing permanent energy efficiency, water conservation, renewable generation, wildfire safety, and seismic strengthening projects. PACE financing is repaid as an assessment on the property's regular tax bill.

The program is similar to others in California authorized by AB 811 of 2008, but was the first county-wide program. Eligible equipment must be permanently attached to existing buildings, new construction does not qualify. The property tax assessments are attached to the property, not the property owner. If the property is sold, the assessment stays with the property.

Financing is available for residential, commercial, industrial, agricultural, multifamily and certain non-profit projects.

Benefits of financing with SCEIP include:

  • Fixed interest rate of 7.49%
  • No money down
  • No income or credit quilifying
  • Minimal Fees (less than $200)
  • Consumer Protections

There over 100 pre-approved improvements eligible for SCEIP financing. All measures must meet and prove performance criteria and be permanently installed. Custom measures that are not pre-approved may be submitted for review. Search for your improvement here.

The Energy Independence Program can be combined with utility and state rebates, but financing will only be available for the post-incentive cost. Tax credits, on the other hand, will not affect the amount of financing available.

The minimum amount of financing is $2,500. The financed amount becomes an assessment attached to the property, not the owner, and is paid back through the property tax system over a term of 10 or 20 years with a 7.49% interest rate. 

A key Sonoma County Energy Independence Program (SCEIP) enhancement effective July 1, 2011, is the requirement of achieving 10% energy efficiency improvement on the property prior to (or along with) the financing of renewable generation upgrade projects. This approach supports SCEIP’s regional goal to “reduce and produce,” plus strengthens the market position of the SCEIP assessment portfolio.

Beginning March 1, 2011, the Sonoma County Energy Independence Program offers rebates for Energy Analyses performed by certified HERS II Raters. Submit your application, utility authorization, final invoice, rating certificate and recommendations report to SCEIP, and SCEIP will pay up to 75% of the total directly to the rater.
 

Commercial and industrial properties must first have Pacific Gas and Electric perform an energy audit before participating in the program. Energy audits are not required for residential participants, but they are strongly recommended. The sum of all debt associated with the property cannot exceed 100% of the value of the property. Prospective participants should fully review the program website for additional requirements and restrictions.

Beginning in 2015, Sonoma County property owners had expanded options for PACE financing options. Originally only SCEIP, the county program has partnered with CaliforniaFIRST and California HERO to make more PACE financing options available.

CaliforniaFIRST operates under the auspices of the California Statewide Communities Development Authority (CSCDA), the CaliforniaFIRST residential PACE program launched in the summer of 2014 in 17 California counties and 167 cities.

The HERO program was started up in December 2011 with a partnership between the Western Riverside Council of Governments and Renovate America, Inc. As of 2014, the program has been extended to 202 communities in California, helping to fund more than 18,836 residential projects totaling more than $344 million in financing.

As of January 2016, this program has funded more than $73 million in projects. 

Local Option - Municipal Energy DistrictsCalifornia Energy Commission01/16/2403/29/243527

Note:  In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENation for more information about PACE financing and a comprehensive list of all PACE programs across the country.

Property-Assessed Clean Energy (PACE) financing effectively allows property owners to borrow money to pay for energy improvements. The amount borrowed is typically repaid via a special assessment on the property over a period of years. California has authorized local governments to establish such programs, as described below. (Not all local governments in California offer PACE financing; contact your local government to find out if it has established a PACE financing program.)

In July 2008, California amended its state law to enable cities and counties to offer PACE financing programs to property owners. Financing may be used for improvements to developed property only if the property owner agrees to a contractual assessment (that is, agrees to repay the loan) on his/her property tax bill for up to 20 years. To be eligible, a property owner must have a clean property title and must be current on property taxes and mortgages. The law requires that local governments first establish draft plans that will be subject to a public hearing. Subsequently, city/county officials will develop a report, which will be voted on by the local legislative body. The report must include:

  • A map delineating the area where contractual assessments are proposed;
  • A draft contract agreement between property owners and the local government;
  • Eligible facilities;
  • Eligible distributed renewable-energy systems;
  • Eligible energy-efficiency improvements;
  • A designated local official who authorized to enter into contractual assessments on behalf of the local government;
  • A maximum aggregate dollar amount of contractual assessments;
  • A method for prioritizing applications/requests in the event that applications exceed the authorization amount;
  • A plan for raising a capital amount required to pay for work performed pursuant to contractual assessments; and
  • Costs incidental to financing, administration, and collection of the contractual assessment program among the consenting property owners and the city

Participating local governments may authorize the property owner to contract for the improvements or purchase equipment directly. Although local governments determine which energy projects are eligible for financing, the California Energy Commission (CEC) recommends photovoltaics (PV), geothermal heat pumps, fuel cells, high-efficiency HVAC systems, insulation, and high-efficiency windows.

The interest rate of bonds may be determined by an index, but it will be fixed at the time the bonds are issued. The assessments levied, interest and any penalties constitute a lien against the improved property until loans are paid.

Senate Bill 77 of 2010 requires the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) to develop and administer a PACE Reserve program to help reduce overall program costs. The bill appropriated $50 million to the authority through January 1, 2015. The bill also authorizes the authority to issue revenue bonds to help support PACE programs. Click here to read more about the CAEATFA's efforts to support PACE.  

California voters provided even more support for PACE programs by approving Ballot Proposition 39 in November 2012. The new law closes a tax loophole, which is expected to provide $1 billion in additional revenue every year. According to the law, half of the new funding collected in the first five years must be used for renewable energy and energy efficiency projects at schools and public facilities, workforce development, and providing assistance to local governments in establishing and implementing PACE programs.

Sales and Use Tax Exclusion for Advanced Transportation and Alternative Energy Manufacturing ProgramState Treasurer's Office$100,000,000 per year03/22/2412/31/254054

SB 71 of 2010 established a sales and use tax exclusion (STE) for eligible projects on property utilized for the design, manufacture, production or assembly of advanced transportation technologies or alternative source (including energy efficiency) products, components, or systems. The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) is administering the program. The STE Program is currently authorized through 2025.

To date, the Program has approved financial assistance for private entities in the following fields: electric vehicle manufacturing, solar photovoltaic manufacturing, landfill gas capture and production, biogas capture and production (dairies and waste water treatment plants), demonstration hydrogen fuel production, electric vehicle battery manufacturing, biomass processing and fuel production, and others.

Eligibility Criteria: § 10033

  • Applicants must show the property to be purchased will be used to design, manufacture, produce or assemble an eligible advanced transportation technology or alternative source product – including energy efficiency – component or system.
  • This definition includes manufacturers of alternative source electricity generation equipment such as solar panels or wind turbines. But it excludes the purchase of that equipment for power generation.
  • The facility must produce benefits to the state of California.
  • The applicant must not be found guilty of violating OSHA or a case of the Occupational Safety and Health Administration’s Severe Violator Enforcement Program.

Application Evaluation: § 10033

  • Applications that meet the project definition criteria will be evaluated based on criteria developed and specified in the program regulations.
  • These evaluation criteria are designed to measure and quantify the fiscal and environmental benefits of the project and to compare the benefits to the cost of the STE.
  • Applicants will receive points in the areas of fiscal benefits and environmental benefits which will translate into a numerical score.
  • Applications that receive a total of 1,000 or more points and a total environment benefits score of 100 or more points will be recommended to the CAEATFA Board for approval.

 Program Restrictions

  • There are no STE minimum or maximum limits for individual projects.
  • Applicants will be required to make at least twenty five (25) percent of the purchases identified in their application within one year of application approval.
  • All purchases must be made within three years following application approval, unless CAEATFA grants a longer time period.

Prior Use

  • CAEATFA will be able to extend the STE to any qualified property for which the participating party can make a representation that there has been no functional use of the qualified property prior to it being conveyed to CAEATFA.

Fees

  • Application Fee – equal to .0005 of the total purchase price of qualified property identified in the application. The minimum application fee shall be a minimum of $250 and shall not exceed $10,000. Payment of the fee is required for a submitted application to be considered complete.
  • Administrative Fee – equal to .004 of the total purchase price of the qualified property purchased. The administrative fee shall be a minimum of $15,000 and shall not exceed $350,000.

Those interested in participating in the SB 71 Program should contact the California Alternative Energy and Advanced Transportation Financing Authority.
 


On October 16, 2020, CAEATFA issued a Notice of Emergency Regulations to make STE Program modifications that address the program’s oversubscription for the last two years, the unprecedented economic impact of the COVID-19 pandemic, incorporate lessons learned from program implementation, add further clarity and specificity in existing regulations provisions, and update and revise regulation and statutory cross-references. The emergency rulemaking package was submitted to the Office of Administrative Law (“OAL”) for review on October 26, 2020. The regulatory action was approved by OAL and became effective upon filing with the Secretary of State on November 4, 2020.

 

City of San Francisco - GreenFinanceSF09/21/2103/29/244091

GreenFinanceSF is a Property Assessed Clean Energy (PACE) financing program for commercial properties. GreenFinance SF uses an "open-market" PACE model in which individual property owners identify their own project lenders and negotiate all the financing terms with them. The City collects loan repayments from the participant through a special tax lien on the property and disburses payment to the project lender. The special tax lean should provide greater security to the lender, who should be able to provide more favorable financing terms to the property owner.

The property must be located in the City and County of San Francisco must be current in the payment of all obligations secured to the property including property taxes, assessments and tax liens within the past 3 years. The GreenFinance SF lien will be a senior lien, and the property owner must receive written consent from all lenders with existing liens on the property.  The property owner must also have a professional energy and/or water audit conducted on the property, and the improvements being targeted by the financing must be identified as opportunities or recommendations by the auditor. If a renewable energy system is financed, the property owner must also implement energy efficiency measures resulting in a 10% improvement in building energy performance.

See program website for additional rules and restrictions.

USDA - High Energy Cost Grant ProgramUSDA Rural Utilities Service$10 million (2021 solicitation)07/20/2203/29/244359

NOTE: The most recent solicitation for this program closed July 6, 2021. Please check the program website for information on future solicitations.

The U.S. Department of Agriculture (USDA) offers an ongoing grant program for the improvement of energy generation, transmission, and distribution facilities in rural communities. This program began in 2000. Eligibility is limited to projects in communities that have average home energy costs at least 275% above the national average. Retail power suppliers serving rural areas are eligible to apply for grant funding, including non-profits (cooperatives and limited dividend or mutual associations), commercial entities, state and local governments entities, and tribal governments. Under the most recent solicitation for projects, a total of $7 million was available for qualifying projects. Under this solicitation grants ranging from $100,000 to $3 million were available for a variety of activities, including:

  • Electric generation, transmission, and distribution facilities;
  • Natural gas or petroleum storage or distribution facilities;
  • Renewable energy facilities used for on-grid or off-grid electric power generation, water or space heating, or process heating and power;
  • Backup up or emergency power generation or energy storage equipment; and
  • Weatherization of residential and community property, or other energy efficiency or conservation programs.

This grant program is not limited to renewable energy or energy conservation and efficiency measures, but these measures are eligible for this grant program.

Marin Clean Energy - Feed-In TariffMarin Clean Energy15 MW of projects06/17/1503/29/244556

Assembly Bill 117, passed in 2002, allows communities in California to aggregate their load and to procure electricity from their own preferred sources. Under the authority of this law, California’s first community choice aggregator, Marin Clean Energy (MCE), was launched in May of 2010. The Marin Energy Authority comprises each city and town in Marin as well as the communities of Belvedere, Fairfax, Mill Valley, San Anselmo, San Rafael, Sausalito, Tiburon, and the County of Marin. The original legislation mandated that the customers of each supporting community would automatically be enrolled in Marin Clean Energy unless they chose not to participate by opting out.

Among the varied sources of renewable energy pursued by MCE are local installations of renewable energy. To streamline the procurement process for small local renewable energy systems, MCE has designed a feed-in tariff which provides long-term contracts to renewable energy system owners. The pricing for the tariff is determined by the total capacity remaining for the program before the contract is signed, and the characteristics of the renewable energy system:

  • Peak - 90% or more of the system's electric output is produced and delivered to MCE between the hours of 6:00 A.M. and 10:00 P.M. Based on typical energy production profiles, solar technologies fall into this category.
  • Baseload - System typically generates electric output around the clock with an annual capacity factor greater than 75%. Based on typical energy production profiles, landfill gas, biomass and fuel cells fall into this category.
  • Intermittent - Energy delivery profile cannot be considered Peak or Baseload. Based on typical energy production profiles, wind energy systems fall into this category.

As shown in the table below, systems with a Peak Energy delivery profile earn the highest per-MWh payments, and prices will decline as more systems sign contracts:

Aggregate rated capacity of all participating
projects prior to contract execution
Peak Energy Prices
(20 year term, $/MWh)
Baseload Energy Prices
(20 year term, $/MWh)
Intermittent Energy Prices
(20 year term, $/MWh)
 < 2 MW  $137.66  $116.49 $100.57
 > 2 MW, < 4 MW  $120.00  $105.00  $95.00
 > 4 MW, < 6 MW   $115.00  $100.00  $90.00
 > 6 MW, < 8 MW  $110.00  $95.00  $90.00
 > 8 MW, < 10 MW  $105.00  $95.00  $90.00
 > 10 MW, < 12 MW  $95.00  $95.00  $90.00
 > 12 MW, < 15 MW  $90.00  $90.00  $90.00

System owners obligated to sign a contract for a 20-year term. Individual projects are limited to 1 MW, and MEA will accept a total of 15 MW under this tariff unless MEA's Board of Directors votes to expand the program. Feed-in tariff participants are not eligible to participate in any net metering option for energy deliveries from the same facility.

 

City of San Diego - Sustainable Building Expedited Permit ProgramCity of San Diego Development Services07/20/2203/29/244790

In 2002, the City of San Diego passed Resolution R-298001, which amended the Sustainable Building Policy to allow for expedited permitting for sustainable buildings. Sustainable buildings are defined in Policy Number 900-14, and the expedited permitting program is described in Policy Number 600-27. The Sustainable Building Policy is scheduled to be revised every three years.

New residential, commercial, and industrial development projects are all eligible for expedited permitting. The expedited permitting process is estimated to take 50% as much time as the normal permitting process. The policy also prioritizes project types in the case that the expedited permitting program is full. Sustainable projects that also qualify as "Affordable Housing" projects receive second priority, and all other sustainable building projects receive fourth priority.

See Council Policy 900-14 for a list of requirements to qualify for expedited permitting.  Program materials, including a checklist and form, are available on the program website above.

Energy Efficiency Financing for Public Sector ProjectsCalifornia Energy Commission08/25/2303/29/245131

Cities, counties, public care institutions, public hospitals, public schools and colleges, and special districts in California can apply for low-interest loans from the California Energy Commission for energy efficiency projects in their buildings and facilities. Residential and commercial projects and non-profit institutions are not eligible for these funds.

Entities eligible for 0% loans include:

  • School districts
  • Charter schools
  • County office of educations
  • State special schools

Entities eligible for 1% loans include:

  • Cities
  • Counties
  • Special Districts
  • Public College or University
  • Community Colleges
  • Public Care Institutions/ Public Hospitals
  • University of California
  • California State Universities

There is no minimum loan amount, but the maximum loan amount per application is $3 million. The loan term cannot exceed the useful life of loan-funded equipment, and will be determined on a case-by-case basis based on the estimated annual energy cost savings from the projects. The exact loan term will be determined such that the energy savings will cover the loan payments.

For a project to be considered, it must have proven energy savings and meet the eligibility requirements of the loan program. Examples of projects include:

  • Lighting systems
  • Pumps and motors
  • Streetlights and LED traffic signals
  • Energy management systems and equipment controls
  • Building insulation
  • Energy generation including renewable energy and combined heat and power projects
  • Heating, ventilation and air conditioning equipment
  • Waste water treatment equipment
  • Load shifting projects, including thermal energy storage
  • Energy storage systems.
  • Electric vehicle charging infrastructure used to power public fleets.

Full details and application packets are available at the web site above.

Western Riverside Council of Governments - Home Energy Renovation Opportunity (HERO) Financing Program01/15/2403/29/245181

Note:  In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENation for more information about PACE financing and a comprehensive list of all PACE programs across the country.

Western Riverside Council of Governments (WRCOG) is offering homeowners in WRCOG participating jurisdictions an opportunity to finance energy and water efficiency projects in their homes. The Home Energy Renovation Opportunity (HERO) Program is a Property Assessed Clean Energy (PACE) financing program. PACE programs allow homeowners to finance energy improvements, and to repay the financing through special assessments on their property taxes. In most cases the property tax assessment will stay with the property if it is sold, though the buyer's lender may impose restrictions on the transfer.

A wide variety of energy and water efficiency products permanently affixed to the property can qualify for this program. Light bulbs, appliances, and other products not permanently affixed to the property are ineligible for this program. Only contractors registered with the program or a property owner who has signed a Self-Install Agreement may install the financed equipment.

See the web site above for complete details.

CaliforniaFIRSTRenewable Funding12/27/2303/29/245309

Note:  In 2010, the Federal Housing Finance Agency (FHFA), which has authority over mortgage underwriters Fannie Mae and Freddie Mac, directed these enterprises against purchasing mortgages of homes with a PACE lien due to its senior status above a mortgage. Most residential PACE activity subsided following this directive; however, some residential PACE programs are now operating with loan loss reserve funds, appropriate disclosures, or other protections meant to address FHFA's concerns. Commercial PACE programs were not directly affected by FHFA’s actions, as Fannie Mae and Freddie Mac do not underwrite commercial mortgages. Visit PACENation for more information about PACE financing and a comprehensive list of all PACE programs across the country.

The CaliforniaFIRST Program is a Property Assessed Clean Energy (PACE) financing program for residential properties. PACE allow property owners to finance the installation of energy and water improvements on their homes and to pay the amount back through their property taxes. CaliforniaFIRST is available to residential customers in participating counties. Check here to find a pace community near you.

State law prohibits PACE program administrator from approving an assessment contract unless the program administrator determines the property owner has a reasonable ability to pay the annual payment obligations for the PACE assessment. S.B. 645 broadens PACE financing opportunities by allowing financing in high risk fire hazard zones for wildfire safety improvements.

More information and a complete list of the currently approved energy and water efficiency technologies are available at the web site above.

Partial Sales and Use Tax Exemption for Agricultural Solar Power FacilitiesCalifornia State Board of Equalization03/16/2303/29/245351

California provides a partial exemption of the state's sales and use tax for farm equipment and machinery. The exemption only applies to taxes levied by the State, and not sales and use taxes levied by local governments. Further, the exemption does not apply to the taxes imposed or administered pursuant to sections 6051.2 and 6201.2 of the Revenue and Taxation Code, the Bradley-Burns Uniform Local Sales and Use Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the California Constitution.

The California State Board of Equalization issued a Special Notice in November 2012, clarifying that photovoltaic (PV) systems that are used to provide electricity to farm equipment and machinery may qualify for the partial exemption. For any farm equipment or machinery to qualify for the partial exemption, it must be used primarily in producing and harvesting agricultural products. "Primarily" means 50% or more of the time. In the case of PV, according to the Special Notice, 50% or more of the electricity produced by the system must be used to provide power to farm equipment and machinery. The system does not need to be directly connected to the equipment to qualify. The system can be connected to the local electrical grid and used to offset the farm's electrical use through a net metering arrangement with the local utility. Applicants will need to demonstrate, however, that the farm equipment annually consumes at least half of the amount of electricity annually produced by the PV system.

Leased equipment also qualifies for the partial exemption. For more information, including a sample Partial Exemption Certificate, can be found on the web site above.

 

Renewable Market Adjusting Tariff (ReMAT)03/16/1803/29/245665

Note: In a December 2017 letter to the IOUs the Executive Director of the CPUC declared that the U.S. District Court had declared that the Re-MAT program violated the Supremacy Clause of the U.S. Constitution by placing numerical limits on utility obligations to purchase power from QFs, and establishing a purchase price different than the utility's avoided cost. The letter instructed the IOUs to not accept or approve new Re-MAT contracts pending further CPUC action. 

All investor-owned utilities and publicly-owned utilities with 75,000 or more customers must make a standard Renewable Market Adjusting Tariff (ReMAT) available to their customers. As the ReMAT is meant to help the utilities meet California's renewable portfolio standard (RPS), all green attributes associated with the energy, including renewable energy credits (RECs), transfer to the utility with the sale. Any customer-generator who sells power to the utility under this tariff may not participate in other state incentive programs. The tariffs will be available until the combined statewide cumulative capacity of eligible generation installed equals 750 megawatts (MW) for the general ReMAT program, and 250 MW for the bioenergy ReMAT program. Each utility will be responsible for a portion of those cumulative totals based on their proportionate sales.

The CPUC has regulatory authority over the investor-owned utilities, but not publicly-owned utilities. Therefore, the rules adopted by the CPUC do not apply to the publicly-owned utilities. Instead, the governing board of each publicly-owned utility is wholly responsible for developing their tariffs within the parameters established by the legislature in CA Public Utilities Code § 399.32 (formerly CA Public Utilities Code § 387.6). The collective share of the 750 MW program capacity established by the legislature for which the investor-owned utilities are responsible is 493.6 MW. The remaining 256.4 MW is to be divided between the publicly-owned utilities. Investor-owned utilities are solely responsible for the 250 MW bioenergy program.


Investor-Owned Utilities (General ReMAT program)

The California ReMAT allows eligible customer-generators to enter into 10-, 15- or 20-year standard contracts with their utilities to sell the electricity produced by small renewable energy systems (up to 3 megawatts (MW)). The CPUC has separated the technologies eligible to participate in the feed-in tariff into three project type categories: Baseload (bioenergy and geothermal), As-Available Peaking (solar), and As-Available Non-Peaking (wind and hydro). The ReMAT starting price is based on the weighted average of the three investor-owned utilities highest executed contract resulting from the Renewable Auction Mechanism (RAM) auction held in November 2011. Based on the results of that auction the starting price was $89.23 per megawatt-hour (MWh). As of July 2016, the current price for Baseload and As-Available Non-Peaking resources remains $89.23 per MWh; the current price for As-Available Peaking resources is $61.23 per MWh.

The CPUC built in price adjustment mechanisms to allow the program to adapt to changing market conditions. Interested generators must start by submitting a program participation request with the utility. The utility will establish a queue on a first-come first-served basis for each product type and will extend a ReMAT price offer to the applicants. The applicant can either accept or reject the contract. The price adjustments are only triggered if at least five projects with different developers for a certain product type apply. If no projects accept the Re-MAT, or less than 50% of the initial starting capacity for that project type accept the Re-MAT after its first two months, then the price will be escalated by $4 per MWh for the third and fourth months. The price will continue to escalate in subsequent two-month blocks until the subscription capacity is equal to 50% or more of the initial starting capacity for that project type. Similarly, if the program demonstrates excessive interest, the Re-MAT will be adjusted downward every two months.


Investor-Owned Utilities (Bioenergy ReMAT program)

SB 1122 of 2012 requires the investor-owned utilities to operate a separate ReMAT program for a cumulative total of 250 MW of bioenergy projects, separate from the wider 750 MW program. The legislation subdivided the 250 MW limit across different bioenergy sources:

  • 110 MW for biogas from wastewater treatment, municipal organic waste diversion, food processing, and codigestion
  • 90 MW for dairy and other agricultural bioenergy
  • 50 MW for bioenergy using byproducts of sustainable forest management

The CPUC, in consultation with the California Energy Commission (CEC), the State Air Resources Board, the Department of Forestry and Fire Protection, the Department of Food and Agriculture, and the Department of Resources Recycling and Recovery, may reallocate the 250 MW requirement among the categories if they determine the allocations referenced above are not appropriate. 


Publicly-Owned Utilities

All publicly-owned utilities with 75,000 or more customers are required to develop feed-in tariffs by July 1, 2013. In determining the rate to pay under the tariffs, publicly-owned utilities must consider:

  • The value of every kilowatt-hour (kWh) on a time of delivery basis
  • Avoided costs for distribution and transmission system upgrades
  • The ability of systems to offset peak demand on the distribution circuit
  • All current and anticipated environmental and greenhouse gas reduction compliance costs

CA Public Utilities Code § 399.32 provides more guidance for publicly-owned utilities in developing their tariffs, including conditions in which the utility may limit the program.

Customers of publicly-owned utilities with 75,000 or more customers should contact their utility for more information. Customers of one of the investor-owned utilities can contact the appropriate program administrator for more information:


LADWP - Feed-in Tariff (FiT) Program100 MW of Projects06/09/2303/29/245685

Through the Feed-in Tariff (FiT) program, LADWP is purchasing energy for up to 20 years from solar V and non PV technologies through a standard offer power purchase agreement. Participating in the program conveys to the utility all energy, capacity rights, and environmental attributes associated with the project.

As of May 2023, the price per kWh varies as shown below:

 Project Capacity  In-Basin PV In-Basin Non-PV Owens Valley PV
 30 kW - 500 kW   $0.145 per kWh

 $0.115 per kWh

 $0.115 per kWh

 > 500 kW - 3 MW

 $0.140 per kWh  $0.110 per kWh  Not Available
 > 3 MW  $0.135 per kWh  $0.105 per kWh    Not Available 


Fannie Mae Green Financing – Loan Program05/08/2003/29/245780

NOTE: Only multifamily properties are eligible for the program. Single family homeowners are not eligible for this program. 

The Fannie Mae Green Financing Business provides mortgage financing to apartment buildings and cooperatives (with 5 or more units) to finance energy and water efficiency property improvements. Its green financing programs include Green Rewards, and preferential pricing for loans secured by a property with an eligible Green Building Certification. All Fannie Mae green loans are securitized as Green Mortgage Backed Securities (Green MBS). To learn more about these programs, multifamily property owners should coordinate with a Fannie Mae DUS Lender:  https://multifamily.fanniemae.com/about-multifamily/our-partners/dus-lenders

Green Rewards, launched in 2015, provides preferential pricing and up to an additional 5% of loan proceeds by including up to 75% of projected owner energy and water savings and 25% of projected tenant savings in the loan underwriting. Conventional and affordable multifamily properties, as well as cooperatives, seniors, military, and student housing properties are eligible for this program. To qualify for a Green Rewards loan the property owner must commit to making property improvements that are projected to reduce the whole property’s annual energy and water consumption by at least 30%, which a minimum of 15% must be attributable to savings in energy consumption. Properties may be located anywhere in US, and the selected property upgrades must be completed within 12 months of loan closing.

Fannie Mae also provides preferential pricing for an acquisition or refinance loan on a conventional or affordable property that has a current, eligible Green Building Certification per Fannie Mae Form 4250.

Please visit the Fannie Mae Green Financing website for more information and detailed program requirements.

Sales and Use Tax Exemption for Electric Power Generation and Storage EquipmentCalifornia Department of Tax and Fee Administration03/16/2307/01/3022048

AB 1817 of 2018 created an exemption from the sales and use tax for "qualified tangible personal property purchased for use by a qualified person to be used primarily in the generation or production, or storage and distribution, of electric power." The exemption also applies to contractors who purchase the equipment in the service of a contract with a qualified person. "Qualified person" is defined in the statutes. 

The exemption does not apply to the generation or production of electricity from nuclear energy, large hydro, or fossil fuels, except when used in cogeneration. However, the exemption does apply to the storage and distribution of electric power from any source.  

The exemption also applies to "special purpose buildings and foundations used as an integral part of the generation or production or storage and distribution of electric power."