California’s SOMAH Program

Solar on Multi-Family Affordable Housing (SOMAH) program provides financial incentives to property owners for installing solar energy photovoltaic (PV) systems on qualified, multi-family, affordable housing. The California Public Utilities Commission will provide up to $100 million annually for 10 years under SOMAH to fund 300 megawatts of solar by 2030.

What Is SOMAH’s Goal?

SOMAH aims to provide clean power and energy cost savings to California’s affordable housing residents by incentivizing solar installation on multi-family housing in low-income and disadvantaged communities. The SOMAH Program was designed to provide financial incentives for installing solar panel systems that benefit both property owners and low-income tenants by delivering credits on energy bills to residents that otherwise would not have access to solar energy for their homes.

What Are The Benefits Of SOMAH?

• For Property Owners:
  • Reduces and stabilizes the energy costs in common areas of multi-family buildings.
  • Provides incentives to reduce the cost of PV installation substantially.  
  • Offers a range of no-cost technical assistance services to make going solar easier.
  • Solar PV offers financial benefits to tenants via utility bill savings, making the property more attractive.
• For Tenants:
  • A direct financial benefit on energy bills
  • Access to paid job training opportunities

SOMAH Incentives & PV Installation Costs

The price of a solar photovoltaic (PV) system is determined by several factors, including system components and configuration, difficulty of installation, and available incentives.

If a 100kw multi-family solar PV system costs $300,000, prior to tax credits and incentives, then estimated savings from SOMAH can be seen in the chart below:

SOMAH Incentive Example

The example below is for a property with a tenant allocation of 20 kw, or 73%, and a common area allocation of 7.3 kW, or 27% and is based on SOMAH Year 2 incentive rates.

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ITC - Federal Investment Tax Credit            LIHTC - Low-Income Housing Tax Credit

From: https://calsomah.org/incentives-finance

Property Eligibility Requirements

To Be Eligible for the SOMAH Incentive, Properties Must:

• Have at least five units.
• Be deed-restricted low-income residential housing.
• Satisfy one of the following:
  • 80% of the property residents have incomes at or below 60% of the area median income (AMI) OR
  • Property is in a defined disadvantaged community (DAC) that scores in the top 25% of census tracts statewide in the CalEnviroScreen, including property that is located on tribal land and is federally recognized.
• Be an existing building or retrofit (with a Certificate of Occupancy)
• Have separately metered units
• At least 51% of the system’s electric output must directly offset tenant load, allowing affordable housing residents to receive direct financial savings on their energy bills.
• Be a utility or community choice aggregator (CCA) customer (with VNEM) in the following utility territories:
  • Pacific Gas and Electric (PG&E)
  • Southern California Edison (SCE)
  • San Diego Gas & Electric (SDG&E)
  • PacifiCorp
  • Liberty Utilities

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Application Deposit and Gap Financing

The SOMAH application does require an investment of time to gather documentation and complete the required forms, but when you select TENCO SOLAR as your installer, we will complete the application for you. 

SOMAH applicants applying for systems of 10 kW or larger are required to pay an application deposit based on system size.

• 10-50kw = $1,250
• 50-100kw = $2,500
• 100-250kw = $5,000
• 250-500kw = $10,000
• 500-1,000kw = $20,000

Once the solar system has been installed and approved for incentive payment, the application deposit will be returned in full. Application deposits are waived for priority groups, including disadvantaged communities and tribal properties.

SOMAH incentives are paid at the end of a solar system install, so many property owners will need gap financing to start their project.

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Virtual Net Energy Metering (VNEM)

VNEM is a tariff arrangement that enables a multi-meter property owner to allocate the property's solar system's energy credits to tenants. Instead of flowing to the tenants' meters, the generated electricity feeds directly back onto the grid and the participating utility then allocates the kilowatt-hours received to both the building owner's and tenants' individual utility accounts, based on a pre-determined allocation agreement. VNEM tariffs were first piloted under the Multi-family Affordable Solar Housing Program (MASH) as a means of providing direct benefits of the solar system to low-income tenants in an affordable housing complex.

Unlike other multi-family housing projects, all VNEM projects will continue to be compensated according to Net Billing 2.0. Customers with a signed contract and a completed Net Billing application before April 14, 2023, will be locked into the Net Billing 2.0 rates for 20 years. Customers that complete their application after April 14 will be guaranteed Net Billing 2.0 rates for 9 years.

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Contact TENCO SOLAR To Secure The Best Financing Option For Your Business

TENCO SOLAR is a certified SOMAH Contractor, so contact us today at 888-507-6937 for help determining if your multi-family property is eligible for the SOMAH incentive. We can also assist you with the SOMAH application process!

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TENCO SOLAR does not provide tax or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax or accounting advice. You should consult your own tax, legal and accounting advisors regarding your specific circumstances.