Solar Water Heating for Multifamily and Commercial

The California Solar Initiative – Thermal Program is scheduled to sunset on July 31, 2020. At that time, no new residential, commercial or multifamily applications will be accepted. For questions about the incentive or application deadline, we encourage you to contact CSE’s solar thermal team via email.

Solar Water Heating for Business and Property Owners

Solar water heating is a great way for commercial and multifamily residential properties to lower operating costs and reduce their environmental impacts. There are many benefits of installing solar water heating, including saving up to 80% on water heating costs and appealing to eco-conscious consumers.

Solar Water Heating in Action

Almost every business uses hot water, whether it’s for hand sinks and showers or high-volume commercial dishwashers, heavy-duty laundries, pools or industrial processes. With solar water heating systems, savings come from lower utility bills with the added benefit of fewer emissions.

By displacing much of the natural gas currently used for water heating, businesses like hotels, laundromats, restaurants and apartment complexes have found this green alternative to be a valuable next step toward achieving more sustainable operations.

Another important benefit of solar water heating is its seamless application to diverse businesses. Hotels, gyms, restaurants, process plants and other businesses can realize the benefits of solar thermal technology in a variety of ways.

  • Domestic hot water for bathing, dishwashing, laundry, cleaning, etc., suitable for multifamily properties, hotels and laundromats.
  • Pool and spa heating, perfect for multifamily properties, hotels, gyms and community centers.
  • Space heating and cooling to warm up your building while cooling down your energy bill.


Rebates for installing solar water heating systems on commercial or multifamily properties are determined by how many therms your system is expected to displace over one year. Most systems are rebated as one lump-sum payment after the system is installed and permitted. For properties installing solar thermal systems for process heat, cooling, space heating or a combination, the rebate will be a performance-based incentive (PBI) determined by the actual metered performance of the system and paid quarterly over two years.


Incentive per annual therm displaced

Maximum incentive commercial or multifamily project







Sample Multifamily System Cost

Average cost of a multifamily solar water heating system


Average CSI-Thermal rebate




30% federal tax credit ($35,000 x30%)


Net System cost to property


System costs vary widely based on the size of the property and typical hot water demand. In the San Diego area, the average cost for a solar thermal system installed on a multifamily residential properties is around $95,000. CSI-Thermal incentives for these properties typically cover around 60% of the total system cost. Your property may also be able to claim a federal investment tax credit for 30% of the total project cost after rebates, as well as accelerated depreciation. CSE recommends you speak with a tax professional to learn more about what tax advantages you may be eligible for when installing solar water heating.

Rebates for Low-Income Multifamily Properties

Budget category

Incentive per annual therm displaced

Maximum incentive

Low-income multifamily residential projects



The CSI-Thermal program is committed to making clean energy options accessible to all individuals. Qualifying low-income multifamily properties in San Diego County are eligible for higher incentives of up to $24.89 per therm.

To find out if your property is eligible for these higher rebate amounts, check our guide for low income-eligibility.

Check Eligibility



Incentive per annual therm displaced for solar pools

Max incentive (not to exceed 50% of total system cost)







Sample Pool Rebate Cost

Average cost of a commercial pool solar water heating system


Average CSI-Thermal rebate




Net system cost to property


Many commercial and multifamily properties with on-site pools and spas have found solar thermal systems provide a cost-effective solution to heating these popular consumer amenities. Under the CSI-Thermal Program, incentives are available for commercial pools where natural gas service is available for pool heating. Note that the CSI-Thermal Program caps incentives at 50% of the total system cost. Commercial pools are not eligible for the federal investment tax credit.

Ready to take the next step toward getting solar water heating for your business or multifamily property? Get started with our guide for commercial and multifamily properties.

Learn More

Saving with Solar Water Heating

Eligible commercial and multifamily property owners may also be able to reduce their business’s tax liability through the federal Business Energy Investment Tax Credit (ITC) and accelerated depreciation.

30% Federal Tax Credit:

As well as rebates offered through the CSI-Thermal Program, businesses and multifamily properties may be able to claim the ITC. This federal tax credit covers up to 30% of the cost of a new solar water heating system, including equipment and installation. For questions regarding the tax credit, speak with your company’s tax professional.

Accelerated Depreciation:

Established in 1986, federal accelerated depreciation standards set by the Modified Accelerated Cost Recovery System (MACRS) have helped businesses make critical investments into long-term renewable energy. Solar water heating systems are eligible for MACRS, which may allow your business to further reduce the cost of a SWH system through accelerated depreciation. We suggest consulting your tax professional to see if you can take advantage of the accelerated depreciation tax credit.

Financing Your Commercial Solar Water System

In addition to rebates, enterprises interested in bringing solar water heating technology to their properties have several financing options to defray the initial investment costs. In the SDG&E territory, solar financing is available in a variety of forms for businesses and commercial properties. Among the options available are property assessed clean energy (PACE) loans, local credit union energy loan programs and third-party ownership agreements.

To learn more about programs available in your area, please visit our Finance Database.

Learn More

Determining Incentive Eligibility

CSI-Thermal rebates are available to multifamily and commercial customers for a variety of end uses.

  • Domestic solar water heating (direct use of solar heated water)
  • Solar cooling
  • Process heat
  • Space heating
  • Combination systems

To be eligible for a rebate, the property must have natural gas service from SDG&E and must use natural gas as the backup heat source for the desired end use.

Solar thermal pool systems installed for commercial, multifamily, government, nonprofit or institutional properties are also eligible for rebates. While you are not required to have a natural gas pool heating system to receive a CSI-Thermal rebate, you must have natural gas service to the property.

All solar water heating systems must be installed by an eligible contractor to qualify for a CSI-Thermal rebate.