The $210,000 grant will allow the city of San Jose to refund $309 for residential permits and $1,340 for commercial permits until June 30, or until the funds are gone.
This is the full permit cost for most installations, city officials said.
Residents will receive their credit immediately when they receive their permit, while businesses will receive the credit after an inspection.
As part of the city's Green Vision Goal, San Jose is moving towards receiving 100 percent of its electricity from clean renewable sources.
"San Jose is a leading city in California on solar installations and has among the lowest solar permit costs. This incentive is just one more reason to go solar in San Jose," Mayor Chuck Reed said in a statement.