Solar in California: Big Rates, Small Export Credits, and a Closing Tax Window
California pairs the country's highest electricity rates with its stingiest export credits. The math still works here, but it works differently: self-consumption and batteries carry the load, and a property tax exclusion worth locking in closes to new systems at the end of 2026.
Solar incentives in California
State, utility, and local programs that can lower the cost of going solar here. Availability and amounts change, so verify each before counting on it.
| Program | Type | What to know |
|---|---|---|
| Active solar property tax exclusion | Property tax | New systems are excluded from property tax reassessment, but the exclusion sunsets January 1, 2027: per state guidance, construction should be underway before January 1, 2026 and complete before January 1, 2027 to qualify. Under SB 710 (2025), systems that qualify in time keep the exclusion for as long as the owner holds the property. |
| SGIP battery rebates | Storage rebate | CPUC program rebating home battery storage in PG&E, SCE, and SDG&E territories, with larger equity and resiliency tiers for low income customers and high fire threat areas. Budgets open and close by step; the low income solar plus storage budget was waitlisted as of mid 2026, so check current availability before counting on it. |
| DAC-SASH low income solar | No cost solar | Covers the installed cost of rooftop solar for income qualified homeowners in designated disadvantaged communities served by the three big utilities. Administered by a statewide nonprofit and authorized through 2030. |
| Sales tax | None | California has no residential sales tax exemption for solar; equipment is taxed as part of the construction contract. Budget for it in quotes. |
Net metering in California
Net billing (NEM 3.0) at the big three utilities. Systems interconnected since April 15, 2023 at PG&E, SCE, and SDG&E earn avoided cost export credits averaging roughly 3 to 8 cents per kWh, far below retail, with export prices locked for 9 years. A state appeals court upheld the tariff in 2026, so it is not going away. Municipal utilities set their own rules: LADWP still credits exports at full retail, and SMUD pays a flat 9.6 cents. Which side of a city boundary you live on can matter more than which panels you buy.
Utility deep dives: LADWP rates and net metering · SCE · PG&E · SDG&E · SMUD
Going solar in California: what shapes the numbers
The local factors that move payback and savings most.
Retail rates do the heavy lifting
PG&E averages around 40 cents per kWh and SDG&E peaks near 70 on summer evenings. Every kWh you produce and use directly offsets those prices, which is why California payback math survives the weak export credits.
Batteries moved from option to default
With exports worth single digits and evening power worth ten times that, storing midday production is the core of the design. NEM 3.0 was built to reward solar plus storage over solar alone.
The 2026 timing question
The property tax exclusion window and the exhausted low income budgets make timing a real variable this year. A system completed in 2026 locks the tax exclusion for your entire ownership; one completed in 2027 does not.
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Local considerations for California homeowners
Conditions and rules that tend to come up when going solar in this state.
- Installers must give you the CPUC's Solar Consumer Protection Guide and have you sign it before you sign a contract at the big three utilities
- The Solar Rights Act voids HOA rules that add more than $1,000 of cost or cut performance more than 10 percent
- HOA applications are deemed approved if not denied in writing within 45 days
- CCA customers should confirm export compensation with their CCA, not just the utility
- No federal residential credit applies to homeowner purchases placed in service after December 31, 2025
Before you sign a California solar contract
Questions worth asking any installer before you commit:
- Which utility and which tariff will I actually be on, and what is the exact export rate?
- Will construction finish in time to qualify for the property tax exclusion before January 1, 2027?
- Is a battery included, and how does the quote value stored versus exported energy?
- Did you provide the CPUC Solar Consumer Protection Guide for me to sign?
- Does this quote subtract any federal credit? For a 2026 homeowner purchase it should not.
- If I am on a CCA, how does my export compensation differ from the utility's?
Related solar guides
Solar in California: frequently asked questions
Is solar still worth it in California under NEM 3.0?
Often yes, but the design changed: with exports worth roughly 3 to 8 cents against retail rates of 30 to 70 cents, the value comes from using your own production, usually with a battery. Oversized systems built to sell surplus no longer make sense at the big three utilities.
Do solar panels raise property taxes in California?
Not if you qualify for the active solar property tax exclusion, which excludes new systems from reassessment. It closes to new systems January 1, 2027, with construction generally needing to start before January 1, 2026. Systems that qualify keep the exclusion for the owner's entire tenure under SB 710.
Does LADWP follow NEM 3.0?
No. NEM 3.0 is CPUC policy and binds only PG&E, SCE, and SDG&E. LADWP is a municipal utility that still credits exported solar at the full retail rate, and SMUD runs its own flat rate program. City boundaries matter enormously for solar economics in California.
What help exists for low income households going solar in California?
DAC-SASH covers the installed cost of rooftop solar for income qualified homeowners in designated disadvantaged communities, and SGIP carries equity tiers for battery storage. Budgets are limited and the low income solar plus storage fund was waitlisted as of mid 2026, so apply early and verify current availability.
Can my HOA block solar in California?
Only within narrow limits. The Solar Rights Act makes restrictions unenforceable if they add more than $1,000 in cost or reduce performance more than 10 percent, and an HOA that does not deny an application in writing within 45 days is deemed to have approved it.
Solar in other states
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