California has more rooftop solar than any other state, a deep bench of experienced installers, and some of the highest investor-owned utility rates in the country. It also has NEM 3.0 — the 2023 shift from retail net metering to "net billing" — which cut the value of exported solar power for PG&E, SCE, and SDG&E customers and made system design matter far more than it used to.
This guide explains how the California market works in 2026: which utilities are on net billing and which still offer better deals, what solar and batteries actually cost, which incentives exist, and how to pressure-test a California solar proposal before you sign it.
Figures reflect public utility rates and typical household usage. Last reviewed: August 2026.
California's solar market at a glance
California passed two million solar rooftops years ago and requires solar on most new home construction. Investor-owned utility rates have climbed steeply — PG&E and SDG&E residential rates are among the highest in the continental U.S. — while municipal utilities like SMUD, LADWP, and Anaheim Public Utilities charge dramatically less and, in some cases, credit solar more generously.
The result is a market of two speeds: on high-rate IOU territory, solar-plus-battery aimed at self-consumption is the play; on low-rate municipal territory, simpler solar-only systems can still make sense. Knowing which territory you're in is the first step in evaluating any quote.
Why homeowners in California go solar
For PG&E, SCE, and SDG&E customers, the driver is rate escape: retail rates of roughly 36–47 cents per kWh mean a home that offsets most of its usage saves thousands per year, even with reduced export credits. Time-of-use rates that peak in the evening reward households that store solar and use it after sunset.
Resilience is the second driver. Public Safety Power Shutoffs in fire-prone areas and general grid stress have made battery backup a mainstream purchase, and SGIP rebates can offset battery costs — substantially so for households in high fire-threat districts or on medical baseline rates.
Is solar worth it in California?
Usually yes on investor-owned utility territory — but only when the system is designed for NEM 3.0 reality, which typically means storage and self-consumption.
For PG&E, SCE, and SDG&E customers paying roughly 36–47 cents per kWh, offsetting your own usage remains extremely valuable — the economics weakened for systems that export heavily, not for systems that displace retail purchases. A right-sized solar-plus-battery system aligned with time-of-use rates commonly pays back in the five-to-eight-year range, and continuing IOU rate increases push that math further in solar's favor each year.
Where the answer is more nuanced: on low-rate municipal territory (SMUD, and similar), payback stretches longer and solar-only may beat solar-plus-storage; homes with light evening usage or heavy shading need careful modeling; and financed deals with large embedded dealer fees can quietly erase the advantage. The single best protection is making every bidder disclose their export-credit and self-consumption assumptions in writing — and getting a cash price alongside any financed price. Notably, LADWP customers still enjoy retail net metering, making Los Angeles one of the simplest strong-yes markets in the state.
How much can solar generate and save in California?
California's sun resource is excellent almost everywhere — from about 5 peak sun hours on the coast to well over 6 in the deserts — so production is rarely the limiting factor. The figures below are directional estimates from statewide averages; the financial value of each kWh varies enormously by utility territory and how much of it you consume on-site under NEM 3.0.
For IOU customers, treat the savings column as achievable with good self-consumption (typically battery-assisted). For LADWP and other retail-net-metering territories, exported kWh retain close to full value, making the estimates less sensitive to usage patterns.
| System size | Est. annual production | Est. annual savings* | Est. 25-year savings* |
|---|---|---|---|
| 4 kW | 6,377 kWh | $2,245 | $56,118 |
| 6 kW | 9,566 kWh | $3,367 | $84,181 |
| 8 kW | 12,755 kWh | $4,490 | $112,244 |
| 10 kW | 15,943 kWh | $5,612 | $140,298 |
*Savings assume the produced electricity offsets purchases at today's average residential rate. These are directional estimates, not quotes.
Estimates assume average California sun exposure (5.6 peak sun hours/day), a standard system efficiency factor, and the average residential rate of 35.2¢/kWh. Panel output degrades slowly (~0.5%/yr), and utility rates typically rise over time — these effects partially offset in long-run savings. Your roof, shading, and utility program will change these figures.
What makes going solar in California different
NEM 3.0 changed the export math
Systems interconnected under the Net Billing Tariff earn export credits based on avoided-cost values that average far below retail rates — high on a handful of summer evening hours, low most of the time. Well-designed systems now prioritize self-consumption: right-sizing, load shifting, and usually a battery. Be wary of any proposal that models NEM-2-era savings.
Your utility territory is destiny
PG&E, SCE, and SDG&E are on NEM 3.0. But LADWP still offers true retail net metering, SMUD has its own solar and storage rate, and municipal utilities like Anaheim, Riverside, Roseville, Glendale, Burbank, and Modesto's MID run independent programs with much lower base rates. Identical houses in Long Beach (SCE) and Los Angeles (LADWP) can have completely different solar economics.
Permitting varies by city
California has hundreds of permitting jurisdictions. Many use automated instant permitting (SolarAPP+); others take weeks. Local installers know which cities move fast and which require extra structural documentation.
Wildfire and insurance considerations
In high fire-threat districts, expect utility shutoff events, possible extra interconnection scrutiny, and insurance questions about roof-mounted equipment. Batteries with backup capability are particularly valuable in these areas, and SGIP's equity-resiliency budget can cover much of their cost for eligible households.
What solar costs in California
California's mature, competitive installer market keeps hardware pricing among the lowest in the country — commonly in the high-$2s per watt before incentives for a straightforward roof, with wide variation by region and equipment tier. A typical 6–7 kW system might run roughly $17,000–$20,000 before the 30% federal credit.
Batteries add roughly $9,000–$16,000+ installed depending on capacity, before the federal credit and any SGIP rebate. Under NEM 3.0, that battery is often what makes the project's savings hold up — so compare solar-only and solar-plus-storage proposals side by side, and make every bidder state their export-credit and self-consumption assumptions in writing.
Solar incentives in California
Federal Residential Clean Energy Credit
Federal income tax credit worth 30% of the total installed cost of residential solar and battery systems.
| Eligibility | Homeowners with sufficient federal tax liability; owned (not leased) systems. |
|---|---|
| Current status | Active |
| Last reviewed | August 2026 |
Verify current program details (IRS — Residential Clean Energy Credit) →
Self-Generation Incentive Program (SGIP)
Rebates for home battery storage, administered through the major utilities. General-market rebates are modest; equity and equity-resiliency budgets (high fire-threat districts, medical baseline, income-qualified) can cover a large share of battery cost.
| Eligibility | Customers of PG&E, SCE, SDG&E, and SoCalGas installing qualifying storage. |
|---|---|
| Current status | Active — budgets vary by category |
| Last reviewed | August 2026 |
Active Solar Energy System Property Tax Exclusion
Adding solar does not increase your home's assessed value for property tax purposes while the exclusion remains in effect.
| Eligibility | Qualifying new active solar energy systems on California property. |
|---|---|
| Current status | Active — statutory sunset applies; verify current law |
| Last reviewed | August 2026 |
Verify current program details (California State Board of Equalization) →
DAC-SASH (Disadvantaged Communities — Single-family Solar Homes)
No-cost solar installations for income-qualified homeowners living in designated disadvantaged communities, administered by GRID Alternatives.
| Eligibility | Income-qualified homeowners in eligible communities served by PG&E, SCE, or SDG&E. |
|---|---|
| Current status | Active |
| Last reviewed | August 2026 |
Verify current program details (GRID Alternatives — DAC-SASH) →
Utility considerations
- PG&E, SCE, and SDG&E (investor-owned): NEM 3.0 Net Billing Tariff for new solar — avoided-cost export credits, strong incentive to pair storage and shift usage.
- LADWP (Los Angeles): still offers retail-rate net energy metering — among the best solar deals of any large California utility.
- SMUD (Sacramento): its own Solar and Storage Rate with set export credits and much lower base rates than the IOUs.
- Municipal utilities (Anaheim, Riverside, Roseville, Glendale, Burbank, Modesto MID, and others): independent net billing schedules and rates — check your city's program directly.
Battery storage in California
Under NEM 3.0, a battery converts low-value exports into high-value self-consumption during expensive evening time-of-use hours — that's the core of the post-2023 California solar pitch, and for most IOU customers it's correct. The battery also rides through Public Safety Power Shutoffs and outages.
Scrutinize battery proposals the same way you would panels: usable kWh, continuous kW, which loads are backed up, round-trip efficiency, warranty throughput, and whether SGIP eligibility (and who files for it) is spelled out.
How to choose a solar installer in California
- Verify a C-46 Solar or C-10 Electrical license with the Contractors State License Board, and check the license's complaint and bond history online.
- Make every bidder disclose their NEM 3.0 modeling assumptions: export credit values, self-consumption percentage, rate escalation, and time-of-use schedule.
- Prefer installers who regularly work in your city and utility territory — permitting speed and interconnection familiarity vary enormously across California.
- Compare financing offers carefully: dealer fees on solar loans can add 20–30% to the cash price. Ask for the cash price and the financed price separately.
- Avoid pressure tactics tied to 'expiring' incentives — verify any claimed deadline against the official program source before believing it.
Learn how we evaluate solar information →
Installer evaluation checklist
- Licensing
- Experience
- Local Knowledge
- Equipment
- Workmanship Warranty
- Manufacturer Warranty
- Financing
- Permitting
- Utility Experience
- Customer Support
- Installation Timeline
- Proposal Transparency
Questions to ask before you sign
- Is this proposal modeled under NEM 3.0 net billing, and can I see the export-credit assumptions?
- What happens to my savings if I can't shift usage to daytime — how sensitive is the model?
- What's the cash price versus the financed price, and what dealer fee is embedded in the loan?
- Am I eligible for any SGIP battery budget category, and who files the application?
- Which permitting jurisdiction is my home in, and what is your current timeline there?
- How do you handle roof warranty coverage where the mounts penetrate?
The installation process in California
- Usage and rate analysis. A good California proposal starts with your interval usage data and time-of-use rate schedule — not just your monthly bill total.
- Design and proposal. System and battery sizing against NEM 3.0 economics, with written assumptions.
- Permitting. City or county permit — instant in SolarAPP+ jurisdictions, weeks elsewhere.
- Installation. Usually one to three days on-site for solar plus storage.
- Inspection and PTO. Local inspection, then utility permission to operate. Your net billing tariff takes effect from interconnection.
Local considerations across California
Sun resource ranges from about 5 peak sun hours on the foggy north coast to well over 6 in the high desert — but rates vary even more than sun. A San Diego home on SDG&E at 47¢/kWh has a fundamentally stronger solar case than a Sacramento home on SMUD at under 18¢, despite similar weather.
In the Central Valley, summer cooling loads make system sizing and panel temperature coefficients matter; in coastal marine layers, morning shade patterns deserve attention; in the foothills and high fire-threat districts, backup power and insurer requirements should be part of the conversation. Insist on production estimates modeled for your specific address, not a regional average.
Frequently asked questions
Is solar still worth it in California after NEM 3.0?
Often yes, but the design has to respect the new rules. NEM 3.0 cut export credits to avoided-cost values, so systems that simply push power to the grid earn far less than they would have under NEM 2.0. Systems designed for self-consumption — right-sized, paired with a battery, and aligned with time-of-use rates — can still deliver strong savings, especially on PG&E, SCE, and SDG&E territory where retail rates are 36–47¢/kWh. On municipal territory like LADWP (which kept retail net metering) the math can be even simpler. The key is making every bidder show their export and self-consumption assumptions.
Do I need a battery in California now?
On investor-owned utility territory, a battery is usually what makes post-NEM-3.0 economics work: it stores midday solar that would otherwise export at low credit values and discharges it during expensive evening hours. It also provides backup during outages and shutoff events. On lower-rate municipal territory, or for households with heavy daytime usage, solar-only can still pencil. Get both configurations quoted and compare payback side by side.
How much does solar cost in California in 2026?
Competitive pricing for a straightforward residential install commonly lands in the high-$2s per watt before incentives — roughly $17,000–$20,000 for a typical 6–7 kW system, minus the 30% federal credit. Batteries add roughly $9,000–$16,000+ before credits and any SGIP rebate. Prices vary meaningfully by region, roof complexity, and equipment tier, and financed prices often embed significant dealer fees — always ask for the cash price.
Which California utilities still offer full net metering?
Among large utilities, LADWP in Los Angeles still credits exports at retail rates under true net energy metering. PG&E, SCE, and SDG&E moved to NEM 3.0 net billing in April 2023 for new applicants. Municipal utilities such as SMUD, Anaheim, Riverside, Roseville, Glendale, and Burbank each run their own successor programs with varying credit structures — check your specific utility before assuming either extreme.
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How we research this page
This guide is compiled from official program administrators, utility tariff information, and public data, and is reviewed periodically (last reviewed: August 2026). Being mentioned on this website does not automatically mean a company or program is the best option for every homeowner. Read our full methodology.
Sources & references
- California Public Utilities Commission — NEM 3.0 / Net Billing Tariff, SGIP
- Contractors State License Board — Installer license verification
- California Energy Commission — Solar mandates and state energy data
- California State Board of Equalization — Solar property tax exclusion
- GRID Alternatives — DAC-SASH income-qualified solar
- IRS — Federal Residential Clean Energy Credit
- U.S. EIA — California profile — Electricity rates and market data