In short: Solar can still pay off in California because electricity is among the most expensive in the US, but the rules have changed. New customers of PG&E, SCE and SDG&E are on NEM 3.0, which pays much less for exported power, so the best systems are designed around using your own solar, often with a battery. Typical installed prices run roughly $2.40–$3.30 per watt before incentives. There’s no state income tax credit, and a key property tax benefit, the solar property tax exclusion, is scheduled to end on January 1, 2027 for new systems.
This article is general information, not tax or legal advice. California rules and utility programs change; confirm current terms with your utility, county assessor and a tax professional.
Time-sensitive. Last verified: September 30, 2026. Several California incentives have already expired or are about to. The biggest one for new customers: the property tax exclusion for new solar systems ends January 1, 2027. See the deadlines table below and re-check anything you rely on.
This guide pulls together what matters for a California homeowner: costs, how NEM 3.0 works, which incentives remain, whether a battery makes sense, what the January 2027 property tax deadline means, and how to get started without being rushed into a bad deal.
Is solar worth it in California in 2026?
For many homes, yes. California electricity prices are high, so every kWh you use from your own panels avoids an expensive purchase. But payback is longer than it was under the old rules and depends on your utility, your rate plan, your usage pattern and the system you choose. Industry estimates vary a lot: solar-only paybacks are often quoted around 8–13 years under NEM 3.0 and solar-plus-battery around 7–10, though some sources go higher. See the illustrative example below and California NEM 3.0 Explained.
How much do solar panels cost in California?
Most sources put installed prices at about $2.40–$3.30 per watt before incentives, in line with or slightly below the national range. A few sources report higher numbers, especially in some coastal markets, so compare local quotes. For how price per watt works, see How Much Do Solar Panels Cost in 2026?
| System size | Approx. panels (400 W) | Estimated installed cost |
|---|---|---|
| 6 kW | 15 | about $14,400–$19,800 |
| 8 kW | 20 | about $19,200–$26,400 |
| 10 kW | 25 | about $24,000–$33,000 |
A home battery typically adds several thousand dollars or more. Compare options in Tesla Powerwall vs Enphase vs FranklinWH and Solar + Battery Cost After US Incentives.
Which utility are you on? It changes everything
- PG&E, SCE and SDG&E: new solar customers are on the Net Billing Tariff (NEM 3.0). Exports are valued at avoided-cost rates that average roughly $0.05–$0.08 per kWh and vary by hour and season. Earlier NEM 2.0 customers are generally grandfathered for about 20 years. Details in California NEM 3.0 Explained.
- Municipal utilities (for example LADWP, SMUD, Anaheim and others) follow their own rules, and some offer more generous export credits and local rebates. Check yours.
- Community choice aggregators (CCAs) supply the electricity in many areas while the big utilities deliver it, so your plan options can differ. Check how they treat solar customers.
Designing a system for California’s rules
- Size for self-consumption, not maximum export. See How Many Solar Panels Do I Need?
- Consider a battery to shift midday solar into the expensive evening hours, and for backup during outages. See Do You Need a Solar Battery?
- Choose the right time-of-use plan and have installers model your savings on it.
- Shift usage: run laundry, dishwashers, pool pumps and EV charging when your panels produce.
- Consider west-facing panels to match late-afternoon use. See Best Roof Direction and Angle.
- Plan for outages: parts of California face wildfire-related power shutoffs, which can make backup power valuable. See Solar Batteries and Blackouts.
An illustrative California example
Illustrative example only: an 8 kW system costing $23,000 that produces about 12,400 kWh a year (about 1,550 kWh per kW). Assume a blended retail price of $0.35 per kWh and exports valued at $0.07 per kWh.
| Solar only | Solar + battery | |
|---|---|---|
| Total cost | $23,000 | $35,000 (battery about $12,000) |
| Share of solar used at home | 35% | 70% |
| Value of self-used power | 4,340 kWh × $0.35 = $1,519 | 8,680 kWh × $0.35 = $3,038 |
| Value of exports | 8,060 kWh × $0.07 = $564 | 3,720 kWh × $0.07 = $260 |
| Annual savings | about $2,083 | about $3,298 |
| Simple payback | about 11 years | about 10.6 years |
What the example shows: under NEM 3.0, a battery doesn’t dramatically shorten payback by itself, but it raises your savings and gives you backup power. Real results depend on your rates, usage and prices. Electricity prices usually rise over time, which shortens actual payback compared with these simple figures. Calculate your own with How to Calculate Your Solar Payback Period.
Incentives in California (2026)
| Incentive | Status |
|---|---|
| Federal residential tax credit (30%) | Not available for systems bought and installed after 2025. See Federal Solar Tax Credit Changes. |
| State income tax credit | None. |
| Property tax exclusion (R&T Code §73) | Available for systems completed before January 1, 2027. See the section below. |
| SGIP battery rebates | The ratepayer-funded SGIP budgets (General Market, Equity and Equity Resiliency) closed to new applicants after December 31, 2025. The state-funded income-qualified Residential Solar and Storage Equity (RSSE) budget offers up to about $1,100 per kWh for storage and $3,100 per kW for paired solar, but its funds are exhausted and applicants go on a waitlist. Check selfgenca.com for the current status. |
| DAC-SASH | Pays $3 per watt for rooftop solar for income-qualified homeowners (CARE/FERA-level eligibility) living in disadvantaged communities served by PG&E, SCE or SDG&E (not LADWP). Administered by GRID Alternatives; funding is authorized through the end of 2030, subject to annual availability. |
| SOMAH | Incentives for solar on qualifying affordable multifamily buildings, with bill credits for tenants. Sources disagree on how long funding runs (from mid-2026 to 2032), so check calsomah.org. |
| Local utility and CCA programs | Some municipal utilities and community power programs offer battery or solar rebates. Availability varies. |
| Sales tax | No general exemption for residential solar. According to the state tax agency (CDTFA), a solar installation is a construction contract: sales or use tax applies to the materials and fixtures (panels, inverters, batteries), while installation labor is generally not taxed. Ask your installer to itemize. |
See State Solar Incentives and Rebates Directory and Battery Storage Incentives by State for the wider picture.
The property tax exclusion deadline: January 1, 2027
Under California law, adding an active solar energy system normally doesn’t count as “new construction” for property tax purposes, so it doesn’t trigger a reassessment that would raise your property taxes. That exclusion is scheduled to sunset on January 1, 2027.
- Systems that qualify before the deadline keep the exclusion until a change of ownership, under a law signed in October 2025 (SB 710).
- Systems completed after the deadline may be treated as new construction, so the added value could be assessed and taxed under current law.
- An extension bill (AB 2389) was proposed to continue the exclusion for smaller customer-sited systems, but it was held in committee in May 2026 and, according to the most recent sources we found, has not been enacted. Check the legislature’s website for any last-minute changes.
- What counts as “completed”: a State Board of Equalization letter says the exclusion covers new construction completed before January 1, 2027, and construction that starts after January 1, 2026 must also be finished by then. Other sources say the system must pass inspection with the local authority or be active and connected to the grid. Because interpretations differ, aim to have final inspection and utility permission to operate done well before year-end and confirm with your county assessor.
- Adding panels or a battery to an existing system after 2026 may also have property tax consequences, according to solar industry groups. Confirm with your assessor.
How much is it worth?
Illustrative: California’s basic property tax rate is around 1% of assessed value, with local additions. If a $25,000 system were added to your assessed value, that would mean roughly $250–$300 more in property tax per year. That’s a real cost (over 20 years it could add up to several thousand dollars), but it’s a fraction of the annual savings in the example above. It doesn’t make solar a bad idea after 2026; it lengthens payback modestly.
Don’t let the deadline rush you into a bad deal
Installers commonly use this deadline as a sales pressure tool. Real timelines include design, permitting, installation, inspection and utility permission to operate, which can take weeks or months. If you want the exclusion, ask each installer for a written, realistic schedule, and still compare quotes carefully. Read How to Choose a Solar Installer and How to Compare Solar Quotes and Spot Red Flags. A rushed contract can cost you more than the tax benefit is worth.
California-specific things to know
- Contractor licensing and contracts: California requires solar installers to hold a Contractors State License Board (CSLB) license, typically in the C-46 (Solar) or C-10 (Electrical) classification. Check the license on the CSLB website before you sign. Residential solar contracts must include the contractor’s license number and a Solar Energy System Disclosure Document, and you generally have a right to cancel, typically within 3 business days and 5 in some cases. Read the cancellation notice in your contract.
- Permits and interconnection: a California law (SB 379) requires most cities and counties to offer online, automated permitting for residential solar systems up to 38.4 kW, with deadlines in 2023 and 2024 depending on population. Compliance varies by jurisdiction, so ask your installer how long permits take in your area. See Solar Permits and Interconnection.
- HOA rules: California’s Solar Rights Act (Civil Code §714) makes HOA rules that effectively prohibit or restrict solar void and unenforceable. Rules that add significant cost or cut efficiency (thresholds of about $1,000 or 10% for solar panels, according to legal summaries) are treated as unreasonable. Check the current text and your HOA’s process. See HOA Rules and Your Right to Install Solar.
- New homes: California’s building standards generally require rooftop solar on newly constructed homes.
- Roofs and fire safety: ask about setbacks, fire codes and roof condition. See Solar Panels on Flat, Metal, Tile and Slate Roofs.
- Existing NEM 2.0 owners: changes to your system could affect your grandfathered terms, so check with your utility first.
Deadlines and expiration dates at a glance
Last verified September 30, 2026. Dates and program status can change, so confirm with the official source before you rely on any of them.
| What | Date | Status and what to do |
|---|---|---|
| Property tax exclusion for new solar | January 1, 2027 | Systems must be completed before this date. An extension bill stalled in May 2026. Systems that already qualify keep the exclusion until a change of ownership. |
| Federal residential solar credit (30%) | December 31, 2025 | Expired for homeowner purchases. See Federal Solar Tax Credit Changes. |
| Federal business credit for leases and PPAs | December 31, 2027 (with a construction-start exception, July 4, 2026) | Sources describe the schedule differently. If you’re considering a lease or PPA, ask the provider how the credit affects your rate. |
| SGIP general, equity and equity-resiliency budgets | December 31, 2025 | Closed to new applicants. Only the income-qualified RSSE waitlist remains. |
| DAC-SASH funding | December 31, 2030 | Authorized through 2030, subject to annual funding. |
| SOMAH funding | Unclear (2026 to 2032) | Sources disagree. Check calsomah.org. |
| NEM 3.0 review | After April 2026 | The CPUC review could change rules for future customers. Customers on NEM 3.0 have their export rates locked for 9 years from interconnection. See California NEM 3.0 Explained. |
How to go solar in California: step by step
- Identify your utility and current rate plan, and pull 12 months of usage data (especially evening usage).
- Decide your goals: savings, backup power, EV charging.
- Get at least three itemized quotes, with and without a battery, each modeled on your actual rate plan.
- Verify licenses on the CSLB site and check references.
- Ask about the property tax deadline and a realistic schedule if you want to complete in 2026.
- Check incentives: income-qualified programs (DAC-SASH, the SGIP equity waitlist), and local utility and community power programs. Confirm each program’s status and funding first.
- Review the contract and financing. See Solar Loans vs Cash vs Lease.
- After installation, confirm permission to operate, set up monitoring and check your first bills against the estimate.
Common mistakes
- Using old payback numbers from the NEM 2.0 era.
- Oversizing the system to export more power.
- Assuming a battery always pays for itself, or never does, without modeling your plan.
- Signing quickly because of the property tax deadline.
- Assuming the federal credit still applies.
- Skipping the CSLB license check.
- Assuming NEM 3.0 rules apply to a municipal utility.
Next steps
- Find out which utility and plan you’re on.
- Read California NEM 3.0 Explained to understand exports.
- Get quotes and compare: How to Compare Solar Quotes and Spot Red Flags.
- Calculate your payback: How to Calculate Your Solar Payback Period.
Where to next:
Frequently asked questions
Is solar worth it in California in 2026?
For many homes, yes, thanks to high electricity prices, especially with a design based on self-consumption and, often, a battery. Payback is longer than under NEM 2.0 and depends on your utility, rate plan and usage.
How much do solar panels cost in California?
Most sources put installed prices at roughly $2.40–$3.30 per watt before incentives, or about $19,200–$26,400 for an 8 kW system. Quotes vary by installer, equipment and location.
Does California have a solar tax credit?
No state income tax credit. The federal 30% credit no longer applies to systems bought after 2025. Programs that remain include DAC-SASH for eligible low-income households, the income-qualified SGIP equity budget (currently on a waitlist; the general SGIP budgets closed after 2025), and the property tax exclusion for systems completed before January 1, 2027.
What happens to the California solar property tax exclusion after 2026?
It is scheduled to sunset on January 1, 2027 for new systems. Systems that qualify before then keep the exclusion until a change of ownership. An extension bill was proposed but had not been enacted according to the latest sources we found, so check for updates.
Do I need a battery with NEM 3.0?
Not required, but it often improves the economics by moving midday solar to the expensive evening hours, and it provides backup power. Whether it pays back depends on your rates and battery cost.
Do municipal utilities like LADWP and SMUD use NEM 3.0?
No, NEM 3.0 applies to PG&E, SCE and SDG&E. Municipal utilities set their own rules, and some offer more favorable export credits, so check with yours.