⚠️ 2026 update on the federal tax credit
The 30% federal residential solar tax credit (Section 25D) expired on December 31, 2025 for systems you buy with cash or a loan. Cost and savings figures on this page that assume that credit may be out of date. Two things still apply: Nevada's sales-tax and property-tax exemptions and NV Energy net metering, and systems on a lease or PPA may still qualify for a federal incentive through the end of 2027. For numbers that reflect today's incentives, book a free review and talk to a tax professional about your situation.
California solar has a reputation as the gold standard — and it mostly deserves it, though the rules changed significantly in 2023. If you're considering solar in Los Angeles, San Diego, or Riverside, here's everything you need to know about the current incentive landscape.
The Big Picture: What Changed in April 2023
Until April 2023, California operated under NEM 2.0 — a net metering framework that compensated solar homeowners at or near the full retail rate for every kilowatt-hour they exported to the grid. With SDG&E charging $0.40/kWh and SCE charging $0.30–$0.35/kWh, that was an extremely generous deal.
NEM 3.0 changed that. The California Public Utilities Commission (CPUC) replaced retail-rate export compensation with "Avoided Cost Calculator" (ACC) rates, which currently average $0.06 to $0.08 per kWh — a reduction of roughly 75% in the value of exported solar power.
The solution: design for self-consumption, not export. Solar plus battery storage is now the recommended approach for California homeowners, and the incentive structure has evolved to support it.
Federal Investment Tax Credit (ITC) — Expired December 31, 2025
The 30% federal ITC expired December 31, 2025 under the One Big Beautiful Bill Act — in California exactly as everywhere else. For a system you buy with cash or a loan, there's no longer a 30% federal credit on your panels, battery, inverter, or installation. If you bought and installed on or before December 31, 2025, you can still claim it on that return.
One path survives: lease and PPA (third-party-owned) systems can still capture a federal incentive through the end of 2027, since that credit goes to the system owner. For owned systems, California's own programs below — SGIP and NEM 3.0 — are now the heart of the math, and they're unchanged.
| System type | Installed cost (sticker) |
|---|---|
| 7 kW solar only (LA) | $22,400 |
| 7 kW solar + 13.5 kWh battery | $33,000 |
| 8 kW solar + 13.5 kWh battery (SD) | $36,000 |
These are pre-incentive sticker prices. The federal credit no longer reduces them for a purchase, so for owned systems your savings come from SGIP, self-consumption under NEM 3.0, and the property tax exclusion.
SGIP: California's Battery Storage Rebate
The Self-Generation Incentive Program (SGIP) is California's battery storage incentive. The program is administered by the state's major utilities (SCE, SDG&E, PG&E, SoCalGas) and provides upfront rebates for qualifying battery storage installations.
Standard budget rebates: $200–$400 per kWh of usable battery capacity. For a 13.5 kWh Powerwall, that's $2,700–$5,400.
Equity budget rebates: For income-qualified households (under 80% of area median income) and residents in Tier 2 or Tier 3 high fire hazard severity zones, the rebate increases to $850–$1,000 per kWh. For a 13.5 kWh Powerwall under the equity budget, that's $11,475–$13,500 in rebates — and with the federal ITC now expired for purchases, SGIP is the largest incentive most California buyers will see.
SGIP availability varies by utility territory and budget cycle. SCE and SDG&E equity budgets are currently available; standard budget waitlists exist in some areas.
California Property Tax Exclusion
California provides a property tax exclusion for active solar energy systems under Revenue and Taxation Code Section 73. The exclusion prevents solar from triggering a Prop 13 reassessment — meaning your home's assessed value for property tax purposes doesn't increase because you added solar. As of 2025, it remains in effect through at least 2027. For California homeowners where a solar-plus-battery system can add $20,000–$40,000 in market value, this exclusion saves $200–$500 per year in property taxes.
NEM 3.0 by Utility
SCE (serving most of Riverside, parts of LA): NEM 3.0 ACC export rates average $0.06–$0.08/kWh. Time-of-use rates apply — the smartest solar design optimizes around the peak/off-peak rate differential.
SDG&E (serving San Diego): Same NEM 3.0 framework, same ACC export rates. But SDG&E's retail rates are the highest in the continental US at $0.40+/kWh, which means the electricity you self-consume is worth twice as much as in other markets. NEM 3.0 actually hurts less in San Diego — the self-consumption savings are so high.
LADWP (serving City of LA): LADWP operates under its own net metering program, separate from the CPUC's NEM 3.0 framework. LADWP customers may be on different export rates — confirm with your installer.
NEM 2.0 Grandfathering
If you already have solar in California under NEM 2.0 (interconnected before April 14, 2023), you are grandfathered at NEM 2.0 rates for 20 years from your interconnection date. Your system continues earning retail-rate export credits. Adding battery storage generally doesn't affect your NEM 2.0 status. If you're on NEM 2.0, don't touch your interconnection agreement — it's extremely valuable.
Should You Still Go Solar in California?
Yes — the economics still work, especially with battery storage. California has the highest electricity rates in the continental US in most metro areas, and those rates are rising every year. Even with the federal ITC expired for purchases, SGIP alone can offset a large share of a solar-plus-battery system cost for qualifying households, and the value of self-consumption under NEM 3.0 keeps climbing as rates rise.
The key is designing the system correctly for NEM 3.0: right-sized solar array, adequate battery capacity, and a system tuned for self-consumption rather than export.
Book a free consultation and I'll show you exactly how the numbers work for your specific home, utility, and situation in California.