California solar incentives changed significantly in 2023 with NEM 3.0. Here's everything Southern California homeowners need to know going into 2025.
Federal: 30% ITC (Same as Every State)
California homeowners get the same 30% federal Investment Tax Credit as everyone else. On a $25,000 system (California systems run larger than Nevada), that's $7,500 back on your federal taxes. The ITC applies to cash, loan, and now also covers battery storage systems charged primarily by solar.
NEM 3.0 — What Changed in April 2023
California's Net Energy Metering 3.0 (officially "Net Billing Tariff") launched April 15, 2023 for new solar customers of PG&E, SCE, and SDG&E. The key change:
- Old NEM 2.0: Exported solar credited at retail rate (~$0.25–0.35/kWh)
- New NEM 3.0: Exported solar credited at "avoided cost" rate (~$0.02–0.08/kWh)
This dramatically reduces the value of excess solar sent to the grid. A system designed to export 40% of its production is now much less economical than under NEM 2.0.
How to Win Under NEM 3.0
The answer is self-consumption — use your solar power as it's being generated, and store what you can't use immediately:
- Add battery storage: A Tesla Powerwall 3 or Enphase IQ Battery stores midday solar for evening use instead of exporting it at low rates
- Shift loads to solar hours: EV charging, laundry, dishwasher — schedule for 10am–2pm
- Right-size the system: Under NEM 3.0, bigger is not better. Excess production earns almost nothing; design for 85–90% self-consumption
California Solar Mandate
Since January 1, 2020, all new single-family homes and low-rise multifamily buildings in California must be built with solar panels. If you're in a new development home, you likely already have solar — but you may be in a lease. Buying out that lease and pairing it with storage is often financially advantageous.
SGIP — California Battery Storage Rebate
The Self-Generation Incentive Program (SGIP) offers rebates for battery storage systems in California. In 2025:
- Standard residential rebate: $150–200/kWh of storage capacity
- Equity Resiliency rebate (for qualifying low-income homeowners and those in high fire-risk areas): up to $1,000/kWh
- A 10 kWh system at the standard rate earns $1,500–$2,000 in rebates
SGIP rebates are administered by the utilities and have waitlists — the earlier you apply, the better your position.
SDG&E, SCE, and LA-DWP: Which Rate Applies to You?
- SDG&E (San Diego): NEM 3.0 applies. Battery storage is especially valuable due to SDG&E's high retail rates ($0.38–0.54/kWh in summer)
- SCE (Los Angeles, Riverside, Inland Empire): NEM 3.0 applies. Time-of-use rates favor self-consumption batteries
- LADWP (City of LA): Still on NEM 2.0-equivalent rates as of 2025. No NEM 3.0 switch announced. Excellent export rates still apply
Daniel Hadobas Serves Southern California
Daniel is licensed in California and works with top-rated installers in Los Angeles, San Diego, Riverside, and the Inland Empire. He specializes in NEM 3.0-optimized system designs — the right panel count, right battery size, and right usage strategy for your specific utility and rate plan.