In California, solar can still pay off in 2026 — but the math has shifted. Two big changes hit at once: NEM 3.0 cut export credits by roughly three-quarters, and the federal 30% credit was repealed for new installs. What's left is a story where battery storage is doing most of the heavy lifting.
What NEM 3.0 changed
California moved from NEM 2.0 to NEM 3.0 — the Net Billing Tariff — on April 15, 2023 (CPUC Decision 22-12-056). New PG&E, SCE, and SDG&E connections are subject to it.
Under NEM 2.0, exports earned retail (~30¢/kWh). Under NEM 3.0, exports earn avoided-cost, valued hourly and seasonally. The average comes out to ~5-8¢/kWh — a drop of roughly 75%.
It's not flat: summer evening peaks (typically August-September, 4-9pm) can spike to $3+/kWh, while midday export — when everyone's solar is producing — can be near zero.
A few other NEM 3.0 details:
- Self-consumed solar still earns the full retail rate. Every kWh you use directly is worth what you would have paid the utility.
- Year-end true-up surplus expires — no cash payout. Don't oversize expecting to sell extra.
- Export rate is locked for 9 years from the date your system interconnects (vintage).
- The proposed monthly "solar tax" was rejected.
California retail rates: still the highest
California has some of the highest residential electricity rates in the country:
- PG&E and SCE: ~33¢/kWh
- SDG&E: ~40¢/kWh
Time-of-use plans add a layer: off-peak ~18-22¢, on-peak (4-9pm) climbing to 45-55¢+. Those expensive hours fall as solar production drops toward sunset.
VERIFIED 2026-06 · eia.govWhy battery is the lever in California
The retail rate is ~33¢. The NEM 3.0 export rate averages ~7¢. The gap is ~26¢ per kWh — and even bigger on SDG&E (~33¢ gap).
- Without a battery, surplus solar production exports at ~7¢ and you lose the gap on every exported kWh.
- With a battery, you store that surplus and use it during expensive evening hours instead of buying from the grid at 33-55¢.
The economics have moved from "solar pays via exports" to "solar pays via reduced grid purchases." In a low-gap state like Arizona — where export rates are closer to retail — a battery often doesn't pay back. In California, the gap is so large that the battery is doing the heavy economic lifting.
This isn't a marketing claim — it falls out of the same math our calculator uses for every state. The retail-export gap is what determines whether a battery makes economic sense.
The federal credit — gone
The federal Residential Clean Energy Credit (§25D) — the 30% homeowner credit — was repealed for systems installed after December 31, 2025. For 2026 California buyers, the federal credit on solar is $0.
The same applies to batteries purchased outright. §25D covered storage too; it's gone. The §48E commercial credit (30%) still exists, but only for leased or third-party-owned systems where the provider claims it — not for homeowner cash or loan purchases. Full federal context here.
VERIFIED 2026-06 · irs.govSGIP — mostly closed in 2026
The Self-Generation Incentive Program (SGIP) was California's main battery rebate. For most 2026 buyers, it is no longer available:
- General Market, Equity, and Equity Resiliency tiers closed on December 30, 2025.
- Only the AB 209 income-qualified tier remains in 2026, with most sub-budgets on a waitlist.
- For a typical (non-low-income) buyer, SGIP = $0.
Check current status at selfgenca.com before assuming any rebate amount. If a 2026 quote shows SGIP savings, ask which tier and verify it's actually open and funded.
ACC Plus — small adder for PG&E and SCE
NEM 3.0 export credits get a small bonus for PG&E and SCE residential customers:
- +0.88¢/kWh for 2026 connections (NBT26 vintage)
- Declines to +0.44¢/kWh for NBT27
- Zero for new connections after April 2028
- SDG&E does not offer ACC Plus.
It's real but minor — tenths of a cent. Don't model it as a big part of your payback.
The honest picture
California can still pay off:
- The highest retail rates in the country mean every self-consumed kWh has high value.
- The retail-export gap means a battery captures real savings by shifting evening usage off the grid.
But the 2026 reality is harder than what most quotes are still showing:
- Federal credit is $0 — not 30%.
- SGIP is $0 for most — not the per-kWh rebate still on many sales decks.
- Export rates dropped ~75% under NEM 3.0.
- Solar-only payback in California typically lands around 9-13 years.
- Solar+battery works better, but adds $13k+ in upfront capex with no current subsidies for most buyers.
Sellers who paint a rosier picture using the old federal credit and the old SGIP are showing outdated math. The right move before committing: run the numbers with current rules.
Run your real California payback (with battery) →Estimates only — NEM 3.0 export rates are hourly; verify with your utility and a licensed installer. This is not financial advice.