California solar incentives & net metering (2026)

A California solar quote in 2024 led with a 30% federal tax credit. In 2026, that line is gone, and the two incentives still standing — a shrinking SGIP battery rebate and a property-tax exclusion with a countdown clock — both reward homeowners who store energy rather than just make it. Net metering under NEM 3.0 pays roughly a quarter of retail for anything you export. Put those three facts together and the panels-only pitch that worked in 2022 doesn’t work the same way now; the case for pairing solar with a battery does.

The property-tax exclusion: real money, real deadline

California law currently keeps a solar installation’s added value out of your property-tax assessment — your home’s taxable value doesn’t rise because you put panels on the roof. On a system valued at $25,000–$35,000, that exclusion is worth an estimated $250–$500 per year, assuming a roughly 1% effective tax rate. Stretch that across 25 years and it’s not a rounding error.

The part worth circling on your calendar: this exclusion sunsets January 1, 2027 for newly installed systems. As of mid-2026, two bills that would extend it — SB 710 and AB 2389 — remained in the legislature, neither signed. If you install before December 31, 2026, the exclusion applies to your system regardless of how those bills eventually land. Wait until 2027 with nothing passed, and your county assessor could fold the added value into your next reassessment. Check DSIRE (dsireusa.org) and your county assessor’s office before you commit to a timeline based on this deadline alone.

There is no state income-tax credit riding alongside this exclusion — California has never had one, and installers who imply otherwise are either mistaken or selling something.

SGIP: the battery rebate that mostly isn’t there anymore

The Self-Generation Incentive Program used to meaningfully cut the cost of adding storage to a solar system. For 2026, most homeowners shouldn’t plan around it.

The standard residential storage budget closed at the end of 2025. What remains runs through narrower channels — a limited Small Residential Storage tranche in select utility territories, plus larger allocations reserved for equity, low-income, and high-fire-threat customers — and most of those tracks carry long waitlists. If you fall into one of those categories, your utility’s SGIP representative can check your eligibility and waitlist position. Otherwise, price your battery at full retail and treat any rebate as upside if it materializes.

The dollar impact is significant: a 10–13 kWh battery that used to net out around $8,000–$10,000 after a strong rebate now runs closer to $12,000–$16,000 all-in for most buyers. That shift pushes the battery decision toward households that actually need backup power or serious time-of-use arbitrage, not those counting on a rebate to make the math work. Is solar worth it in California? goes deeper on how battery payback plays out against your specific utility and usage.

NEM 3.0: why export volume stopped mattering

Under the Net Billing Tariff — what most people still call NEM 3.0 — every kilowatt-hour you send to the grid gets credited at the avoided-cost rate for that 15-minute interval, not at retail. That rate floats with wholesale conditions and averages roughly $0.05–$0.08 per kWh across the year. During summer middays, exactly when rooftop solar produces the most, it can drop close to zero because the grid is already saturated with cheap solar power.

Compare that to what you pay pulling electricity from the grid: PG&E, SCE, and SDG&E customers average around 35.25 cents per kWh in 2026. Export credits run at roughly 25 cents on the dollar against that number, which is why sizing a system to maximize exports rarely pencils out anymore.

Self-consumption is the lever that still works. A kilowatt-hour you use directly — running a dishwasher at noon, charging an EV in daylight — is worth the full retail rate you’d otherwise pay. A battery extends that value into the evening: bank midday production, discharge it during peak hours when time-of-use rates on most plans run $0.40–$0.55 per kWh. That spread, not grid export, is where NEM 3.0-era savings actually live.

The federal credit: gone, not reduced

IRC §25D — the federal residential solar credit, long known as the 30% ITC — expired December 31, 2025 and stayed dead under the One Big Beautiful Budget Act. Buy and install a system in 2026 and your federal credit is $0.

Put a number on what that means: a $30,000 system used to come with a $9,000 federal credit, dropping the effective cost to roughly $21,000. That offset no longer exists for cash or loan buyers in 2026.

Leases and PPAs work differently — the third-party owner claims any available credit, not you, and the commercial §48E credit may still apply on their side. If you’re weighing a lease or PPA, ask the provider in writing whether any §48E value gets passed through as a lower monthly rate. For current installed pricing by system size, see solar panel cost in California.

A Sacramento household running the numbers with a battery

Picture an 8 kW array paired with a 13.5 kWh battery on a south-facing Sacramento roof with light shading — no SGIP rebate in the math, no federal credit available, the property-tax exclusion assumed to apply.

Installed cost lands around $38,000–$44,000 all-in. Sacramento gets roughly 5.5 peak sun hours a day, which puts gross production at 8 kW × 5.5 hours × 365 days = 16,060 kWh for the year. Real systems don’t hit that number — inverter losses, wiring resistance, heat, soiling, and minor shading knock off about 20% in practice, using the standard 0.80 performance ratio. Net production comes out to roughly 12,850 kWh a year. That haircut from gross to net is consistent across nearly every residential install; don’t let anyone quote you the raw peak-hours figure.

With the battery enabling strong self-consumption, assume 70–75% of production gets used directly or discharged from storage at full retail value, with the remaining 25–30% exported at the average NBT rate:

• ~9,600 kWh self-consumed × $0.3525/kWh ≈ $3,384/year in avoided retail cost
• ~3,250 kWh exported × $0.06/kWh ≈ $195/year in export credits
• Combined: roughly $3,500–$3,700 a year

At a midpoint cost of $41,000 with no credits applied, simple payback lands around 11–12 years — longer than the NEM 2.0-plus-30%-ITC era, but the property-tax exclusion trims the annual carry cost and panels still carry 25-year production warranties. After that break-even point, you’re generating power during what will likely be years of continued rate increases. Model your own address and rate plan with the solar savings calculator — your time-of-use plan and how much load you can shift to daytime or battery discharge move these numbers meaningfully.

The 2026 stack in one table

Incentive	2026 status	Benefit
Federal tax credit (IRC §25D)	Expired 12/31/2025	$0 for new purchases
California state income-tax credit	Never existed	—
Property-tax exclusion	Active; sunsets 1/1/2027	~$250–$500/yr saved (estimate)
SGIP standard residential storage	Budget closed end of 2025	Not available for most homeowners
SGIP equity / low-income / high-fire-risk	Limited; mostly waitlisted	Check with utility
NEM 3.0 export credit	Active for new interconnections	~$0.05–$0.08/kWh
Lease/PPA commercial §48E benefit	Depends on provider terms	Ask your provider

Three questions to settle before you sign

Ask your installer to confirm SGIP eligibility in writing rather than assuming a rebate applies — programs shift faster than sales decks get updated, and a rebate that closed six months ago sometimes still shows up in a proposal.

Request a bill-impact analysis built on your actual interval data, not a 12-month average. NEM 3.0 savings hinge on when you use power relative to when your panels produce it, and an average consumption number misses that entirely.

Decide, deliberately, whether the property-tax exclusion deadline should drive your install date. If SB 710 or AB 2389 becomes law before year-end, the pressure eases; if neither moves, installing before December 31, 2026 is what locks in the exclusion.

California still has some of the country’s highest retail electricity rates, strong sun resources, and a long history of rates climbing further. What’s changed is that the incentive stack rewards precision now — sizing for self-consumption, running the battery math without assuming a rebate, and timing the property-tax deadline correctly — rather than a blanket 30% discount that used to smooth over sloppy assumptions.