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 — an SGIP battery rebate now limited to income-qualified households 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 becomes inoperative January 1, 2027. As of October 2026, no extension has been enacted. SB 710, signed in October 2025, only changed how the sunset is worded and kept the same date; AB 2389, which would have extended the exclusion, was held in the Assembly Appropriations Committee on May 14, 2026. A system completed before January 1, 2027 keeps the exclusion until the home changes ownership; one still under construction on that date is assessed as new construction, so leave margin for permitting and inspection. Check your county assessor’s office before you commit to a timeline based on this deadline.

There is no state income-tax credit riding alongside this exclusion — California’s last solar income-tax credit ended after the 2005 tax year, 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 CPUC lists the Small Residential Storage, San Joaquin Valley Residential, and Equity Resiliency budgets as available only through 2025. What remains is the Residential Solar and Storage Equity budget for income-qualified households ($1,100/kWh for storage and $3,100/kW for paired solar, per the CPUC), and it is fully reserved, with new applicants placed on a waitlist. If you think you qualify, your utility’s SGIP administrator 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: without a rebate, a 10–13 kWh battery runs roughly $12,000–$16,000 all-in (estimate) 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 value for that hour, taken from the CPUC’s Avoided Cost Calculator (values vary by month and hour), 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: California’s residential customers average around 32.99 cents per kWh (EIA, 12-month average through July 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 — ended for systems completed after December 31, 2025, under the One Big Beautiful Bill 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 the project began construction before July 4, 2026 or is placed in service by the end of 2027. 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 Fresno household running the numbers with a battery

Picture an 8 kW array paired with a 13.5 kWh battery on a south-facing Fresno roof in PG&E territory with light shading (Sacramento homes served by SMUD, a municipal utility, aren’t on NEM 3.0 and should model SMUD’s own export rate) — no SGIP rebate in the math, no federal credit available, the property-tax exclusion assumed to apply.

Installed cost lands around $36,000–$40,000 all-in (estimate: about $23,600 for the array at $2.95/W, plus $12,000–$16,000 for the battery). The Central Valley 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 × $0.3299/kWh ≈ $3,167/year in avoided retail cost
• ~3,250 kWh exported × $0.06/kWh ≈ $195/year in export credits
• Combined: roughly $3,200–$3,400 a year

At a midpoint cost of $38,000 with no credits applied, simple payback lands around 11–12 years (estimate) — 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

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. With no extension enacted as of October 2026, getting the system completed before January 1, 2027 is what locks in the exclusion — so ask your installer in writing whether permitting and inspection can realistically finish in time.

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.