America's solar leader — but the economics changed in April 2023 with NEM 3.0. Here's what's actually true now.
If you're in California and looking at residential solar in 2026, the single most important thing to understand is what NEM 3.0 changed — and what it didn't. This is the brief.
Under the old California net-metering rules (NEM 1.0 and NEM 2.0), excess solar electricity exported to the grid earned a credit at roughly your retail rate — about $0.32–0.48/kWh. That made panels-only economics extraordinary. Many California homeowners ran their meters backward all summer and used those credits to cover winter consumption.
NEM 3.0, in effect since April 2023, changed that. Excess solar exported to the grid now earns roughly $0.05–0.08/kWh — a fraction of retail. This isn't a small change. For a panels-only system that exports 60% of its production, the lifetime economics get materially worse.
The fix is a battery. With a battery, you store your midday solar production and use it yourself in the evening — instead of exporting at $0.07/kWh and buying back at $0.45/kWh. For new California installs in 2026, panels + battery is essentially the only configuration that makes economic sense. Panels-only still works for cash purchasers who plan to consume most of their production during the day, but for the typical premium-suburb household with EV charging, electric appliances, and evening AC use, battery is required.
Federal Investment Tax Credit (ITC): 30% of total system cost, including the battery, claimable on your federal tax return. Available through 2032. Requires sufficient federal tax liability.
Self-Generation Incentive Program (SGIP): California-specific battery rebate, declining tier structure. Currently most useful for low-income households and those in high-fire-risk areas. Your installer should check current SGIP availability for your county.
Local utility rebates: Some municipal utilities (LADWP, SMUD, Anaheim Public Utilities) offer additional rebates outside of NEM 3.0. PG&E, SCE, and SDG&E do not currently offer install rebates.
For a typical California premium-suburb household: a 7–10 kW panel system paired with a 13.5 kWh battery (Tesla Powerwall 3, Enphase IQ 5P, or FranklinWH). List price $25,000–45,000. After the 30% federal ITC, net $17,500–31,500. Typical payback 8–11 years cash. Lifetime savings strongly positive even at NEM 3.0 export rates because you're using your own production.
Even with NEM 3.0, California still has the best residential solar economics in the country for most homeowners. But there are situations where it doesn't pencil out:
If any of those describe your situation, Marcus will tell you plainly when you chat. Community solar is now available across most of California through CPUC's community solar program — worth looking into as an alternative.