California Solar Incentives 2026: NEM 3.0, SGIP, and Vetted Installers

California solar incentives overview

The federal Residential Clean Energy Credit (the 30% credit homeowners used to claim on Form 5695) expired at the end of 2025. California's own incentives did not. The state programs are smaller individually but stack with utility rebates, property tax treatment, and the pass-through value lease companies can still claim. Here is what is currently available to California homeowners in 2026.

NEM 3.0 and net billing

California's Net Billing Tariff (commonly called NEM 3.0) took effect for new solar customers in April 2023. It replaced retail-rate net metering, where utilities credited exported solar at the same rate they charged for power, with an "avoided cost" rate calculated by the California Public Utilities Commission.

What changed

Where you used to receive roughly $0.30 to $0.40 per kWh credit for solar you exported to the grid, you now receive something closer to $0.05 to $0.08 per kWh, depending on time of day and time of year. The hardest hit are midday exports, which is exactly when solar produces the most. The least affected are evening exports, when solar produces the least.

What this means for your system

Self-consumption is now the economic model. A solar-only system that exports half its production gets paid the low export rate for that half while you buy power back at $0.30 to $0.55 per kWh during the evening peak. That is a losing trade. Pairing solar with a battery stores cheap midday production for the high-cost evening window, which recovers most of what NEM 3.0 took away. For most California homeowners in 2026, that means a battery is no longer optional.

For the full math on payback periods after NEM 3.0 plus the expired federal credit, see our deep dive on California solar in 2026.

SGIP battery storage rebate

The Self-Generation Incentive Program is California's longest-running and largest storage rebate. It is administered by the CPUC and funded through utility bill surcharges. Customers of PG&E, SCE, SDG&E, and SoCalGas are eligible. The rebate is paid per kWh of installed battery capacity, with the rate depending on which "step" the program is in and which tier the homeowner qualifies for.

SGIP tiers, briefly

• General Market. The lowest rebate, available to most homeowners. Rates step down as program budget is used; check current step before committing.
• Equity. Higher rebate for homes in disadvantaged communities or on income-qualifying utility plans (CARE, FERA, etc.).
• Equity Resiliency. Highest rebate, often covering most of a battery's installed cost. Available to homes in high fire-threat district (HFTD) zones that have experienced two or more Public Safety Power Shutoff events, or to medical-baseline customers in those zones.

Installers handle the SGIP application as part of the quote. Make sure your installer breaks out the SGIP estimate as a line item so you can verify it on the final invoice.

DAC-SASH and income-qualified programs

For households that qualify, California offers two state-administered programs that cover a meaningful portion (sometimes nearly all) of a residential solar system's cost.

DAC-SASH (Single-family Affordable Solar Homes)

Available to homeowners in census tracts designated as disadvantaged communities by CalEPA, with household income at or below 80% of area median income. The program funds solar installations on owner-occupied single-family homes, with the goal of reducing energy burden for low-income households. Administered through GRID Alternatives.

ERA (Equity Resiliency Allocation)

Part of SGIP. Funds battery storage for income-qualified households in fire-prone or grid-vulnerable areas. Often covers most of the battery's installed cost when fully qualified.

Both programs are oversubscribed and have wait lists. If you might qualify, applying early matters. Your installer can walk you through eligibility during the quote.

Property tax exclusion

California excludes the added assessed value of an active solar energy system from property tax. In practical terms, the system raises your home's market value but does not raise your property tax bill. The exclusion is automatic for qualifying systems through 2026 and has been extended multiple times by the legislature; treat it as ongoing.

The exclusion applies only to the solar system itself (panels, inverters, racking, batteries paired with solar). Standalone improvements like roof replacement do not qualify.

Federal tax credit (2026 update)

The 30% federal Residential Clean Energy Credit (Section 25D) expired December 31, 2025. Homeowners who installed and placed a system in service before that date can still claim the credit on their 2025 federal return. Homeowners who installed in 2026 or later cannot claim it on purchased systems.

The lease and PPA exception

The commercial version of the credit (Section 48E) is still active through 2027 for lease and PPA providers. When you sign a prepaid lease or PPA, the lease company owns the system, claims the 48E credit, and passes part of that value back through to you in the form of lower upfront cost or lower monthly payments. This is why prepaid leases are unusually competitive in California in 2026 compared to cash purchase. Run the lease math against cash and loan on the same project before deciding.

Local utility programs (PG&E, SCE, SDG&E)

The three major investor-owned utilities each run additional programs on top of statewide incentives. Coverage varies year to year.

PG&E

Customers can stack SGIP on battery installations and may qualify for demand response programs that pay for shifting load away from peak hours. Time-of-use rate plans determine how much your battery saves you; ask your installer to model your bill on your current and best-fit TOU plan.

SCE

Similar SGIP eligibility and TOU plan optimization. SCE service territory includes large stretches of high fire-threat district, which can put a meaningful number of homeowners into the Equity Resiliency rebate tier.

SDG&E

The highest residential rates in the state on average, which makes self-consumption with storage particularly economic. Same SGIP eligibility.

Municipal utilities

SMUD (Sacramento) and LADWP (Los Angeles) operate under their own rate structures and do not use NEM 3.0. Homeowners in those territories should ask the installer how their utility specifically credits exported solar, since the answer is different from the IOU territories.

Community Choice Aggregators (CCAs)

More than 25 CCAs now operate inside PG&E, SCE, and SDG&E territory. If your city or county has a CCA, your generation comes from them while the utility still handles delivery and your NEM 3.0 interconnection. The export credit rate can vary slightly between CCA and utility, and some installers in our network are flagged as CCA-approved. Read the full breakdown in our California CCA guide.

When California solar still pencils in 2026

The post-NEM 3.0 post-credit math still works for the majority of California homeowners. Five factors drive whether it works for yours specifically.

• Your utility rate. PG&E, SCE, and SDG&E peak time-of-use rates run $0.40 to $0.55 per kWh on hot summer afternoons. At these rates solar still pencils aggressively.
• Your monthly bill. Above $200 a month solar clearly works. Above $300 it works well. Above $500 it works dramatically.
• Your roof. South-facing with full sun produces the most. Shaded or north-facing roofs weaken the self-consumption math NEM 3.0 makes essential.
• Pairing with a battery. Without storage, a California solar system exports half its production at the low rate and buys it back at the high rate. With a battery, you self-consume that stored solar in the evening peak window and keep the dollars.
• Financing structure. Cash and HELOC win for those with capital or equity. Prepaid leases are unusually competitive in California 2026 because the lease company still claims the 48E commercial credit and passes the value through.

How to compare California solar quotes

Get at least three quotes for the same project specs (same system size, same battery decision). For each one, ask the installer to show:

• System size in kilowatts and battery size in kWh
• Cash purchase price, financed price, and prepaid lease price for the equivalent system
• Annual production estimate and self-consumption estimate under NEM 3.0
• SGIP rebate amount and tier (if a battery is included)
• Total expected utility savings over 25 years, with assumptions visible
• All warranties in writing (product, performance, workmanship)

Compare the 25-year total cost for each scenario. The lowest one wins. For more on structuring that comparison, see our pillar on comparing solar quotes apples-to-apples.