Is Solar Worth It in California in 2026?
California still has the sun to make solar work — Los Angeles produces roughly 1,703 kWh per installed kilowatt per year (PVWatts), among the best production numbers of any big state. At 32.5¢ per kWh in 2025, California's electricity is also some of the most expensive in the country, up 160 percent since 2005 and climbing about 6.7 percent a year over the last decade. High rates plus high production used to make California an easy yes.
2026 makes it a harder yes. The 30 percent federal tax credit is gone for any system completed after December 31, 2025 — no phase-out, no exceptions for owned systems. On top of that, California retired retail-rate net metering in 2023: new customers are on the Net Billing Tariff ("NEM 3.0"), paying roughly 4–8¢ per kWh for exported power instead of the old ~30¢ retail credit. That means a standalone panels-only system, sized to export a lot of midday power, pays back much more slowly — often in the mid-teens or longer. The systems that still pencil out in 2026 are sized to self-consume what they produce, usually paired with a battery, rather than sell it back for pennies. This page has the real numbers so you can tell which category your roof falls into.
California Electricity Prices
Solar is a hedge against your future power bill, so it's worth seeing where that bill has been. Here's California's residential rate history from the federal EIA.
Full California electricity price data (1990–2025)
| Year | California (¢/kWh) | US avg (¢/kWh) |
|---|---|---|
| 1990 | 10.0 | 7.8 |
| 1991 | 10.8 | 8.0 |
| 1992 | 11.1 | 8.2 |
| 1993 | 11.3 | 8.3 |
| 1994 | 11.4 | 8.4 |
| 1995 | 11.6 | 8.4 |
| 1996 | 11.3 | 8.4 |
| 1997 | 11.5 | 8.4 |
| 1998 | 10.6 | 8.3 |
| 1999 | 10.6 | 8.2 |
| 2000 | 10.9 | 8.2 |
| 2001 | 12.1 | 8.6 |
| 2002 | 12.6 | 8.4 |
| 2003 | 12.2 | 8.7 |
| 2004 | 12.2 | 9.0 |
| 2005 | 12.5 | 9.5 |
| 2006 | 14.3 | 10.4 |
| 2007 | 14.4 | 10.7 |
| 2008 | 13.8 | 11.3 |
| 2009 | 14.7 | 11.5 |
| 2010 | 14.8 | 11.5 |
| 2011 | 14.8 | 11.7 |
| 2012 | 15.3 | 11.9 |
| 2013 | 16.2 | 12.1 |
| 2014 | 16.3 | 12.5 |
| 2015 | 17.0 | 12.7 |
| 2016 | 17.4 | 12.6 |
| 2017 | 18.3 | 12.9 |
| 2018 | 18.8 | 12.9 |
| 2019 | 19.2 | 13.0 |
| 2020 | 20.5 | 13.2 |
| 2021 | 22.8 | 13.7 |
| 2022 | 25.8 | 15.0 |
| 2023 | 29.5 | 16.0 |
| 2024 | 32.0 | 16.5 |
| 2025 * | 32.5 | 17.3 |
Source: US EIA, average residential retail electricity price. Values in cents per kWh. * 2025 is preliminary.
California rates have gone almost straight up: about 160 percent higher in 2025 than in 2005, with the last decade climbing roughly 6.7 percent a year — the fastest pace of any large state. Wildfire-hardening costs (undergrounding and insulating power lines), transmission investment, and clean-energy procurement all show up in the rate base, and none of that is likely to reverse. At 32.5¢ per kWh, California homeowners already pay close to double the national average, which is exactly why self-consuming your own solar production — rather than exporting it for a few cents — is worth so much more here than in a low-rate state.
The California Sun, Month by Month
At roughly 35.5°N, California sits in the same solar-latitude band as the Mediterranean coast — winter sun angles are workable and summer days are long. Combined with a marine layer that clears inland and a dry season running late spring through fall, that's why Los Angeles-area systems produce so consistently across the year.
California monthly solar production data
| Month | kWh per installed kW |
|---|---|
| Jan | 126 |
| Feb | 119 |
| Mar | 145 |
| Apr | 152 |
| May | 143 |
| Jun | 149 |
| Jul | 158 |
| Aug | 167 |
| Sep | 154 |
| Oct | 144 |
| Nov | 131 |
| Dec | 116 |
| Year | 1703 |
Source: NREL PVWatts typical-year estimate (Los Angeles), per installed kW at latitude tilt.
August is the peak month at 167 kWh/kW, with the marine layer mostly burned off and the sun still high. December is the low point at 116 kWh/kW — shorter days and a lower sun angle, though still respectable next to much of the country. The moderate spread between the two is part of why California holds up well against sunnier-sounding desert states once you average over a full year.
What Solar Costs in California in 2026
Installed cost in California runs roughly $2.40 to $3.50 per watt before incentives, per aggregated 2025–2026 industry data (EnergySage, SolarReviews, and others). A typical ~9 kW system runs about $19,000 to $25,000 sticker price — and with the federal credit gone, that's close to what you'll actually pay if you own the system outright.
| System Size | Typical 2026 Cost | Roughly Offsets (at 32.5¢/kWh) | Fits |
|---|---|---|---|
| 5 kW | $12,000 to $17,500 | ~8,500 kWh/yr (~$230/mo) | Smaller home, lower usage |
| 8 kW | $19,000 to $28,000 | ~13,600 kWh/yr (~$369/mo) | Average California home |
| 12 kW | $29,000 to $42,000 | ~20,400 kWh/yr (~$553/mo) | Large home, EV or heat pump load |
Those "roughly offsets" figures assume every kWh produced gets used at full retail value — realistic with a battery and self-consumption, much less realistic if you're exporting a large surplus at NEM 3.0's ~4–8¢ rate. Get quotes in dollars per watt, and ask each installer to model your actual export-versus-self-consumption split under NEM 3.0, not old NEM 2.0 assumptions some sales decks still use.
Estimate Your California Payback
The calculator below starts at California's average rate and Los Angeles-area production. Enter your own monthly bill to see an estimated system size, payback period, and 25-year savings. California rates have grown about 6.7 percent a year over the last decade — a defensible starting point for the inflation field, though try a more conservative 3–4 percent too, to see how sensitive your payback is to that assumption.
California Solar Incentives in 2026
What's gone: the 30 percent federal Residential Clean Energy Credit, ended for any homeowner-owned system completed after December 31, 2025. There is no federal tax credit for buying and owning panels here in 2026.
- No state income tax credit: California has never had a state personal tax credit for residential solar.
- SGIP battery rebates — mostly closed: The Self-Generation Incentive Program funds batteries, not panels; as of April 2026 its General Market, Equity, and Equity Resiliency budgets are closed to new residential applicants. Only the income-qualified RSSE budget stays open — confirm current status with the CPUC before planning around it.
- Property tax exclusion — time-limited: California excludes qualifying solar installations from a property tax reassessment (Cal. Rev. & Tax Code §73), so panels don't raise your tax bill. But it sunsets January 1, 2027 for systems completed after that date. A pending bill (AB 2389) would extend it through 2031 for systems 10 kW and under, but wasn't final as of this writing — to guarantee the exclusion, finish before the deadline. See our property taxes and home finances guide.
- No sales tax exemption: Unlike some states, California does not exempt solar equipment from sales tax.
- Leases and PPAs — the 48E nuance: Third-party-owned systems can still capture a separate federal business credit through 2027 — but it belongs to the leasing company, not you. It may show up as a lower lease payment, or the company may just keep the margin. Get the effective rate in writing before comparing.
The Net Billing Tariff (NEM 3.0)
California's net-export program is officially the Net Billing Tariff, universally called "NEM 3.0," applying to any new interconnection at the state's three big investor-owned utilities — PG&E, SCE, and SDG&E — since April 15, 2023 (CPUC Decision D.22-12-056). It replaced retail-rate net metering (NEM 2.0) with export credits set by the CPUC's Avoided Cost Calculator, roughly 4–8¢ per kWh — about 75 percent below the ~30¢ retail rate NEM 2.0 customers still get. NEM 2.0 is now closed to new applicants; the final deadline for Permission to Operate under the old tariff was April 15, 2026.
Practically, exporting your midday surplus is no longer where the value is. A panels-only system shipping most of its output back to PG&E at 5¢ a kWh, when it could have avoided buying that same power back at 30-plus cents in the evening, leaves most of the value on the table. That's why battery attachment has become close to standard for new California solar — pairing panels with storage so you use your own power at 8pm instead of selling it at noon and buying it back at dinner. If your installer's quote doesn't include a battery, ask them to run the numbers both ways.
The Duck Curve — Why Timing Matters More Than Sunshine
CAISO, the state's grid operator, has charted a phenomenon called the "duck curve" since the early 2010s: as rooftop and utility-scale solar flooded the midday grid, net demand dipped into a deep belly around noon, then spiked as the sun went down and everyone came home — roughly 4pm to 9pm. That evening ramp is the highest-value period on the grid, exactly the opposite of when a bare rooftop system produces most.
That's the real mechanism behind NEM 3.0's low export rates: panels are busiest when the grid least needs power, idle when it's paying top dollar. It's also why reported battery attach rates for new home solar jumped from around 11 percent before NEM 3.0 to over 50 percent by 2024 — homeowners shifting production into the evening peak rather than selling at the midday low. There's an active legal backdrop too: the California Supreme Court sent NEM 3.0 back to the Court of Appeal in August 2025, and the Court of Appeal upheld it in March 2026 — current rules, but under judicial review within the last year, not settled law.
How to Go Solar in California
- Pull your last 12 months of bills for a real average monthly usage and cost — California's tiered and time-of-use rates make a single month misleading.
- Check your roof's age. Under 10–15 years of life left means replace it first; removing and reinstalling an array later costs thousands. See our roofing guide.
- Decide upfront whether you're evaluating a panels-only or panels-plus-battery system — under NEM 3.0 these have genuinely different paybacks.
- Get at least three quotes and compare strictly on price per watt and equipment — make sure none still price in the federal credit or NEM 2.0 export rates.
- For the property tax exclusion, ask your installer for a completion timeline against the January 1, 2027 sunset before you sign.
- Have an electrician confirm your panel can support the inverter and any battery — see our electrical guide.
- Check with your insurer how panels affect your policy, especially in a wildfire-rated zone; our home insurance guide covers what carriers ask.
For the fundamentals of how solar systems work, sizing, and buying versus leasing, see our main solar panels guide — this page covers what's specific to California.
Sources
Figures on this page are 2026-current. Federal credit repeal: IRS — Residential Clean Energy Credit and Congressional Research Service IN12611. Net Billing Tariff / NEM 3.0 and SGIP status: California Public Utilities Commission and CPUC Self-Generation Incentive Program. Property tax exclusion: California State Board of Equalization. State incentive programs: DSIRE — California Solar Programs and DSIRE — SGIP. Cost estimates: EnergySage. Rate history: US EIA, Electric Sales, Revenue, and Average Price (2025 preliminary). Production: NREL PVWatts. Reviewed every six months.