Is solar worth it in California?
At California’s average rate of 33¢/kWh and about 1550 kWh per kW of panels a year, a typical home pays back its system in roughly 9.3 years on electricity savings alone — no federal credit, which ended for buyers at the end of 2025 — then keeps saving. Run your own numbers below.
Sources: EIA · NREL · IRS. No federal credit — it ended 31 Dec 2025.
Independent estimate for guidance only — not a quote or advice. Very high power prices, but NEM 3.0 pays well below retail for exports — a battery changes the math.
What drives solar payback in California
California homeowners pay about 33¢/kWh, which is 14.6¢ above the national average. A rooftop here generates roughly 1550 kWh per kW each year — better than the typical US figure. On exports, California offers partial / below-retail export credit: Very high power prices, but NEM 3.0 pays well below retail for exports — a battery changes the math.
California electricity price trend
Average residential rate, monthly, May 2023 – Apr 2026. Up 18% over the period.
Source: U.S. Energy Information Administration (EIA), Electric Power Monthly · range 29.12–35.25¢/kWh
A worked example
For a California home with a $289/month power bill (typical household usage at California’s rate):
That nets out to a payback of about 9.3 years — shorter than simply dividing net cost by year-one savings, because power prices climb ~2.5%/yr so your savings grow each year. Year-one savings already reflect California’s below-retail export rate (you save full value on the power you use as it’s made, less on what you export), which is why they’re lower than the bill. Assumes 3.00 $/W installed before incentives and a typical 40% self-consumption; your actual cost, roof and usage will differ — adjust the calculator above.
Who supplies your power in California
Most Californians are served by one of three big investor-owned utilities — Pacific Gas & Electric (PG&E) in the north, Southern California Edison (SCE) in the centre and south, and San Diego Gas & Electric (SDG&E) in the far south — and those three set the solar rules that matter. If you're instead on a municipal utility like LADWP or SMUD, your net-metering terms are set locally and differ from everything below.
What you’re paid for what you export
California runs the toughest export regime in the country: NEM 3.0, officially the Net Billing Tariff, in force for PG&E, SCE and SDG&E customers since April 2023 and upheld by a state appeals court in 2026. The catch is the gap between what power costs and what exports earn. Energy you use the moment your panels make it is worth the full retail rate — and California's is brutal: SDG&E runs around 45¢/kWh, with PG&E and SCE in the low-30s. But energy you export is paid an "avoided cost" that averages only about 5–8¢/kWh. That roughly 25–40¢ spread is exactly why, in California more than anywhere, the smart move is to use your own solar as it's made and store the surplus in a battery rather than sell it cheap and buy it back dear.
California incentives & taxes in 2026
With the federal credit gone, California leans on its rates rather than rebates — there's no broad statewide solar tax credit. PG&E and SCE do offer temporary, declining export-rate "adders" to new solar customers, and low-income households may qualify for programs like DAC-SASH. The current, authoritative list lives on DSIRE.
The 30% federal credit ended on 31 December 2025 and can now only reach a homeowner indirectly through a lease or PPA. Check the current state and utility programs on DSIRE’s California list, then type any incentive into the calculator above to see how it shortens your payback.
What solar costs in California
Installed prices run roughly $2.50–$3.50 per watt before any incentive, putting a typical home system around $22,000. California's market is huge and competitive, so getting two or three itemised quotes genuinely moves the price — the spread between a lean local installer and a national sales operation is wide here.
The honest verdict for California
Even with no federal credit, California's sky-high power prices mean solar still pays for a lot of homes — but NEM 3.0 rewrites the playbook. Size the system to what you actually use during daylight, take batteries seriously, and stop thinking of the grid as a free battery. Oversizing to export, the old California strategy, no longer wins.
Sources for this page
Driving electric — or heating electric — in California?
Your home electricity rate also sets what it costs to charge an EV and whether a heat pump beats a gas furnace. See the California EV charging cost and the California heat pump vs gas comparison.