Solar Panels in California (2026): Costs, NEM 3.0, and a Real Deadline

Q: Is California's solar property tax exclusion ending?

Yes. Revenue and Taxation Code Section 73, which keeps a solar system from triggering a Prop 13 reassessment, is repealed on January 1, 2027. The Board of Equalization has confirmed the system must be completed before January 1, 2027 to qualify. SB 710, signed October 6, 2025, permanently protects anyone who qualifies before that date — the exclusion stays with the home until it changes ownership. It did not extend the exclusion for systems finished afterward. A separate bill, AB 2389, would extend it through 2031, but it has not passed.

Q: Is the 30% federal solar tax credit still available in California in 2026?

No. The Residential Clean Energy Credit (Section 25D) ended for systems placed in service after December 31, 2025 under the One Big Beautiful Bill Act. Cash and loan buyers get no federal credit in 2026. The commercial credit (Section 48E) still exists but goes to the system owner, which in a lease or PPA is the company, not you.

Q: How much do solar panels cost in California in 2026?

About $2.50 to $3.50 per watt installed before incentives. The average California system is roughly 8.6 kW — smaller than most states — at about $21,700, with a typical range of $18,400 to $25,000. Adding a battery typically pushes a full system to $35,000 or more.

Q: What is NEM 3.0 and how does it affect savings?

NEM 3.0, officially the Net Billing Tariff, took effect April 15, 2023 for PG&E, SCE, and SDG&E customers. Exported solar is credited at avoided-cost rates of roughly 5 to 8 cents per kWh instead of the near-retail 30 cents that NEM 2.0 paid — about a 75% cut. The practical effect is that electricity you use yourself is worth roughly five times more than electricity you export, which is why batteries now matter so much in California.

Q: Did AB 942 take away net metering from existing solar owners?

No. AB 942 was introduced in 2025 and would have forced legacy NEM 1.0 and 2.0 customers onto NEM 3.0 after 10 years. Those contract-breaking provisions were removed by amendment, and as of our July 2026 check the bill had not been enacted — its last recorded action was August 29, 2025. A great deal of alarming content online describes the original version as though it already happened. If you are on NEM 1.0 or 2.0, your 20-year grandfathering from your permission-to-operate date still stands.

Q: Do I need a battery with solar in California?

Not required, but under NEM 3.0 it changes the math significantly. Because exports earn roughly 5 to 8 cents while you buy power back at 33 cents or more, storing your midday production to use in the evening captures far more value than selling it. A battery also covers outages and may qualify for SGIP rebates. Solar-only still works — it just means designing for self-consumption rather than export.

Q: How much is electricity in California in 2026?

Roughly 33 to 34 cents per kWh on average, about double the national average, and up around 59% over six years. It varies enormously by utility: SDG&E is near 45 cents, PG&E's average bundled residential rate is about 39 cents as of March 2026, and SCE is around 32 to 33 cents. Publicly owned utilities are far cheaper — SMUD is about 17 cents.

Q: What is the solar payback period in California in 2026?

Roughly 9 to 10 years for a typical system, with or without a battery — despite there being no federal or state tax credit. California's very high electricity rates do the work that incentives do elsewhere. Payback is meaningfully faster in SDG&E and PG&E territory and much slower for customers of low-rate municipal utilities.

California has no state solar tax credit, no statewide rebate, and — since April 2023 — export credits worth about a quarter of what they used to be. Solar still works here, but for one reason: electricity costs roughly double the national average and keeps climbing.

There's also a genuine deadline, and it isn't a sales tactic. California's solar property tax exclusion is repealed on January 1, 2027. It's in the statute. Finish your system before then and you're protected for as long as you own the home. Finish after, and — unless the legislature acts — your panels can raise your property assessment permanently.

Want your exact California numbers? Get a free, no-obligation solar quote →

The Short Answer

Typical installed cost: about $2.50–$3.50 per watt. The average California system is roughly 8.6 kW — ~$21,700 (range $18,400–$25,000). Smaller than most states, because sun does more per panel here.
The property tax exclusion sunsets January 1, 2027. Systems must be completed before that date. This is real and it's in the law.
The 30% federal credit is gone for cash and loan buyers.
NEM 3.0 cut exports ~75% — you get ~5–8¢ for power you export, but avoid ~33¢ for power you use yourself.
Electricity averages ~33–34¢/kWh and is up roughly 59% in six years.
Realistic payback: about 9–10 years.

The Deadline That's Actually Real: January 1, 2027

Solar marketing is full of fake urgency. This one is written into the Revenue and Taxation Code.

Section 73 is what stops a solar installation from being treated as "newly constructed" and triggering a Prop 13 reassessment. Without it, the value your panels add to your home gets added to your assessed value — a permanent annual tax increase.

Section 73 is repealed as of January 1, 2027.

Here's what you need to know, and the details matter:

The system must be completed before January 1, 2027. The Board of Equalization has confirmed this: completion is the test. A system under construction as of January 1, 2026 qualifies as long as it's finished by the deadline.
If you qualify before the deadline, you're protected permanently — the exclusion continues after the repeal until the home changes ownership. That protection comes from SB 710 (Blakespear), signed by Governor Newsom on October 6, 2025 after passing the Senate 39–0.
SB 710 did not extend the exclusion for new systems. It locked in protection for people who make the deadline and left a gap for everyone after it. That distinction gets blurred constantly — they are two different things.
AB 2389 (Irwin) would extend the exclusion through 2031. As of now it hasn't passed. Don't plan around a bill that might not happen.

What this means practically: if you're going solar in California and you're on the fence about timing, completing in 2026 rather than 2027 protects you from a permanent property tax increase. Given that installs commonly take 2–3 months from contract to permission-to-operate — longer with permitting delays — a decision in late 2026 is already a tight decision.

We're a lead generation site, so treat our urgency with appropriate suspicion — then go read Section 73 and the BOE's guidance yourself. It's the rare case where the deadline holds up.

The Federal Credit Is Gone — Regardless of What Calculators Say

Section 25D was terminated by the One Big Beautiful Bill Act (signed July 4, 2025) for systems placed in service after December 31, 2025. See our 2026 tax credit guide.

Researching this page in July 2026, we found an April 2026 California electricity page stating: "With the 30% federal ITC, payback is typically 4–6 years." That's built on a credit that ended sixteen months earlier.

If your California quote shows a 30% federal credit, the net cost is understated by roughly $6,500 on an average system. Ask for a corrected proposal.

Section 48E survives at 30% but goes to the system owner. In a lease or PPA that's the company, which may price some of it into your rate. Compare 25-year cost, not the monthly payment — see our financing guide.

NEM 3.0: What Actually Changed

California's Net Billing Tariff — universally called NEM 3.0 — took effect April 15, 2023 for PG&E, SCE, and SDG&E customers.

Under the old NEM 2.0, exported power earned close to the retail rate, around 30¢/kWh. Under NEM 3.0, exports are credited at avoided cost: roughly 5–8¢/kWh on average, varying by hour and month. That's about a 75% cut.

The single sentence that explains California solar in 2026: a kilowatt-hour you use yourself is worth ~33¢. The same kilowatt-hour exported is worth ~6¢. Self-consumption is worth roughly five times export.

Everything else follows from that:

System sizing changed. Overbuilding to export is no longer smart. California's average system is 8.6 kW while Virginia's is 13.9 kW — that's not a sunshine difference alone, it's a policy difference.
Batteries got compelling. Storing midday production for the 4–9pm peak captures retail value instead of 6¢. This is why California is a battery market and Pennsylvania isn't.
Time-of-use is the whole game. Export rates can hit $1–$4/kWh on select evening hours (5–7pm) in some months and drop to fractions of a cent in others.

Existing solar owners: if you interconnected before April 15, 2023, you keep your NEM 1.0 or 2.0 terms for 20 years from your permission-to-operate date. One caution: significantly expanding your array can end grandfathering early. Adding a battery generally does not. Confirm with your utility before any major change.

About AB 942 — Most of What You've Read Is Out of Date

If you've searched California solar recently, you've seen alarming content about AB 942 forcing legacy solar owners onto NEM 3.0 after 10 years, starting July 1, 2026.

Here's the current picture. AB 942 (Calderon) was introduced in February 2025. As amended in March 2025 it would have ended NEM 1.0/2.0 for anyone with solar for 10+ years and stripped grandfathering when a home sold. It drew heavy opposition.

The contract-breaking provisions were removed by Senate amendment. The bill was retitled "Electricity: climate credits," and as of our July 2026 check its last recorded action was August 29, 2025 — reported out of committee and re-referred to Senate Rules. It has not been enacted.

What survived in the amended text: new owners buying a solar home would take the current tariff rather than inheriting NEM 1.0/2.0, and NEM customers would lose the California Climate Credit. Meaningful if it passes — but not the same as the 10-year contract termination that most of the scary content still describes.

Our honest position: legislative status changes, and this is a bill that has moved repeatedly. Verify before you rely on it. But if you're on NEM 2.0 and someone is using AB 942 to pressure you into a decision today, they're selling you a version of the bill that was amended out.

What Solar Actually Costs in California

5 kW system: ~$12,600–$17,500
8.6 kW (CA average): ~$21,700 (range $18,400–$25,000)
Solar + battery: commonly $35,000+

EnergySage puts California at $2.52/W as of July 2026; SolarReviews reports $3.14/W; installers quote $2.50–$3.50/W. Compare on cost per watt, not the headline number — our quote comparison tool does the math.

Battery pricing runs roughly $10,000–$16,000 installed per unit in Southern California, before incentives. A Tesla Powerwall lands around $15,600. See our battery guide.

Your Utility Matters More in California Than Anywhere

The state average is ~33–34¢/kWh, but that average hides an enormous spread:

SDG&E: ~45¢/kWh — among the highest in the country
PG&E: ~39¢/kWh average bundled residential rate as of March 2026 (some sources put it nearer 31–34¢ depending on plan and baseline)
SCE: ~32–33¢/kWh
SMUD: ~17¢/kWh · City of Anaheim: ~17.5¢/kWh

This is the most important line on the page: if you're a SMUD, LADWP, Anaheim, or other municipal utility customer, your solar math is completely different — roughly half the rate to offset, and NEM 3.0 doesn't apply to you because publicly owned utilities set their own rules. Most California solar content quietly assumes you're a PG&E, SCE, or SDG&E customer. Check your bill before reading another word of it.

For IOU customers, direction is the whole case: California residential rates are up about 59% over six years, driven by wildfire mitigation and grid hardening — costs that aren't going away. PG&E has also introduced a mandatory fixed Base Services Charge, which solar can't offset.

What's Actually Left in Incentives

Property tax exclusion — the big one, and it expires January 1, 2027. See above.
SGIP (Self-Generation Incentive Program) — battery rebates, commonly cited around $150/kWh of storage capacity, with higher tiers for qualifying customers in high-fire-risk areas and low-income households. Budgets move; confirm current availability.
DAC-SASH — no-cost or heavily discounted solar for income-qualified homeowners in disadvantaged communities. You must be a PG&E, SCE, or SDG&E customer, own and occupy a single-family primary residence, and live in a qualifying area. Applications go through GRID Alternatives directly, not private installers. If you qualify, this is worth far more than anything else on this page.
No state tax credit. No statewide rebate. California has neither, and never has for residential PV.

The Payback Math, Shown in Full

Our calculations from the sourced figures above — not a quote, and not a promise about your home.

Assumptions: 8.6 kW at $2.52/W = $21,700; California averages ~5.5 peak sun hours, producing ~1,500 kWh per kW = ~13,000 kWh/year; retail rate $0.33/kWh; export credit $0.065/kWh; solar-only self-consumption ~40%.

Solar only:

Self-consumed (5,200 kWh × $0.33): $1,716/yr
Exported (7,800 kWh × $0.065): $507/yr
Total: ~$2,223/yr → payback ≈ 9.8 years

Solar + battery (adds ~$13,000 net of SGIP, lifts self-consumption to ~80%):

Self-consumed (10,400 kWh × $0.33): $3,432/yr
Exported (2,600 kWh × $0.065): $169/yr
Total: ~$3,601/yr on ~$34,700 → payback ≈ 9.6 years

So both land near 9–10 years. The battery doesn't dramatically shorten payback — it roughly matches it while adding outage protection. Anyone telling you a battery is a payback play in California is overselling; anyone telling you it's pointless under NEM 3.0 hasn't done the math. It's close to a wash, and resilience is the tiebreaker.

No rate escalation applied. With rates up 59% in six years, a real model lands shorter — we left it flat because escalation assumptions are where optimistic savings claims come from.

What moves it down (better): SDG&E or PG&E territory, high usage, evening-heavy consumption, an EV, DAC-SASH eligibility. What moves it up (worse): a municipal utility, low usage, shading, PG&E's fixed charge, over-sizing for export.

When Solar Does Not Make Sense in California

We generate leads for solar companies. Even in the best solar state in the country, this isn't universal:

You're on SMUD, LADWP, Anaheim, or another low-rate municipal utility. At ~17¢ you're offsetting half as much. The math is genuinely different — get numbers built for your actual utility.
Your bill is under about $100/month. No federal credit, no state credit. Small systems don't clear.
You're moving within 5 years. And note: under NEM 3.0 there's no favorable tariff to hand to a buyer as a selling point anymore.
Heavy shade. California sun is only an advantage if it reaches your roof.
Your roof needs replacing soon. Do the roof first, always — and in California, before the property tax deadline makes the sequencing painful.
Someone's using AB 942 to rush you. The provision they're describing was amended out and the bill hasn't passed.

If you're a PG&E, SCE, or SDG&E customer with a $200+ monthly bill and a decent roof, California remains one of the strongest solar cases in the country — even with the federal credit gone, and largely because your utility keeps making it stronger.

Frequently Asked Questions

Is California's solar property tax exclusion ending?
Yes. Revenue and Taxation Code §73 is repealed January 1, 2027. The BOE has confirmed the system must be completed before that date. SB 710 (signed October 6, 2025) permanently protects anyone qualifying before the deadline — the exclusion stays with the home until it changes ownership. AB 2389 would extend it through 2031 but hasn't passed.

Is the 30% federal solar tax credit still available in California in 2026?
No. Section 25D ended for systems placed in service after December 31, 2025. Section 48E survives but goes to the system owner — in a lease or PPA, that's the company.

How much do solar panels cost in California in 2026?
About $2.50–$3.50 per watt. The average system is roughly 8.6 kW (~$21,700, range $18,400–$25,000). With a battery, commonly $35,000+.

What is NEM 3.0 and how does it affect savings?
The Net Billing Tariff, effective April 15, 2023 for PG&E, SCE and SDG&E. Exports earn avoided-cost rates of ~5–8¢/kWh instead of ~30¢ — about a 75% cut. Power you use yourself is worth roughly five times power you export.

Did AB 942 take away net metering from existing solar owners?
No. The contract-breaking provisions were amended out, and as of our July 2026 check the bill hadn't been enacted (last action August 29, 2025). If you're on NEM 1.0 or 2.0, your 20-year grandfathering from your PTO date stands.

Do I need a battery with solar in California?
Not required, but it changes the math. Exports earn ~6¢ while you buy back at ~33¢, so storing midday production for evening captures far more value. It also covers outages and may qualify for SGIP.

How much is electricity in California in 2026?
~33–34¢/kWh on average, about double the national average, up ~59% in six years. SDG&E ~45¢, PG&E ~39¢ average bundled (March 2026), SCE ~32–33¢, SMUD ~17¢.

What is the solar payback period in California in 2026?
Roughly 9–10 years with or without a battery, despite no federal or state credit. High rates do the work incentives do elsewhere. Much slower on a low-rate municipal utility.

See What Solar Actually Costs on Your Roof — With 2026 Numbers

The ranges here are market averages. Your number depends on your roof, your usage, your rate plan, and above all which utility bills you. Compare solar quotes for your California home → Free, no obligation — and see our certified installer standards.

More: 2026 solar cost breakdown · 2026 incentives guide · is solar worth it · solar + battery · state-by-state index · Arizona · Nevada

Sources

Property tax exclusion repeal (Jan 1, 2027) and completion test: California Revenue and Taxation Code §73; California State Board of Equalization LTA 2024/031; DMA; Cox Castle. SB 710 (Blakespear), signed October 6, 2025: BOE bill analysis; LegiScan. AB 2389 status: US Power Solar. AB 942 text and status: LegiScan; California Legislative Information; amendment removing contract-breaking provisions: Sunhub citing pv magazine USA. NEM 3.0 / Net Billing Tariff (CPUC Decision 22-12-056): Assembly committee analysis; Palmetto. Legacy 20-year grandfathering: Helios Energy. Costs: EnergySage, July 2026; SolarReviews, July 2026. Rates: Solar.com (PG&E, March 2026 schedules); Palmetto (utility comparison); VoltFlow (EIA, April 2026). Federal credit expiration: One Big Beautiful Bill Act (signed July 4, 2025). Payback figures are Solar Energy Nerds calculations from the sources above, with assumptions stated in full.

See how California compares nationwide: our Net Metering by State (2026) guide covers how every state's utility credits solar exports.