Californians pay far more for electricity than almost anyone else in the country, which makes solar unusually attractive. The state also rewrote its solar rules in 2023, which makes a battery close to essential. Here is where things stand, with every figure sourced.
Last reviewed 25 July 2026. Rules and programme budgets change often, so confirm current terms before you sign anything.
Everything about solar economics in California follows from one fact: grid power is expensive. Every kilowatt hour you generate and use yourself displaces a very costly one.
April 2026 readings[1]
California sits roughly 87 percent above the national average, and only Hawaii is higher among US states. Rates across the major California utilities span a very wide band, reported from about 11 to 74 cents per kWh depending on utility, tier and time of day, with a median near 33 cents.[1]
The average California system quoted on the EnergySage marketplace is 8.54 kW at $2.51 per watt, about $21,472 before incentives, with a reported average payback of 7.68 years.[2] That is a smaller and cheaper system than the 12 kW national average, yet it pays back faster, purely because the power it displaces costs so much.
Most California residential customers are on time of use pricing, where the late afternoon and evening peak costs far more than midday. That is precisely the window when solar output is falling, which is why storage matters so much here. Our time of use guide shows the arithmetic.
If you read one thing about California solar, read this. It changed what your exported power is worth, and therefore how you should design a system.
The CPUC adopted decision D.22-12-056 on 15 December 2022, creating the Net Billing Tariff as the successor to NEM 2. It applies to customers who submitted an interconnection application on or after 15 April 2023.[3]
Export credits moved from close to the retail rate to an avoided cost basis. Industry analysis puts the reduction at roughly 75 percent, from around 30 cents per kWh to averages in the region of 5 to 8 cents, varying by hour, day and month across a large number of individual export rates.[4]
The Commission projected that an average residential customer adding solar would save about $100 a month, rising to at least $136 a month with solar plus storage, and that systems would pay off in about nine years. It also added extra bill credits for customers adopting in the first five years, guaranteed for nine years.[3]
Under the old rules, exporting surplus midday power was nearly as good as using it. Under the Net Billing Tariff it is worth a fraction as much. The value now sits in self consumption, which means using your own generation directly or storing it for the evening peak rather than selling it cheaply at noon.
California runs the largest battery storage rebate programme in the country. The headline rates are generous, but the biggest ones are targeted at specific households rather than everyone.
| Category | Who it targets | Rate |
|---|---|---|
| Residential Solar and Storage Equity | Low income residential customers statewide, opened 2 June 2025 | $1,100 per kWh storage $3,100 per kW solar |
| Equity Resiliency | Households facing wildfire or shutoff risk, and other qualifying criteria | $1,000 per kWh |
| Non-Residential Equity | Qualifying non-residential customers | $850 per kWh |
| General market | Everyone else | substantially lower[6] |
The CPUC has authorised $280 million for the Residential Solar and Storage Equity budget alone.[5] SGIP is funded by a surcharge on utility bills and is administered through the utilities. Budgets are finite and categories can close when funds are exhausted, so check availability before counting on it.
The difference between the general market rate and the equity rates is very large. Before assuming you get the headline number, confirm which category you fall into with your utility or the CPUC programme page.[5]
Cities, counties and municipal utilities run their own schemes on top of statewide programmes. Search the DSIRE database by zip code, then confirm on the operator's own site, because local schemes are not always captured promptly.[7]
California has long excluded the added value of an active solar energy system from property tax reassessment. Confirm the current terms and expiry with the DSIRE listing and your county assessor before relying on it.[7]
Two things are worth watching: a building code that already took effect, and a bill that has been heavily amended and has not moved in almost a year.
The 2025 Building Energy Efficiency Standards took effect on 1 January 2026 and widened solar and storage requirements for new construction. Low rise homes of one to three storeys require solar with storage treated as optional, while high rise residential of four or more storeys and many new nonresidential building types face requirements covering both solar and battery storage.[8]
This affects new builds and major work, not existing homes. If you are building or doing a substantial remodel, raise it with your designer early, because it changes the roof plan.
AB 942 attracted alarming headlines because the original version would have cut existing net metering arrangements from twenty years to ten. It was subsequently amended in committee to remove the provisions affecting existing contracts and their transferability.[9]
As of this review the official record shows it as an active bill in the committee process, with the last action on 29 August 2025, re-referred to the Senate Rules Committee.[10] It has not been chaptered, signed or vetoed, and has not moved in nearly a year. The 2025 to 2026 session ends on 31 August 2026, so a bill that does not pass by then dies with the session.
Our general cost guide and savings estimator work anywhere. For California, put your real rate into the estimator rather than the national default, because 35 cents behaves very differently from 18.
Nothing on this page is tax, legal or financial advice. California tariffs, incentive budgets and building rules change frequently and vary by utility and county. Confirm your own position with the CPUC, your utility, your county and a qualified adviser before making a purchase.
