California Solar Incentives Overview
California has been a leader in solar adoption for over two decades, offering a combination of federal, state, and local incentives that make going solar highly economical. However, the incentive landscape has changed significantly with the transition from NEM 2.0 to NEM 3.0.
Current Incentive Summary
| Incentive | Value | Availability |
|---|---|---|
| Federal ITC (PPA/Lease only in 2026) | 30% via 48E (company claims it) | Through Dec 2027 (PPA/Lease only) |
| NEM 3.0 | $0.08-0.12/kWh export | New customers |
| NEM 2.0 | $0.28-0.35/kWh export | Existing customers only |
| SGIP Storage | $0.15-0.85/W | Limited funding |
Federal Tax Credit Update: What Changed in 2026
Important 2026 Update: The 30% residential ITC (25D) for homeowner-purchased solar systems (cash or loan) expired on December 31, 2025. There is no longer a federal tax credit for purchased systems.
- PPA/Lease: Solar company claims a 30% commercial credit (48E) through Dec 2027, typically passes savings to you as lower rates
- Purchased systems (cash/loan): No federal credit available in 2026
- Stackable: Combines with state and local incentives
- Requirements: System must be at your primary residence
Example savings:
Every home is different. Chat with our AI to get numbers specific to your address, usage, and utility.
Net Energy Metering
Net metering allows you to earn credits for excess solar energy exported to the grid. California transitioned to NEM 3.0 in 2023, which significantly changed compensation rates.
NEM 2.0 vs NEM 3.0
| Feature | NEM 2.0 | NEM 3.0 |
|---|---|---|
| Export Rate | $0.28-0.35/kWh | $0.08-0.12/kWh |
| Grid Access Fee | None | $8-15/month |
| Rate Structure | Retail rate | Near-wholesale |
| Availability | Existing customers only | All new customers |
California State Rebates
Self-Generation Incentive Program (SGIP)
SGIP provides rebates for qualifying energy storage systems paired with solar. Amounts vary based on customer type and storage capacity.
- Residential: $0.15-0.85 per watt of storage
- Equity: Higher rates for low-income customers
- Equity Resilience: Highest rates for underserved communities
- Requirements: Must be paired with solar system
Example SGIP calculation:
- 13.5 kWh battery (Tesla Powerwall 2) = ~$1,800-4,000 rebate
- 27 kWh battery (2x Powerwall) = ~$3,600-8,000 rebate
Equity Programs
California offers enhanced incentives for low-income households and residents in disadvantaged communities:
- Single-Family Affordable Solar Housing (SASH): Up to $10,000 for affordable housing
- Multi-Family Affordable Solar (MASH): Up to $1.50/watt for apartments
- Disadvantaged Community (DAC) Programs: Enhanced SGIP rates
Local Utility Programs
PG&E, SCE, and SDG&E Programs
Major California utilities offer additional rebates and programs beyond state incentives:
PG&E (Northern & Central California)
- Energy Storage Rebates: Up to $3,000
- EV Charger Rebates: $500-2,000
- Energy Efficiency Upgrades: Varies
SCE (Southern California Edison)
- Storage Rebates: Up to $4,000
- Electric Home Rebates: $500-3,000
- Energy Management Systems: Up to $1,000
SDG&E (San Diego)
- Sunrgy Solar Program: Rebates for solar + storage
- Battery Storage Incentives: Up to $5,000
- Clean Transportation Incentives: Up to $2,000
City-Specific Programs
Many California cities offer additional incentives:
- Los Angeles: LADWP solar rebates, Feed-in Tariff program
- San Francisco: SFPUC solar programs, CleanPowerSF
- Berkeley: Solar-COOP bulk buy programs
- Santa Monica: City solar incentive program
Calculate Your Total Savings
Here's how to estimate your total incentives when going solar in California:
Example: 10kW System ($24,000)
| System Cost | $24,000 |
| Federal ITC (PPA/Lease only in 2026) | -$7,200 |
| SGIP Battery (if added) | -$2,000 |
| Net Cost After Incentives | $14,800 |
What's the best way to maximize California solar incentives?
Follow these steps:
- Apply for SGIP early in the year (funding runs out)
- Add battery storage to qualify for additional rebates
- Check if you qualify for equity programs
- Get quotes from multiple installers who know local programs
- Work with a tax professional to maximize federal ITC
- Consider adding an EV charger for additional utility rebates
How to Claim Your Incentives
- Federal ITC: Claim on IRS Form 5695 when filing taxes
- NEM: Automatically applied through your utility
- SGIP: Apply through your utility or visit sgip-sgc.com
- Local Programs: Apply through your specific utility or city
Important: Some incentives must be claimed in the year they are earned. Work with your solar installer and a tax professional to ensure you capture all available savings.