Solar Incentives and Rebates in California
California doesn’t offer a state-level solar tax credit, and the 30% federal credit that used to backstop the state’s high solar adoption is now gone for homeowner-owned systems. What’s left is a smaller but still meaningful set of state and utility programs — and, thanks to some of the country’s highest electricity rates, a payback case that remains strong even without the old federal cushion.
Table of Contents
- The Big Picture for California in 2026
- Net Billing (NEM 3.0): How Export Credits Work Now
- Self-Generation Incentive Program (SGIP)
- Property Tax Exclusion
- DAC-SASH: Low-Income Solar Program
- Utility-Specific Programs
- What’s No Longer Available
- How These Incentives Add Up
- FAQ
The Big Picture for California in 2026
The federal Residential Clean Energy Credit (Section 25D) expired for any system placed in service after December 31, 2025, so California homeowners installing solar in 2026 get $0 in federal credit on a cash or loan purchase. What remains is state and local: a property tax exclusion, battery storage rebates through SGIP, and California’s net billing structure for exported solar. None of these require federal eligibility, and all of them are still active as of 2026.
Net Billing (NEM 3.0): How Export Credits Work Now
California transitioned away from traditional net metering in April 2023 with what’s officially called the Net Billing Tariff, widely referred to as NEM 3.0. For customers of the state’s three big investor-owned utilities — PG&E, SCE, and SDG&E — this changed how much you’re paid for the solar power you send back to the grid.
| Metering Program | Typical Export Credit |
|---|---|
| NEM 2.0 (legacy, largely closed to new customers) | ~$0.30 – $0.35 per kWh (near retail rate) |
| NEM 3.0 / Net Billing (current standard) | ~$0.05 – $0.10 per kWh (avoided-cost basis) |
This roughly 70-75% drop in export value is the single biggest reason battery storage has become close to a financial necessity for new California solar customers rather than an optional add-on. Instead of selling excess daytime solar back to the grid at a low rate, pairing solar with a battery lets you store that power and use it during the expensive evening peak (typically 4-9 PM), when grid electricity costs the most.
Some municipal utilities and co-ops outside the big three — including LADWP and SMUD — run their own rate structures and aren’t subject to NEM 3.0, so it’s worth checking your specific utility’s current buyback rules rather than assuming NEM 3.0 applies statewide.
Self-Generation Incentive Program (SGIP)
SGIP is California’s main rebate for home battery storage, administered through the state’s utilities. Rebate levels vary significantly by budget category:
| SGIP Category | Typical Rebate | Who Qualifies |
|---|---|---|
| General Market | Lower, budget-dependent | Most homeowners |
| Equity | Higher | Income-qualified households |
| Equity Resiliency | Highest (up to roughly $1.10/Wh, plus a per-watt solar adder) | Income-qualified households in high fire-threat or PSPS-affected areas |
For a typical 13.5 kWh battery, Equity Resiliency-tier rebates can meaningfully offset — and in some cases largely cover — the cost of storage, though most territories face waitlists and funding limits, and applications generally must be submitted and approved before installation begins. General Market rebates for non-income-qualified households are considerably smaller and depend on current budget availability, which changes throughout the year.
Property Tax Exclusion
California excludes the added home value from a new solar or solar-plus-storage installation from your property tax assessment under the Active Solar Energy System Exclusion. In plain terms: adding solar increases your home’s value but not your property tax bill, for systems that qualify before the program’s current cutoff date. This exclusion applies to the original owner at the time of installation — a change in ownership can trigger a reassessment, so it’s worth discussing with a tax professional if you’re planning to sell.
DAC-SASH: Low-Income Solar Program
The Disadvantaged Communities Single-Family Solar Homes (DAC-SASH) program provides upfront incentive payments — historically around $3 per watt for systems up to 5 kW — to income-qualified homeowners in designated disadvantaged communities served by PG&E, SCE, or SDG&E. The program, administered by the nonprofit GRID Alternatives, can combine with other local incentives to cover most or all of a qualifying homeowner’s installation cost. Eligibility requires living in a designated disadvantaged community and meeting income limits.
Utility-Specific Programs
Beyond statewide programs, individual utilities sometimes offer their own rate plans or incentives for solar and EV-charging customers, such as bundled solar-plus-EV time-of-use rates. These vary by provider and change more frequently than state-level programs, so it’s worth asking your installer or utility directly what’s currently available in your service territory.
What’s No Longer Available
| Program | Status in 2026 |
|---|---|
| Federal 30% Residential Clean Energy Credit (Section 25D) | Expired Dec 31, 2025 for owned systems |
| Traditional NEM 2.0 retail-rate net metering | Largely closed to new customers |
| Most SGIP General Market and Equity budgets | Frequently exhausted; check current status before assuming availability |
How These Incentives Add Up
A California homeowner installing solar plus battery storage in 2026 typically layers savings from the property tax exclusion (no ongoing cost), an SGIP rebate if income-qualified (upfront cost reduction), and self-consumption savings from using stored solar during peak hours rather than exporting it at low NEM 3.0 rates. Together, these can bring payback periods for a solar-plus-storage system down to roughly 6-9 years in many California markets — meaningfully faster than solar alone under current net billing rates.
*California Public Utilities Commission (cpuc.ca.gov), California Energy Commission (energy.ca.gov), and DSIRE (dsireusa.org).
FAQ
Does California still offer a state solar tax credit? No. California has never had a state-level solar income tax credit; its incentives are structured as rebates, exclusions, and rate programs instead.
Is the federal solar tax credit still available for California homeowners? No, not for homeowner-owned systems installed in 2026 or later — Section 25D expired December 31, 2025. Lease and PPA customers may still see an indirect benefit through the system owner’s commercial credit.
What’s the best California incentive for battery storage? SGIP, especially its Equity Resiliency tier for income-qualified homeowners in high fire-risk areas, offers the largest rebates — though budget availability and waitlists vary by territory.
Will installing solar raise my property taxes in California? No. The state’s Active Solar Energy System Exclusion keeps the added value of a qualifying solar installation out of your property tax assessment.
Is solar still worth it in California without the federal tax credit? For most homeowners, yes — California’s electricity rates remain among the highest in the country, and pairing solar with battery storage under NEM 3.0 still delivers meaningful long-term savings, even though the payback period is longer than it was with the federal credit in place.