Home solar in California in 2026: is it still worth it?
For many California homes, yes, but for different reasons than a few years ago. Power you send to the grid now usually earns far less than power you buy, and the 30 percent federal credit for homeowners who buy a system ended for systems finished after December 31, 2025. Solar now pays through the power you use yourself, often with a battery, and through the way you pay for it.
What changed when California moved to net billing?
Since April 15, 2023, new solar customers of PG&E, SCE and SDG&E have joined the net billing tariff, which the utilities call the Solar Billing Plan and many installers call NEM 3.0. Exported power earns credits based on values set by the California Public Utilities Commission (CPUC). They change by hour, day and month, are usually well below what you pay for grid power, and can rise above it on some late-summer evenings.
These customers also move to a time-of-use rate with the highest prices in the late afternoon and evening, typically 4 p.m. to 9 p.m. Bills arrive monthly, unused credits roll over to an annual true-up, and export values can be locked in for nine years. PG&E and SCE residential customers who apply before the end of 2027 get slightly higher export credits; SDG&E customers do not. In March 2026 a state appeals court upheld the tariff, so these are the rules to plan around.
Bills changed shape too. From late 2025 at SCE and SDG&E, and from March 2026 at PG&E, most households pay a fixed monthly Base Services Charge in exchange for lower prices per kWh, and SCE notes that solar cannot offset it. What solar replaces is grid power, and California’s household electricity prices remain among the highest in the country.
What happened to the federal tax credit?
The 2025 federal budget law, Public Law 119-21, often called the One Big Beautiful Bill Act, ended the 30 percent residential clean energy credit (Section 25D) for expenditures made after December 31, 2025. The IRS treats the expense as made when installation is complete, so a system paid for in 2025 but finished in 2026 does not qualify, and the same applies to home batteries. Unused credit from a system finished earlier can still be carried forward.
Systems owned by a company and placed on your home under a lease or a power purchase agreement (PPA) are treated differently. The owner can still claim a business credit, Section 48E, as long as the solar system is placed in service by December 31, 2027, or its construction began by July 4, 2026, and its equipment meets new sourcing rules. How much of that value reaches you depends on the contract.
Why does it matter more now who owns the system?
With the homeowner credit gone and exports worth less, the way you pay changes the result as much as the equipment does. The three common routes compare like this:
| What differs | Buy (cash or loan) | Lease | PPA |
|---|---|---|---|
| Who owns the system | You | The provider | The provider |
| What you pay | The system price, or loan payments | A monthly amount set in the contract | A price per kWh for the power produced |
| Federal tax credit | None for systems finished after 2025 | The owner may claim Section 48E | The owner may claim Section 48E |
| Upkeep and repairs | Yours | The provider, under the contract | The provider, under the contract |
| Typical length | The loan term, if any | 20 to 25 years | 20 to 25 years |
Property tax: California excludes new solar systems from reassessment only if they are built or under construction before January 1, 2027, unless lawmakers extend the rule again. A 2026 bill to extend it was held in committee in May.
Do you need a battery for solar to pay?
Not always, but it often helps. A kWh used at home is usually worth more than a kWh exported, and the expensive evening hours begin as solar output falls. A battery stores the midday surplus for the evening. Without one, size the system to what the home uses in daylight, and know that a grid-tied system without storage shuts down during an outage. Sizing, backup and incentives are covered in home batteries in California.
Is your home a good fit?
Start with your own numbers, not a sales projection. These questions decide it:
- How much power you use, and when. Twelve months of hourly data from your utility account, set against the expected output, shows how much of it you would use yourself.
- The roof: which way it faces, how much shade it gets, and whether it will need replacing during a 20 to 25 year contract.
- Who owns the home. The owner signs, and a homeowners association can set reasonable rules but cannot ban solar.
- Your utility. These rules cover PG&E, SCE and SDG&E customers; city-owned utilities set their own.
- What is coming: an electric car or a heat pump raises your use and can raise the share of solar you use at home.
A licensed provider’s savings estimate on the official disclosure covers your first 12 months, should use your past 12 months of hourly data, and assumes utility rates do not rise.
Where does Aeternus fit in California?
Aeternus Power is an independent energy company based in Madrid. Our California office opens on December 1, 2026, and we are arranging a home solar PPA: a financing partner would own the system on your roof, and you would pay only for the power it makes, at a price per kWh set in the contract, with any yearly increase written in from the start. How such contracts work, including the escalator and selling your home, is explained in solar PPAs for California homes.
The PPA is not available yet, and we will not give a date until a provider is signed. What we plan to offer and what to have ready are in Aeternus Power in California. If you would like us to contact you when it is ready, register your interest.
Questions
Is NEM 3.0 the same as the net billing tariff?
Yes. NEM 3.0 is the informal name for the net billing tariff the CPUC adopted in December 2022, which the utilities call the Solar Billing Plan. It applies to PG&E, SCE and SDG&E customers who applied to connect a system from April 15, 2023.
I have solar under NEM 2.0. Does net billing change my bill?
Not your export credits: NEM 2.0 customers can stay on that tariff for 20 years from the date their system was connected. The Base Services Charge does apply to most residential customers, including those with solar.
Can I still claim the 30 percent federal credit in 2026?
Not for a system you buy and finish in 2026. The credit ended for expenditures made after December 31, 2025, and the IRS counts the expense when installation is complete. Unused credit from a system finished earlier can still be carried forward.
Does the owner of a leased or PPA system still get a federal credit?
It can, under Section 48E, if the solar system is placed in service by December 31, 2027, or construction began by July 4, 2026, and the equipment meets the new sourcing rules. Ask how the contract price reflects it.
Will solar get rid of my electricity bill?
No. The CPUC says solar reduces a utility bill but does not eliminate it, and with a lease or PPA you also pay the provider. Fixed charges such as the Base Services Charge remain.
Sources
- CPUC: Net Energy Metering and Net Billing (net billing tariff, export credits, nine-year legacy, required time-of-use rates): https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/customer-generation/net-energy-metering-and-net-billing
- CPUC news release, December 15, 2022: CPUC modernizes solar tariff to support reliability and decarbonization: https://www.cpuc.ca.gov/news-and-updates/all-news/cpuc-modernizes-solar-tariff-to-support-reliability-and-decarbonization
- PG&E: Solar Billing Plan guide for residential customers (Electric Home rate, export credits, batteries): https://www.pge.com/assets/pge/localized/en/docs/clean-energy/solar/pge-solar-billing-plan-guide.pdf
- pv magazine (March 11, 2026): U.S. court upholds California’s current net billing mechanism: https://www.pv-magazine.com/2026/03/11/u-s-court-upholds-current-net-billing-mechanism-dealing-blow-to-rooftop-solar-in-california/
- PG&E (March 1, 2026): PG&E’s restructured electric bill debuts in March 2026 (Base Services Charge): https://www.pge.com/en/newsroom/currents/energy-savings/pg-e-s-restructured-electric-bill-debuts-in-march-2026-.html
- SCE: Base Services Charge (bills restructured November 2025; cannot be offset by the power you generate): https://www.sce.com/save-money/rates-financing/residential-rate-plans/bsc
- U.S. Energy Information Administration: Electric Power Monthly, Table 5.6.A, average price of electricity by state: https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a
- IRS Fact Sheet FS-2025-05: FAQs on the modification of sections 25C, 25D and other credits under Public Law 119-21: https://www.irs.gov/EnergyCreditFAQs
- Congressional Research Service, Insight IN12611 (September 25, 2025): Expiration and carryforward rules for the residential clean energy credit: https://www.everycrsreport.com/reports/IN12611.html
- IRS Notice 2025-42: Sections 45Y and 48E beginning of construction for wind and solar facilities: https://www.irs.gov/pub/irs-drop/n-25-42.pdf
- Grant Thornton: Energy incentives under OBBBA, what you need to know (25D termination, 48E for solar, leased residential property): https://www.grantthornton.com/insights/alerts/tax/2025/insights/energy-incentives-under-obbba-what-you-need-to-know
- CPUC: California Solar Consumer Protection Guide (leases and PPAs, escalators, selling your home, questions to ask): https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/customer-generation/california-solar-consumer-protection-guide
- California State Board of Equalization, Letter to Assessors 2024/031: active solar energy system new construction exclusion, sunset date: https://www.boe.ca.gov/proptaxes/pdf/lta24031.pdf
- EnergySage (updated October 8, 2026): California’s solar property tax break ends after 2026: https://www.energysage.com/news/ca-solar-property-tax-break-ending/
- California Civil Code section 714 (Solar Rights Act: restrictions on solar energy systems): https://california.public.law/codes/civil_code_section_714
- CPUC Resolution E-5364 (adopted March 13, 2025): inputs and assumptions for bill savings estimates in the CSLB Solar Energy System Disclosure Document: https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M559/K800/559800004.PDF