California has long been one of the most favorable states in the U.S. for going solar. With abundant sunshine, high electricity rates, and a litany of incentives, solar installations can be more financially compelling there than many other states. But the details matter: incentives change, policies evolve, and your savings depend heavily on how all the pieces fit together. Below, I walk through the main incentives, credit programs, financing options, net metering changes, and what someone in California should watch out for.
How Much Do Things Cost (and How Much Can You Save)?
First, let’s anchor ourselves with some numbers.
Recent data from SolarReviews (October 2025) estimates that the average California home solar installation costs around $22,600 before incentives.
After applying the 30% federal solar tax credit (ITC), that net cost drops to about $15,820.
For battery storage combined with solar, the pre-incentive cost is estimated around $15,600, and the net after credits and rebates is about $8,895.
Taken together, many homeowners in California, after incentives, can see payback periods of 8 years or less, thanks to high utility rates and strong local incentives.
Those are averages and estimates, and results may vary based on your utility, location, roof, and system size.
Main Incentives in California
Here’s a breakdown of the most important incentives and programs that can significantly lower your solar costs in California as of 2025.
Federal Solar Tax Credit (ITC / Residential Clean Energy Credit)
This is a 30% tax credit off the cost of your solar installation (equipment and labor).
It is not a rebate, but a credit against your federal income taxes. If you owe less tax than the credit, some states allow you to roll over leftover credit into future years.
The timing is favorable because the Inflation Reduction Act extended this credit through 2032 at 30%, with gradual phase-downs in 2033 and beyond.
Self-Generation Incentive Program (SGIP)
SGIP is a key California program that provides rebates for battery storage when paired with solar.
The rebate is often expressed as dollars per kilowatt-hour (kWh) of storage capacity, approximately $200 per kWh.
For example, a Tesla Powerwall (around 13.5 kWh) might qualify for a rebate of about $2,600 under some SGIP metrics.
There is also a Demand Side Grid Support (DSGS) program for Powerwall owners who allow their battery to participate in grid demand events, offering payments such as $350 per year.
Property Tax Exclusion
California offers a property tax exclusion for solar and solar plus storage systems, meaning their added value is not counted when assessing your property taxes.
For example, if your solar system increases your home’s value, that increase is generally excluded from your property tax base.
Some sources note that this exclusion may change, so verify current policy with your county assessor.
DAC-SASH (Disadvantaged Communities Single-Family Affordable Solar Homes)
This program helps low-income residents in California’s most disadvantaged areas gain access to solar installations.
It can provide rebates of up to $3 per watt installed in eligible homes.
In some cases, eligible homes may receive solar installations for little to no cost under this program.
Local and Utility Incentives
Depending on your city and utility, additional rebates or fee waivers may be available, such as waived permitting fees or local grants.
Some municipalities or utilities run their own battery or solar incentives, so checking local programs is essential.
Net Metering: How Much You Get Credited for Extra Power
Net energy metering (NEM) is a major factor in your long-term savings, but California’s policy has changed.
Under older rules (NEM 1.0 and 2.0), solar customers were credited at near retail electricity rates for the excess energy they exported to the grid.
However, with NEM 3.0, which took effect in 2023, export credits are now lower than retail rates. This means the value you receive for excess solar power is reduced.
Because of the reduced export rate, combining solar with battery storage often produces better financial outcomes under NEM 3.0.
Even with the reduced net metering credit, solar plus battery systems can still be economical in California, thanks to high electricity rates and available incentives.
Financing Options and Trade-Offs
Going solar doesn’t always require a large cash outlay up front. Here are some common ways people finance their systems in California and points to consider.
Cash or Upfront Purchase
You buy the system outright and receive all incentives and credits yourself over time.
There are no monthly payments, but it requires available capital.
It offers maximum return over the long term.
Solar Loan
You borrow money to pay for the system, still own it, and can claim incentives.
Monthly payments often replace or are less than your old electric bills.
Interest rate and loan structuring matter significantly.
Solar Lease or Power Purchase Agreement (PPA)
You don’t own the system; a third party installs it, and you pay for usage (per kWh) or a lease fee.
You typically can’t claim tax credits or incentives since you don’t own the system.
It’s simpler up front but provides lower returns long term.
PACE Financing
PACE (Property Assessed Clean Energy) ties your solar payments to your property tax bill.
Payments are attached to the property rather than to you personally.
Some downsides include adding a lien to your home, and future buyers must accept that lien.
It’s useful for homeowners with lower credit or those wanting low or no upfront costs.
Installation Process and Timing
Going solar in California typically follows these steps:
- Site assessment and system design: The installer examines sun exposure, roof angle, shading, and your energy usage to determine system size.
- Permitting and approvals: Plans are submitted to your city or county and to the utility for interconnection.
- Installation: Panels, wiring, inverter, and batteries are installed once approved.
- Inspection and interconnection: The local authority inspects the system; the utility signs off; the system is activated.
- Monitoring and maintenance: After activation, you monitor performance, address shading or maintenance issues, and handle warranties.
In California, permitting and utility interconnections can sometimes add weeks or months of delay depending on local rules and workloads.
Is Solar Still Worth It in California?
When you combine California’s high electricity rates, strong incentives, sunny climate, and battery support, solar can still be very attractive in 2025, though with more nuance than before.
Even under NEM 3.0 with reduced export credit, solar plus battery systems can pay back in under 10 years in many cases.
Over 20 to 25 years, savings can accumulate into tens of thousands of dollars in avoided electric bills.
For lower-income or disadvantaged homeowners, programs like DAC-SASH can make solar nearly free or heavily discounted.
The battery incentives such as SGIP are a strong lever for improving economics, especially when grid export rates are less favorable.
It’s essential to run the numbers yourself because your utility rate, roof conditions, local incentives, and system pricing all influence whether solar is a smart move for your home.