California solar rebates and incentives: 2026 guide

Solar panels might seem expensive, but if you live in California, you're in luck. While the state no longer offers the same level of solar incentives it once did, high electricity rates and strong battery rebates make going solar a smart investment. Programs like net billing (NEM 3.0) have reduced the value of exporting solar energy to the grid, but they’ve also made adding battery storage more valuable than ever.

Even better? The long-term savings from reduced electricity costs typically outweigh your upfront investment. Here's how to take advantage of California's solar incentives.

Incentives help bring solar's price tag down considerably in California. Here are the major ones to know about:

DAC-SASH

If you live in a top 25% disadvantaged community and you're a Pacific Gas & Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (SDG&E) customer, you may be able to install solar for free or at a very low cost. The DAC-SASH program offers an incentive worth $3/W for solar panel systems between 1 and 5 kW. To qualify, you must also meet income requirements and own a single-family home. Through May 31, 2026, the income limit is $52,875 for a one-to-two person household and $94,125 for a five-person household.

PACE financing

California is one of only three states that offers property assessed clean energy (PACE) financing to homeowners. This financing arrangement allows you to install a solar panel system with typically no money upfront and pay it back over a set period of time–usually between 10 and 20 years. 

Most PACE programs include low interest because the debt is tied to your property instead of you, making it a secure loan. With PACE financing, you make payments as an addition to your property tax bill. If you sell your home before paying off your loan, it will transfer to the new homeowners. 

Local rebates

Your local electric company may offer rebates to homeowners for installing solar panels. For example, Alameda Municipal Power has an Income Qualified Solar Rebate Program that offers  a one-time $500 rebate to homeowners with household incomes below $106,000 who are installing a new solar panel system on a home built before 2020.

The Golden State doesn’t offer any tax exemptions for solar, but it does have a property tax exclusion for solar and solar-plus-storage systems. Under the Active Solar Energy System Exclusion, your property taxes will not increase or decrease due to the added value of a solar installation—but this incentive is currently set to expire after 2026.

Once the exclusion ends on January 1, 2027, new systems will be subject to property tax based on their value. On a roughly $21,000 system, that translates to about $150 to $260 in additional taxes per year. That’s relatively modest, but it’s not nothing.

California does not currently offer any tax exemptions or exclusions for standalone batteries.

California no longer offers net metering, but if you're a customer of one of the three Investor Owned Utilities (IOUs)–Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E)–and you connect your solar panel system to the grid, you can benefit from net billing. Net billing is similar to net metering in that you earn credits when you send excess electricity from your solar panels to the grid. When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill.

How much are bill credits worth with net billing?

The IOUs transitioned to net billing, also called NEM 3, in April 2023. To determine export rates, the California Public Utilities Commission (CPUC) created the Avoided Cost Calculator (ACC) based on wholesale electricity cost predictions. Under net billing, the value of excess solar energy is now based on what your utility pays for electricity (wholesale rate) instead of what you pay for electricity (retail rate). This means you won't save as much on your electric bills. 

Because the wholesale value of electricity depends on supply and demand in the market, your exact compensation rate varies by the hour of the day, day of the week (i.e., weekday vs. weekend), and month you export the energy. There are 576 possible export rates in total for each utility company. On average, wholesale credits are worth about 25% of retail electricity rates in California.

The CPUC updates the calculator every two years with predictions spanning nine years. If you go solar during those two years, you lock in export rates for the full nine years. Your export rates will still change annually depending on the wholesale electricity cost predictions, but from the time you connect your system to the grid, you'll know exactly how they'll change for each of those nine years. After nine years, your export rates will still depend on avoided costs, but they'll vary based on the version of the ACC available at that time.

You can lock in current export rates by getting your solar panel system interconnected before January 1, 2027. 

How long do bill credits roll over?  

On each monthly bill, you'll have a fixed charge that you can't offset with solar export credits and either a balance for the electricity you consumed and didn't offset with solar or a rollover of extra export credits. 

Because the value of export credits is low under NEM 3.0, it's likely you won't have any credits remaining by your "true-up" date, or the date of your interconnection. If you do happen to have leftover credits by this date, your utility company will compensate you based on the Net Surplus Compensation Rate they've set for that month and year. This rate will always be significantly lower than the value of your export credits, so it's important to minimize your leftover credits. 

Ideally, you'll want to interconnect your system in late winter/early spring (likely sometime in March) so you can build up your credits throughout the summer and use them throughout the winter. To disincentivize all Californians from going solar at the same time, the California Public Utilities Commission (CPUC) allows you to change your true-up date once so you can make it align with that March timeline. 

What to know about export rate adders

If PG&E or SCE is your utility company, you can earn a bit more for the electricity you export to the grid with "adders." Similar to the ACC export rates, you'll lock in these adders for nine years. Your adder rate depends on the year you interconnect your system and stays the same throughout the nine years. If you're a customer of SDG&E, a non-residential customer, or your system is part of new construction, you won't be eligible for adders. 

Each year you wait to go solar, the adder rate drops, lowering your savings; starting in 2028, adders will no longer be available. If you're a low-income customer or live in a disadvantaged community (DAC), your adders will be considerably higher. Here are the adder rates, depending on your utility company, your income status, and the year you connect your system to the grid:

Learn more about the net billing programs in California:

Pacific Gas & Electric (PG&E)

Southern California Edison (SCE)

San Diego Gas & Electric (SDG&E)

California is home to perhaps the best-known state-level storage incentive in the country:

Self-Generation Incentive Program

The Self-Generation Incentive Program (SGIP) offers rebates for installing battery storage, whether standalone or paired with solar panels. Rebates are calculated per kilowatt-hour ($/kWh) of battery capacity, and while incentive levels decrease as more systems are installed statewide, the program prioritizes higher rebates for low-income households and customers in high fire risk areas, helping provide reliable backup power to those who need it most.

SGIP is available to customers of most major California utilities, including PG&E, SCE, and SDG&E.

To estimate your rebate, simply multiply your battery’s capacity by the applicable rate:

• Small Residential Storage: $150/kWh

• Residential Storage Equity (low-income): $1,100/kWh; if paired with solar, can earn an additional $3,100/kW

• Equity Resiliency (low income + high fire risk): $1,000/kWh

• Jan Joaquin Valley Residential: $1,100/kWh

Local rebates and incentives

Your local utility company may offer additional storage rebates or incentives. 

• Rancho Mirage Energy Authority: The Residential Battery Program provides a rebate to eligible homeowners who install home battery storage systems to store excess solar energy. Rebates range from $500 to $1,500.

• Sacramento Municipal Utility District (SMUD): The My Energy Optimizer Partner program not only offers a one-time enrollment incentive of up to $10,000 per household, but it also enables a virtual power plant (VPP) that offers customers ongoing financial incentives for allowing the utility to use smart technology to draw power from their home battery storage systems during times of peak demand. 

• Virtual power plants (VPPs): Eligible battery owners can earn extra income by allowing their system to support the grid during peak demand events. In addition to VPP programs offered directly by utility companies like SMUD, companies such as Sunrun, Tesla, and Sonnen offer payments or bill credits in exchange for occasional battery dispatch.

If you're looking for solar installers in California, here are some popular suggestions: