California rewrote the economics of rooftop solar with its Net Billing Tariff — and in 2026 the courts confirmed the new rules are here to stay. This brief covers the utilities, the export rules, the rate trajectory, and what is genuinely left on the incentive table — researched September 2026.
New to the basics? Start with our California solar guide, then come back — this page is the market layer underneath it.
The Utilities That Shape Your Bill
Three investor-owned utilities dominate: Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E). The big municipal utilities — LADWP and SMUD — run their own programs with their own rules, so your exact economics depend on which territory your home sits in.
What Happens to Your Surplus Power
Systems installed after April 2023 fall under the Net Billing Tariff (NEM 3.0): exports are credited at avoided-cost rates — roughly $0.08/kWh, about 75–80% below the old retail-rate credits — varying by time of day, with export values locked for 9 years. Exported power is not credited at retail: do not let anyone tell you otherwise.
In March 2026, a California appeals court upheld the tariff, ending years of legal uncertainty — the framework is settled. One clarification: AB 942, a bill that would have forced older NEM customers onto NEM 3.0 when their home sells, was amended to preserve NEM agreements on home sale. It was not enacted as a forced switch.
The design consequence is straightforward: California solar economics now rest on self-consumption — using your own power, ideally stored in a battery for the expensive evening hours.
Where California Rates Are Headed
California's average residential rate was 34.74¢/kWh in June 2026 (EIA) — nearly double the 18.34¢ national average. Over the past decade, PG&E rates rose about 110%, SCE about 90%, and SDG&E about 82%, driven largely by transmission and distribution spending.
At these rates, each self-consumed kilowatt-hour is worth nearly twice the national average — which is exactly why batteries pay back faster in California than almost anywhere else.
Incentives on the Table in 2026
The federal picture changed at the end of 2025, and any honest 2026 market brief has to start here: the 30% residential clean-energy credit (Section 25D) expired for homeowner-owned systems placed in service after December 31, 2025. The direct federal credit for a purchased residential system in 2026 is 0% unless Congress enacts new legislation. Third-party-owned systems — leases and power-purchase agreements — may still qualify under Section 48E through 2027, but the installer or lessor must pass that value through to you, so read any lease or PPA contract carefully.
This is general information, not tax advice. Talk with a tax professional about your situation.
At the state level: California's long-standing property-tax exclusion means adding solar does not trigger a reassessment of your home's value. There is no broad statewide rebate for residential solar; some low-income programs exist. With the federal credit gone, the remaining economics are the rate spread — and it is a wide one.
Why Now, Honestly
- Self-consumed power is worth ~2× the national average. At 34.74¢/kWh, the economics favor using your own electricity — and batteries that shift solar into the evening pay back faster here than almost anywhere.
- The uncertainty is over. The March 2026 court ruling locked in the Net Billing Tariff — battery-paired solar now operates under stable, known rules instead of pending litigation.
- The incentive cliff already happened. Waiting no longer brings the 30% credit back. What remains is hedging against utility rates that roughly doubled over a decade — and that math only moves one direction.
California solar in 2026 is a self-consumption story. We will show you the numbers for your usage pattern before you commit to anything.
How We Design for California
We design California systems for self-consumption first: production aimed at your late-day peaks, batteries sized to ride through the expensive evening hours, and export expectations set by the Net Billing Tariff — not by wishful thinking.
Our California Service Areas
Bright Solar serves homeowners and businesses across California, including Los Angeles, San Francisco, San Diego, Sacramento, and San Jose. These are areas we serve — our office is in Houston, Texas, and we do not claim offices in any of these cities. Reach us at (888) 996-1308.