Is Solar Worth It in California in 2026? Payback by Utility

At a glance

Solar still pays for itself in most of California, but the math changed in 2023. Under net billing, which most people call NEM 3.0, the power your home uses as the panels make it saves your full price, and the power you send to the grid earns an export credit worth a few cents. In our model, about 42% of a typical system's output gets used at home. The 30% federal tax credit is also gone for home systems placed in service after 2025.

What works in your favor: California's home electricity prices are among the highest in the country, 32.6 cents per kWh on average from January to August 2026 in federal EIA data, so every kWh you don't buy is worth a lot, and a new system still stays out of your property tax assessment if it's finished before January 1, 2027.

Payback by utility

The same home in five places: it uses 7,000 kWh a year, close to the middle of the single-family homes in our model, and the system covers 85% of that. Our calculator does the rest with each utility's 2026 rates and its rules for solar power sent to the grid:

Utility	Bill before solar	First-year savings	System	Payback at $3/W	at $4/W	at $5/W
PG&ESan Jose sun	$233	$1,110	3.8 kW	10 yrs	13 yrs	15 yrs
SCESan Bernardino sun	$214	$950	3.7 kW	11 yrs	14 yrs	17 yrs
SDG&ESan Diego sun	$279	$1,310	3.7 kW	8 yrs	11 yrs	13 yrs
LADWPLos Angeles sun	$162	$1,480	3.7 kW	7 yrs	10 yrs	11 yrs
SMUDSacramento sun	$122	$740	3.8 kW	14 yrs	17 yrs	21 yrs

Bills include the Base Services Charge at PG&E, SCE and SDG&E and the fixed charges at LADWP and SMUD. Savings at PG&E, SCE and SDG&E come from our model of 308 California homes on each utility's required solar rate and 2026 export credits; LADWP nets solar each billing period and SMUD pays 9.6¢ per kWh sent to the grid. Rates rise each year at the utility's recent pace, capped at 3%; export credits are held flat; panels lose 0.5% a year.

SDG&E pays back fastest of the big three because its prices are the highest. LADWP is faster still because it still nets solar against your use at your full rate within each billing period. SMUD is slowest: SMUD's own comparison puts its bill for 750 kWh at about half of PG&E's, so each kWh you make saves less, even with its 9.6¢ export credit.

What solar costs in California now

Every PG&E, SCE and SDG&E system has to be approved to connect, and the application lists its price. California DG Stats publishes that data. For the 76,292 net billing home systems approved from January to August 2026:

$4.03per wattMedian price of a homeowner-bought, solar-only system; the middle half paid $2.80 to $6.15PG&E, SCE and SDG&E, approved Jan to Aug 2026

72%with a batteryof new net billing home systems at PG&E and SCE included storageSame data; SDG&E reports batteries separately

49%leased or PPAof the 76,292 new net billing home systems were owned by a third party, not the homeownerSame data

Solar only: the median homeowner-bought system without a battery was 4.3 kW and cost $19,000.
With a battery: the median system with storage was 7.5 kW with 13.5 kWh of storage and cost $37,600.
No federal credit: the IRS says the 30% residential clean energy credit doesn't apply to property placed in service after December 31, 2025.
Property tax: the state Board of Equalization says a system started in 2026 has to be finished before January 1, 2027 to stay out of your assessment. See our property tax guide.

Prices vary a lot: a quarter of solar-only systems cost under $2.80 a watt and a quarter cost over $6.15. Getting more than one quote is the cheapest way to shorten your payback.

Black solar panels on a red clay tile roof beside a white gable, under a blue sky

What decides your number

Your utility. It sets your price per kWh and what power sent to the grid earns. Under NEM 3.0 at PG&E, SCE and SDG&E, that credit averages about 3.5 to 6.2 cents in our model, against 29 to 35 cents saved by power you use yourself. Our NEM 3.0 guide explains why.
How much power you use, and when. Bigger homes save more per solar kWh in our model, because more of their use falls above the baseline amount and is priced higher. Power used in the afternoon, while the panels run, saves the most.
The price per watt. Going from $5 to $3 a watt cuts payback by several years in every row above.
A battery. It moves midday solar into the 4 to 9 p.m. peak, when prices are highest. It also adds cost; see our battery guide.
Your sun. It matters less than you'd think: from San Francisco to Riverside, PVWatts output differs by under 10%.

When solar fits, and when it doesn't

Stronger case

Big bill, long stay

You plan to stay well past the payback, your bills run high, much of your use is in the afternoon or you'll add a battery, and you get a fair price per watt.

Run the numbers

Mid-size use

At an average bill, payback depends mostly on the price you're quoted. Compare at least two quotes and check what the system makes against your own bill.

Weaker case

Small use or a short stay

Small homes in our model save the least per solar kWh, and a move within a few years can leave you before the payback. A roof that needs replacing soon also adds cost.

Next step

What a free quote call gets you

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Common questions

Is solar worth it in California in 2026?

For a home you'll keep, it usually pays for itself, but more slowly than under NEM 2.0. For a home using 7,000 kWh a year, our calculator puts the payback for a solar-only system at PG&E, SCE and SDG&E at 11 to 14 years at $4.00 per watt, with no federal tax credit.

Is NEM 3.0 worth it?

It can be. Under NEM 3.0, solar you use as it's made still saves your full price, about 29 to 35 cents per kWh at the big three utilities in our model, while exports earn about 3.5 to 6.2 cents. Sizing the system to your use, and adding a battery when the price makes sense, gets the most out of it.

How much does solar cost in California in 2026?

In California DG Stats data for January to August 2026, the median homeowner-bought solar-only system cost $4.03 per watt, about $19,000 for a 4.3 kW system. The median system with a battery cost about $37,600.

Is there still a solar tax credit in California?

Not a federal one for systems placed in service after December 31, 2025. California's property tax exclusion still applies to a system finished before January 1, 2027.

How long does it take solar to pay for itself in California?

In our estimates for a home using 7,000 kWh a year, 7 to 21 years across PG&E, SCE, SDG&E, LADWP and SMUD at $3 to $5 per watt. LADWP and SDG&E are at the short end, SMUD at the long end.

Prices, rates and export credits change. These are estimates from our calculator's model, not quotes; a site visit gives the exact price for your roof. Sources: California DG Stats: interconnection data · IRS FAQs on the 2025 changes to section 25D · Board of Equalization, Letter to Assessors 2024/031 · CPUC: Net Energy Metering and Net Billing · PVWatts v8, National Laboratory of the Rockies (formerly NREL) · SMUD residential rates · LADWP residential rates · EIA Form 861M · NREL ResStock. Reviewed October 2026.

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