The short answer
- For most California homes with a monthly bill above about $150, yes, if the system is designed for NEM 3.0.
- The 30% federal credit for homeowners ended after 2025, which lengthens payback by a few years.
- High retail rates (35–45¢ per kWh) and batteries are what still make the math work.
If you've been thinking about solar, you've probably heard two pieces of bad news this year. First, the 30% federal tax credit for homeowners ended on December 31, 2025. Second, California's NEM 3.0 rules, which cut what you earn for exported solar, survived their final court challenge in June 2026. So is it still worth it? Here's how we think about it with every family we talk to.
What changed in the last year
The federal credit. Under Section 25D, homeowners used to subtract 30% of their system cost from their federal taxes. That credit dropped to zero for systems installed in 2026 or later, with no phase-down. On a $35,000 solar-plus-battery system, that's about $10,500 you no longer get back.
NEM 3.0 is final. The Net Billing Tariff applies to new solar customers of PG&E, SCE and SDG&E. Exported power earns an hourly credit that averaged about 3.7–4.6¢ per kWh for 2025–26 applicants. Under the old NEM 2.0, exports earned close to the full retail rate.
A new fixed charge. The big utilities now bill a monthly Base Services Charge of about $24 for most customers. Solar can't offset it, so even a perfect system won't bring your bill to $0.
What didn't change: California power is expensive
PG&E's average residential rate was about 39¢ per kWh in March 2026, and SCE's averaged about 35¢ in January 2026. These are among the highest rates in the country. That's the core reason solar still works here: every kWh you make and use yourself saves that full price.
That also tells you how to design a system now. The money is in self-consumption, using your own power, not in exporting it.
The math for a typical family
Let's take a PG&E household with a $250 monthly bill. After the fixed charge, about $226 a month is usage, or roughly 6,900 kWh a year at 39¢.
| Panels only | Panels + battery | |
|---|---|---|
| System | 4.5 kW | 4.5 kW + 13.5 kWh |
| Est. installed cost | ~$14,000 | ~$27,500 |
| Share of solar used at home | ~55% | ~85% |
| Year-1 savings | ~$1,620 | ~$2,350 |
| Payback (4%/yr rate growth) | ~8 yrs | ~10 yrs |
These are rough, illustrative figures using our calculator's assumptions. The battery version costs more but saves more each year and adds backup power. For bigger bills, or for homes on time-of-use plans with large evening usage, the battery case usually gets stronger.
Your numbers depend on roof direction, shade, when you use power, and your rate plan. That's why we model every quote with your actual 12 months of usage.
When solar might not be worth it
- Your bill is consistently under about $100 a month.
- Your roof is heavily shaded or needs replacement and you can't do both.
- You plan to move within two or three years and would buy with cash.
- You're on a municipal utility with very low rates (some are far below the IOUs).
We'll tell you if you're in one of these groups. We'd rather lose a sale than sell a system that doesn't pay off.
Do leases look better now?
In some cases. Companies that own the system on your roof can still claim a business tax credit for qualifying systems placed in service by the end of 2027, and some pass that through as a lower monthly rate. Read the escalator and transfer terms carefully. See buy vs. lease: the real math.
The bottom line
Solar in California is no longer the easy home run it was in 2022, but it's still one of the few ways to take control of a bill that keeps going up. The families who do best in 2026 are the ones who size carefully, add storage where it makes sense, and compare written quotes.
Quick questions
Will NEM 3.0 change again?
Export credit schedules are updated for each year's new applicants, and your schedule locks for nine years from the year you apply. A new set is expected for 2027 applicants.
Should I wait for prices to drop?
Equipment prices move slowly, while you keep paying your utility every month you wait. If the numbers work today, waiting usually costs more than it saves.