Solar in California: market, incentives and NEM 3.0 reality

Market snapshot

Solar in California by the numbers

Installed capacity

50,200 MW

Homes powered

15,600K

Solar share of electricity

28%

Solar jobs in state

78,000

Typical cost per watt

$3.30

US ranking

#1

California installs more solar than any other state and is still growing on utility-scale solar. Residential, however, has slowed sharply since NEM 3.0 came in on April 2023: new interconnection applications are down roughly 60 percent from the pre-NEM-3.0 peak. The deals that still close are typically solar-plus-battery rather than solar-only.

Rates and net metering

Electric rates and how solar export is credited

Incentives

State and local solar incentives in California

Beyond the 30 percent federal Residential Clean Energy Credit, which applies in every US state through 2032, California has these state and local programmes.

Self-Generation Incentive Program (SGIP)

State rebate for residential battery storage, administered by the big three utilities. Equity Resilience tier can cover 85 to 100 percent of battery cost for qualifying low-income households in high-fire-risk areas; the general tier offers smaller rebates for everyone else.

Property-tax exemption

California excludes the added value of a solar system from property-tax reassessment under the Active Solar Energy System Exclusion. Runs through at least 2025 and has been renewed repeatedly.

DAC-SASH (Single-Family Affordable Solar Homes)

Direct install of solar for income-qualified households in disadvantaged communities, at no cost to the homeowner. Administered by GRID Alternatives.

Virtual Power Plant programmes

Multiple utilities and third parties (Tesla, Sunrun, Enphase) now pay residential battery owners to export during grid events. Typical compensation: $0.50 to $2.00 per kWh exported during called events, several events per year.

Permits and interconnection

Permits and interconnection

California adopted SB 379 (Solar Access Act permit automation) in 2022, requiring most jurisdictions to offer automated instant permitting via SolarAPP+ for standard residential systems. In practice, SolarAPP+ coverage is strong in the Bay Area and uneven in parts of the Central Valley and Inland Empire. Interconnection timelines with PG&E and SCE commonly run 4 to 8 weeks post-install; SDG&E is usually faster.

Running a solar company here

Running a solar company in California

Running a solar company in California means operating in the most competitive residential solar market in the country, with cost per lead on Google Search frequently above $200, extensive consumer awareness, and a sales motion that now has to lead with battery value rather than panel payback. The customers who still buy are better qualified than they were two years ago; the companies that have survived NEM 3.0 are the ones that moved fastest to a solar-plus-storage pitch and to tighter sales operations. Lead response time and follow-up discipline matter more than they did under NEM 2.0.

Questions people ask

Solar in California: FAQ

Is solar still worth it in California under NEM 3.0?

Yes, with a battery. Solar-only payback under NEM 3.0 has stretched from 5 to 7 years (NEM 2.0) to 10 to 15 years in most PG&E and SCE territories. Solar paired with a right-sized battery (10 to 15 kWh), using the battery to shift evening use into peak hours, brings payback back into the 7 to 10 year range for most homes.

How many solar companies are in California?

The California Solar and Storage Association (CALSSA) estimates around 2,500 licensed solar contractors in the state. The top 20 companies install roughly 60 percent of residential volume; the rest is a long tail of smaller regional installers.

What is the average cost of solar in California?

Residential solar in California averages around $3.30 per watt installed before incentives, meaning a typical 7 kW system costs about $23,000 gross. After the 30 percent federal tax credit, net cost is around $16,000. Adding a 10 kWh battery adds roughly $12,000 to $15,000 before the ITC.

Does California have a state solar tax credit?

Not a direct state income tax credit on solar panels. California's main state-level incentive is the SGIP battery rebate and the property-tax exemption. The 30 percent federal Residential Clean Energy Credit still applies in full.

What is SGIP and how do I qualify?

SGIP (Self-Generation Incentive Program) is a California state rebate for residential battery storage, administered through PG&E, SCE and SDG&E. The Equity Resilience tier offers the largest rebates (up to 100 percent of battery cost) for income-qualified households in high-fire-risk areas. The general tier is open to all customers but offers much smaller rebates. Applications are limited by annual funding.