yes for many Southern California homeowners, no for some, and the gap between those two groups is wider in 2026 than it has ever been.
Three things changed the math. The federal residential tax credit ended. Export credits dropped sharply for customers of the large investor-owned utilities. Retail electricity rates kept climbing. Whether solar pays off for your home now depends on which utility bills you, how much power you use between 4 p.m. and 9 p.m., and whether you pair panels with a battery.
This guide walks through each of those factors so you can judge your own situation before anyone hands you a proposal.
The 30 percent Residential Clean Energy Credit under Section 25D expired on December 31, 2025 under the One Big Beautiful Bill Act. There was no phase-down and no transition period. A homeowner who purchases a system with cash or a loan in 2026 receives no federal residential credit.
That is a real reduction in value and any installer who tells you otherwise is either out of date or misleading you. Section 48E, the commercial credit, remains active for business and third party owned projects under its own rules, which is why lease structures look different now than they did two years ago. We cover that in detail in our guide to buying versus leasing.
California’s Net Billing Tariff, commonly called NEM 3.0, took effect in April 2023. It replaced retail-rate export credits with avoided-cost rates. Exports that once earned roughly 30 cents per kWh now earn closer to 5 to 8 cents on average, varying by hour and season.
The important detail most articles skip: this applies only to the three investor-owned utilities regulated by the California Public Utilities Commission.
SCE’s average residential rate sits near 35 cents per kWh in 2026, and summer peak pricing between 4 p.m. and 9 p.m. reaches roughly 58 cents on the standard TOU-D-4-9PM plan and higher on other plans. Rising retail rates push in the opposite direction from the two changes above. Every cent your utility adds makes the power your system produces and you consume directly more valuable.
Green Additions installs across territories with very different rules, and this is where most generic solar advice falls apart.
You are on the Net Billing Tariff. Exported power earns a fraction of what you pay to buy it back. Your savings come almost entirely from using your own production in real time or storing it for the evening peak. Solar alone still reduces a bill, but the strongest results come from solar paired with storage.
The rules are different. LADWP is a municipally owned utility and is not regulated by the CPUC, so the Net Billing Tariff does not apply. LADWP operates its own net metering program that credits exports at or near full retail rates. As of 2026 LADWP has not announced a move to net billing. For Los Angeles homeowners inside LADWP territory, the economics of solar alone remain considerably more favorable than for a neighbor a few blocks outside the city boundary.
You are also served by a municipal utility with its own rules, separate from the CPUC decision.
Before you evaluate any proposal, confirm which utility serves your address and which rate schedule you are on. Two houses on the same street can sit in different territories.
Rather than a generic payback number, look at these five things.
1
Pull twelve months of kWh from your utility account, not one summer bill. A home using 6,000 kWh a year and a home using 18,000 kWh a year are completely different projects.
2
Under net billing, the expensive hours are 4 p.m. to 9 p.m., when solar production is falling off. If your household runs air conditioning, cooking and laundry in that window, storage carries more of your savings than panels do.
3
Orientation, pitch, shading, available area and the age of the roofing material all affect production and cost. A roof with eight years of life left may need work first, and that belongs in your budget conversation rather than as a surprise later.
4
New solar customers on SCE are placed on a solar billing plan with a specific TOU structure. The plan you are on changes which hours matter.
5
An electric vehicle, a heat pump, a pool pump or a planned addition can shift your usage substantially. Sizing a system to today’s bill and adding an EV next year is one of the more common and expensive mistakes we see.
We would rather tell you this before a proposal than after.
Solar tends not to pay off well when annual usage is very low, when the roof needs replacement in the near term and is not being addressed, when a homeowner plans to sell within a couple of years, when heavy shading cannot be resolved, or when the household has little or no daytime and evening load to offset.
There are also cases where a battery makes more sense than panels, particularly for homeowners who mainly want outage protection.
A credible estimate should show your current annual utility cost, estimated annual production for your specific roof, how much of that production you are expected to use directly versus export, the export value under your actual tariff, the resulting estimated annual bill, and the charges that remain regardless.
Anything presented as a guaranteed savings figure should be treated with caution. Production varies with weather, usage patterns change, and utility rates are set by others. Estimates are estimates.
Not for homeowners who purchase a system. Section 25D expired December 31, 2025. Homeowners with qualifying 2025 expenses could claim it on their 2025 return. Section 48E remains available to business and third party owners under separate rules.
Only if SCE, PG&E or SDG&E bills you. LADWP and Pasadena Water and Power customers are not covered by the Net Billing Tariff.
It varies too widely for a single number to be useful. Payback depends on usage, utility, rate plan, system size, whether you add storage, and how you pay for the project. A design-specific analysis is the only honest way to answer this.
Under net billing, storage usually improves the outcome because it lets you use power you would otherwise export cheaply. Under LADWP net metering the case for storage rests more on outage protection than on rate arbitrage.
It can reduce it substantially, but most homeowners still see charges. See our guide on reading your electric bill after solar.
Green Additions designs and installs custom solar, battery storage, EV charging, and electrical solutions for Southern California homeowners.
Licensed California Solar Contractor
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