Cost of Solar in California

California Solar Pricing Overview

California is the most mature solar market in the country. Because the state has a highly developed network of installers and streamlined supply chains, the gross cost per watt for a solar installation is generally competitive with the national average, typically falling between $2.60 and $3.40 per watt before incentives.

However, the economics of going solar in California have fundamentally shifted due to changes in how utility companies compensate homeowners for excess energy.

The Impact of NEM 3.0 (Net Billing Tariff)

In April 2023, California implemented the Net Billing Tariff (NBT), widely known as NEM 3.0, for customers of the major investor-owned utilities (PG&E, SCE, and SDG&E). This policy drastically altered the financial math of solar.

• Under NEM 2.0 (The Old Rules): If you sent excess solar power to the grid during the day, the utility credited you at almost the full retail rate. A simple solar-only system paid for itself very quickly.
• Under NEM 3.0 (The Current Rules): The utility pays you significantly less for the solar power you export to the grid during the day (often 75% to 80% less than retail). However, electricity pulled from the grid during peak evening hours remains extremely expensive.

Why Batteries Are Now Essential

Because exporting power to the grid is no longer lucrative, the goal under NEM 3.0 is to self-consume as much of your own solar energy as possible. This is where solar batteries come in.

By adding a battery (like a Tesla Powerwall, Enphase IQ Battery, or FranklinWH), you store your excess daytime solar production. You then use that stored energy to power your home during the expensive evening peak hours (4 PM - 9 PM). This maximizes your savings and shields you from peak utility rates.

The Cost Shift

Adding a battery increases the upfront cost of the system by $10,000 to $15,000. While a solar-only system in California might cost $18,000 gross, a solar + battery system typically costs $28,000 to $35,000 gross.

Despite the higher upfront cost, a solar + battery system under NEM 3.0 generally provides a better long-term return on investment and faster payback period than a solar-only system, because it allows you to bypass the punitive export rates and high evening grid rates.

Local Incentives and Title 24

California homeowners can still claim the 30% Federal Investment Tax Credit (ITC) on both the solar panels and the battery storage. Furthermore, the state's Self-Generation Incentive Program (SGIP) occasionally offers rebates for battery installations, though funding is highly dependent on your utility territory and specific eligibility criteria.

If you are building a new home, be aware that California's Title 24 building code requires solar panels to be included in the construction, which is built into the cost of the home.

Last reviewed: August 2026. Utility rates and program specifics (like SGIP funding) evolve continuously.