Solar in California: the 2026 numbers
A household here spending $200 a month on electricity needs roughly a 4.3 kW array, which generates about 6,949 kWh in its first year. Bought outright, it returns its cost in year 11 and is worth $5,175 over 25 years — after discounting, after upkeep, and with no federal credit.
Our answer for California: cash purchase
Of the four options, a cash purchase has the highest net present value at $5,175 , turning cash-positive in year 11 . Solar stops making sense in California above roughly $4.20/W installed — if a quote comes in above that, the answer flips.
What California gives you to work with
| Sunlight (specific yield) | 1616 kWh per installed kW per year — NREL PVWatts v8, Sacramento |
| Average residential rate | $0.347/kWh — EIA, June 2026 |
| Export credit | 25% of retail — NEM 3.0 compensates exports at avoided-cost rates far below retail. |
| Federal credit on a purchase | None — §25D expired after December 31, 2025 |
| State incentives | Checked, and there is no cash incentive — reviewed 2026-08-14 |
The four options, run side by side
A household spending $200 a month on electricity, with the array sized to cover its usage, at the default $3.00/W installed cost. This is the same case the calculator below opens on. Net present value discounts future dollars at 5%, so these are not the inflated “lifetime savings” totals a sales quote shows.
| Option | Net present value | Payback | Cost per kWh |
|---|---|---|---|
| Cash purchase You pay for it. No fee, no interest, no escalator. | $5,175 | Year 11 | $0.184 |
| Solar loan Includes the 20% dealer fee that a low-APR solar loan hides in the financed price. | $141 | Year 23 | $0.238 |
| Lease You rent the system. The owner keeps the §48E credit. | $4,232 | Year 1 | $0.194 |
| PPA You buy the output per kWh, not the hardware. | $3,717 | Year 1 | $0.200 |
A cash purchase delivers electricity at $0.184/kWh against a retail rate of $0.347 — it undercuts the utility, which is the whole case in California.
Best option: Cash purchase — $5,175 net present value over 25 years, paying back in year 11.
| Option | Owns it | 30% credit | Upfront | 25-yr NPV | Payback | Cost/kWh |
|---|---|---|---|---|---|---|
| Cash purchase | You | None | $12,900 | $5,175 | Year 11 | $0.184 |
| Solar loan | You | None | $0 | $141 | Year 23 | $0.238 |
| Lease | Provider | Indirect (§48E) | $0 | $4,232 | Year 1 | $0.194 |
| PPA | Provider | Indirect (§48E) | $0 | $3,717 | Year 1 | $0.200 |
What this calculation assumes, and where it can be wrong
Federal credit. The 30% federal residential credit (IRC §25D) expired for systems placed in service after December 31, 2025. A 2026 cash or loan purchase receives no federal credit. Leases and PPAs remain eligible indirectly: the third-party owner claims the commercial credit (IRC §48E) and reflects part of it in the price offered, provided the system is placed in service by December 31, 2027.
Estimated §48E value in a lease or PPA quote: about $1,935 for this system, assuming the provider passes through half the credit. That share is our estimate, not a published figure.
Export credit. NEM 3.0 compensates exports at avoided-cost rates far below retail.
State incentives. California has no statewide personal income tax credit or cash rebate for residential PV. Sales tax and property tax exemptions exist but are not cash incentives and are not modelled. SGIP pays roughly $200/kWh toward battery storage (far more for equity-resiliency customers) — that is storage, not PV, and belongs in the battery calculator rather than here. What actually decides California is NEM 3.0: exports earn a fraction of retail, which is already reflected in the export credit ratio.
- Cash purchase: No federal tax credit is applied: IRC §25D expired for systems placed in service after 2025-12-31.
- Cash purchase: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
- Solar loan: Financed amount includes a 20% dealer fee, which is why a $0-down loan quote costs more than the same system bought outright.
- Solar loan: No federal tax credit is applied: IRC §25D expired for systems placed in service after 2025-12-31.
- Solar loan: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
- Lease: Pricing assumes the system owner claims the §48E credit and reflects part of it in your quote. The system must be placed in service by 2027-12-31 to qualify.
- Lease: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
- PPA: Pricing assumes the system owner claims the §48E credit and reflects part of it in your quote. The system must be placed in service by 2027-12-31 to qualify.
- PPA: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
Sunlight data: 1616 kWh per installed kW per year (verified — NREL PVWatts v8). Retail rate: $0.347/kWh.
Why California lands where it does
Across the 50 states we model, California ranks #27 on the value of a cash purchase, at $5,175 — behind Arizona at $5,918 and ahead ofNorth Carolina at $4,533 . The ordering is not the one people expect, and the reason is worth stating plainly: sunshine matters less than the price of the electricity you stop buying.
California gets 1616 kWh per installed kW per year and pays $0.347 per kWh. Neither figure is extreme, so the outcome turns on the export rule and the state programme rather than on the weather.
The export rule is the main event here
California credits exported electricity at 25% of retail. NEM 3.0 compensates exports at avoided-cost rates far below retail. On the reference system, about 4,517 kWh a year leaves the house rather than being used in it, and the gap between what that power is worth on your bill and what the utility pays for it costs $1,177 a year.
That single number is the difference between the answer on this page and the answer on a calculator that values every kWh at retail — which is what almost all of them do. It is also why self-consumption is the lever that matters most in California: shifting load into daylight hours, or adding a battery, an EV or a heat pump, converts exported kWh worth $0.087 into avoided kWh worth $0.347.
What the state actually pays you
California has no statewide personal income tax credit or cash rebate for residential PV. Sales tax and property tax exemptions exist but are not cash incentives and are not modelled. SGIP pays roughly $200/kWh toward battery storage (far more for equity-resiliency customers) — that is storage, not PV, and belongs in the battery calculator rather than here. What actually decides California is NEM 3.0: exports earn a fraction of retail, which is already reflected in the export credit ratio.
So there is no cash incentive to model. That matters more than it used to: while the 30% federal credit existed, a state with no programme of its own was still fine. Now, California buyers are on their own entirely, and the whole case has to come from the bill savings.
The financing trap
A solar loan is worth $141 here against $5,175 for the same system bought outright — a gap of $5,034. The interest rate is not what causes that. A 20% dealer fee is embedded in the financed price, which is how a "1.99% APR" offer ends up costing more than a bank loan at 8%. It is rarely on the quote. Ask for it by name.
Lease and PPA look different from a purchase for a structural reason: the third-party owner still claims the 30% §48E credit, which a homeowner buying outright can no longer get. How much of that credit reaches you in the price is a negotiation, and we assume half. The owner also carries the upkeep and the inverter replacement that a buyer pays for. That is why they still trail a cash purchase here, though by much less than they would have in 2025. Both are tied to systems placed in service by December 31, 2027 — see the 2027 deadline.
Your utility, not the state average
Everything above runs on California's statewide average of $0.347/kWh. No household pays that. In California the 20 largest utilities charged between $0.163 and $0.436 per kWh in 2024 — a spread wide enough to move payback by years. Each page below also shows how many of that utility's own customers already have solar.
- Pacific Gas & Electric Co. — $0.396/kWh, 170.6 solar homes per 1,000
- Southern California Edison Co — $0.324/kWh, 149.0 solar homes per 1,000
- Los Angeles Department of Water & Power — $0.238/kWh, 62.4 solar homes per 1,000
- San Diego Gas & Electric Co — $0.436/kWh, 238.5 solar homes per 1,000
- Sacramento Municipal Util Dist — $0.179/kWh, 96.2 solar homes per 1,000
- Imperial Irrigation District — $0.179/kWh, 71.9 solar homes per 1,000
- City of Anaheim - (CA) — $0.171/kWh, 48.7 solar homes per 1,000
- Modesto Irrigation District — $0.218/kWh, 107.7 solar homes per 1,000
- City of Riverside - (CA) — $0.202/kWh, 72.8 solar homes per 1,000
- Turlock Irrigation District — $0.163/kWh, 59.4 solar homes per 1,000
Before you accept a California quote
- Confirm it does not apply the expired 30% federal credit.
- Ask what export rate it assumed. California credits exports at 25% of retail; if the quote valued every kWh at $0.347, its savings figure is overstated.
- Check the price per watt. Above about $4.20/W the purchase stops paying for itself in California.
- Ask for the dealer fee on any financed offer, as a dollar amount.
- If it is a lease or PPA, ask for a placed-in-service commitment — §48E requires the system running by December 31, 2027.
More: the 2026 credit change, when solar is not worth it, our assumptions and sources.
Written and maintained by guarledes . Last reviewed 2026-08-15.