California Solar Billing Plan Explained: Is Rooftop Solar Still Worth It in 2026?

Introduction

California has long been the epicenter of the American solar revolution. With abundant sunshine and some of the highest retail electricity rates in the nation, going solar in the Golden State used to be a financial no-brainer.

However, if you are looking to install rooftop solar in 2026, you are navigating a whole new landscape: The Solar Billing Plan (SBP).

Major California investor-owned utilities—including Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E)—calculate utility bills strictly based on real-time generation, consumption, and grid imports/exports.

Many homeowners wonder: Did this change ruin the financial value of rooftop solar in California?

The short answer is no—rooftop solar is not dead in California, but the economics have completely shifted from exporting solar power to self-consuming it.

What Is the California Solar Billing Plan?

What happened to NEM?

For years, California operated under Net Energy Metering (NEM 1.0 and NEM 2.0). Under NEM 2.0, every kilowatt-hour (kWh) of excess solar energy you sent to the grid was credited at roughly the same retail price you paid to buy power from the utility company (often 30¢ to 45¢ per kWh).

On April 15, 2023, the California Public Utilities Commission (CPUC) officially replaced NEM 2.0 with the Net Billing Tariff (NBT), commonly referred to as the Solar Billing Plan or NEM 3.0.

Who is affected?

  • Legacy NEM 1.0 & 2.0 Customers: Homeowners who submitted complete interconnection applications prior to April 14, 2023, are grandfathered into their original net metering structure for 20 years from their system's permission-to-operate date.

  • New Solar Customers: Anyone submitting a solar interconnection application under PG&E, SCE, or SDG&E is automatically enrolled in the Solar Billing Plan.

How does net billing work?

Under the Solar Billing Plan, export credits are no longer tied to retail electricity rates. Instead, exported power is valued using an Avoided Cost Calculator (ACC), which dynamically measures how much money the utility saves by not generating that electricity elsewhere.

NEM 2.0 vs. SOLAR BILLING PLAN (NEM 3.0)

NEM 2.0 (LEGACY)       SOLAR BILLING PLAN (NEM 3.0) 
Retail Credit Rate: ~$0.30 - $0.45  
1:1 Solar Export Value    		 Wholesale Credit Rate: ~$0.05 - $0.08
~75% - 80% Reduction in Export Value

 

DAYTIME (10 AM - 3 PM)
Solar Generation > Home Needs ──> Excess Exported ──> Low Export Credit ($0.05/kWh)

EVENING (5 PM - 9 PM)
Home Needs > Solar Generation ──> Buy Grid Power  ──> High Retail Rate ($0.45+/kWh)

How Does Solar Billing Work?

To understand how your bill is calculated under the Solar Billing Plan, let's look at a typical day for a California family:

  1. Daytime: Your rooftop panels produce maximum energy. Your home uses what it needs, and the excess flows out to the street grid. Under SBP, the utility credits you an average wholesale rate of just 5¢ to 8¢ per kWh.

  2. Evening: The sun goes down, but your family turns on air conditioning, cooks dinner, and runs the TV. Because your panels are dark, you must purchase electricity from PG&E or SCE at peak Time-of-Use (TOU) retail rates—often 40¢ to 55¢+ per kWh.

Sending energy out for 5 cents and buying it back hours later for 45 cents is a losing equation. This gap is why your usage strategy matters more than ever.

Why Solar Self-Consumption Matters More Now

The fundamental rule of solar in California under the Solar Billing Plan is simple:

The more solar energy you consume directly in your home, the less electricity you need to buy at inflated utility rates.

When you use a kilowatt-hour of your own solar energy to run your refrigerator or pool pump during the day, you avoid paying the full retail price (worth ~40¢/kWh). But if that same kWh is exported to the grid, it only earns a tiny credit (~5¢/kWh).

VALUE OF 1 kWh OF SOLAR

USED AT HOME (Self-Consumption): Saves ~$0.40/kWh                        

EXPORTED TO GRID (Net Billing):  Earns ~$0.05/kWh

By adding a home battery system, you store that daytime surplus on-site instead of sending it away for pennies. When expensive evening rates arrive, your home draws from your battery storage, protecting you from high grid prices.

Does Solar Billing Plan Make Solar Less Valuable?

While the SBP reduced export credits, rooftop solar remains a powerful tool for controlling household expenses in California for several reasons:

  • Rising Base Electricity Rates: PG&E, SCE, and SDG&E utility rates continue to climb rapidly. Every kWh of grid electricity you avoid buying yields increasing financial savings year after year.

  • Hedge Against Future Inflation: Solar locks in your baseline generation costs, protecting your family budget against unpredictable utility price hikes.

  • EV Charging Efficiency: Pairing daytime solar or evening battery discharge with EV home charging keeps your driving costs far below gas prices or public superchargers.

  • Energy Independence & Resilience: Adding storage keeps essential circuits running during heatwave blackouts and Public Safety Power Shutoffs (PSPS).

Solar vs. Solar + Battery Under the New Billing Structure

Under California's SBP, choosing between standalone solar and solar-plus-storage makes a major difference in performance and return on investment:

Feature Solar-Only (Under SBP) Solar + Battery (Under SBP)
Daytime Self-Consumption √ √
Evening Grid Avoidance Low (Must buy expensive grid power) High (Runs off stored battery power)
Grid Export Compensation Poor (Low wholesale credits) Optimized (Stores power or exports at rare peak hours)
Average Bill Reduction 40% – 50% 70% – 90%
Power Outage Backup No Yes
Estimated Payback Period 9 – 11 Years 6 – 8 Years

How to Estimate Your Solar Savings in California

Because export credits vary dynamically hour-by-hour across the year, estimating your annual financial return uses this core calculation:

Estimated Annual Savings = (Solar Energy Used Directly x Avoided Retail Rate) + (Exported Energy x Avoided Cost Credit) - Fixed Utility Fees
Sample Calculation (Solar + Battery System):
• Direct Solar/Battery Self-Consumption: 8,500 kWh × $0.42/kWh = $3,570 saved
• Grid Export Credits: 1,500 kWh × $0.06/kWh = $90 earned
• Fixed Utility Connection Charges: -$180/year
--------------------------------------------------------------------------------
• Estimated Net Annual Savings: $3,570 + $90 - $180 = $3,480 per year

Who Benefits Most From Solar in California?

Rooftop solar under the Solar Billing Plan yields the highest return for homeowners who fit these profiles:

  1. High Electricity Consumers: Households regularly hit with $300+ monthly utility bills.

  2. Heavy Air Conditioning Users: Inland homes running continuous AC during scorching summer afternoons.

  3. EV Owners: Drivers charging one or more electric vehicles at home overnight.

  4. Daytime Remote Workers: Homeowners with baseline midday electric loads (laptops, lighting, HVAC, pool pumps).

  5. Homeowners Installing Battery Storage: Families who pair solar panels with energy storage to maximize self-consumption and capture high peak value.

Final Verdict

California solar hasn't become irrelevant—the economics have simply shifted toward using more of your own solar energy.

While the era of getting rich off grid export credits under NEM 2.0 is over, California's record-high retail utility rates mean that generating and storing your own electricity is still one of the best financial moves a homeowner can make. By sizing your system correctly and pairing [Solar Panels] with home battery storage, you can bypass peak utility pricing, insulate your family against rate hikes, and achieve true [Energy Independence].