Solar Financing in California
Lease vs. Buy vs. PPA — Complete financing guide for CA homeowners
Urgent tax credit deadlines
- Section 30D EV credit (up to $7,500) — expires June 30, 2026 (12 days left).
- Section 48E solar ITC safe harbor — construction must start by July 4, 2026 (16 days left).
Going solar in California? With electricity rates averaging 31.2¢/kWh and excellent solar resources, choosing the right financing option can save you $70,550 or more over 25 years. This guide breaks down every option available to California homeowners.
Avg Rate
31.2¢
per kWh
Solar Resource
Excellent
CA
Typical System
8kW
residential
Payback
~4.8 yrs
estimated
Solar Incentives & Tax Credits in California
California homeowners can take advantage of the following solar incentive programs:
Federal Solar Investment Tax Credit
30% federal tax credit via Section 48E for qualifying projects (leases, PPAs, commercial) that begin construction before July 4, 2026. The residential ownership credit (25D) expired December 31, 2025.
30% of system cost
Active Solar Energy Property Tax Exclusion
Active solar energy systems are excluded from property tax reassessment through 2025.
100% property tax exclusion
SGIP (Self-Generation Incentive Program)
Rebate for battery storage paired with solar. Higher incentives are available for equity-tier customers.
Up to $1,000/kWh stored
DAC-SASH Program
Solar incentive program for residents of disadvantaged communities, providing no-cost or low-cost solar.
Income-qualified
Net Metering in California
California transitioned from NEM 2.0 to NEM 3.0 (Net Billing Tariff) in April 2023. Under NEM 3.0, solar exports are compensated at avoided-cost rates roughly 75% lower than retail, making battery storage much more valuable. Existing NEM 2.0 customers are grandfathered for 20 years.
✓ California offers a property tax exemption for solar installations, meaning your property taxes won't increase despite the added home value.
Compare Financing Options in California
See how cash purchase, solar loan, lease, and PPA compare based on California's average rates:
Solar Financing Comparison for California
Based on 31.2¢/kWh electricity rate and a 8kW system
Cash Purchase
Pay upfront — maximum long-term savings
- Upfront Cost
- $16,800
- Monthly Savings
- $291/mo
- Tax Credit Eligible
- Yes
Solar Loan
$0 down — own the system over time
- Down Payment
- $0
- Monthly Payment
- $164/mo
- Net Monthly
- $127/mo
- Tax Credit Eligible
- Yes
Solar Lease
$0 down — provider owns the system
- Down Payment
- $0
- Monthly Payment
- $104/mo
- Net Monthly
- $187/mo
- Tax Credit Eligible
- No
Power Purchase Agreement
$0 down — pay per kWh produced
- Down Payment
- $0
- Annual Savings
- $2,878/yr
- Tax Credit Eligible
- No
Estimates based on average California (CA) rates and system costs. For a personalized comparison, use our full financing calculator.
Lease vs. Buy vs. PPA in California
Buying (Cash or Loan)
Best for: Maximizing long-term savings and home value.
- You own the system and all electricity it generates
- Eligible for the 30% Federal Tax Credit (~$7,200 on a 8kW system)
- Property tax exempt in California
- Increases home value by an average of 4.1%
- Highest 25-year savings: ~$70,550
- You handle maintenance (panels need little)
Solar Lease
Best for: Zero upfront cost with predictable payments.
- $0 or low upfront cost
- Fixed monthly payment (no surprise bills)
- Maintenance and repairs typically covered
- Not eligible for tax credits or incentives
- Lower 25-year savings (~$56,150)
- May complicate home sale (lease transfer)
Power Purchase Agreement (PPA)
Best for: Paying only for what you produce, $0 down.
- $0 upfront cost
- Pay a per-kWh rate (typically lower than utility)
- Provider owns and maintains the system
- Not eligible for tax credits
- Rate escalates 2-3% annually (read the contract)
- Lowest 25-year savings of the three options
Solar Financing FAQ — California
Is solar worth it in California?
Yes, solar is an exceptionally strong investment in California. With among the highest electricity rates in the nation averaging 31.2¢/kWh and excellent solar resources, a typical 8kW system can offset most of your household electricity usage. The estimated payback period is 4-6 years, after which you enjoy more than a decade of largely free electricity. california transitioned from nem 2 is the main policy factor to verify with your utility.
What solar incentives are available in California?
California residents can claim the 30% Federal Solar Investment Tax Credit (worth $7,200 on a typical 8kW system). The state also offers Active Solar Energy Property Tax Exclusion, SGIP (Self-Generation Incentive Program), DAC-SASH Program. California offers a property tax exemption, so your property taxes won't rise despite the added home value.
Should I lease, buy, or get a PPA in California?
Buying your solar system (cash or loan) maximizes long-term savings and qualifies you for the 30% Federal Tax Credit. On a typical 8kW system in California, that's about $7,200 back. Buying yields roughly $70,560 in net savings over 25 years. Leasing or a PPA requires $0 down and includes maintenance, but you won't get tax credits and your 25-year savings will be much lower (around $56,160). If you can afford the upfront cost or qualify for a low-rate loan, buying is the clear winner in California.
How much does a solar system cost in California?
A typical 8kW residential solar system in California costs approximately $24,000 before incentives. After the 30% Federal Tax Credit (~$7,200), the net cost drops to about $16,800. Actual costs vary based on equipment quality, installer, roof complexity, and whether you add battery storage. California offers a property tax exemption, so your property taxes won't rise despite the added home value.
Does California have net metering?
California transitioned from NEM 2.0 to NEM 3.0 (Net Billing Tariff) in April 2023. Under NEM 3.0, solar exports are compensated at avoided-cost rates roughly 75% lower than retail, making battery storage much more valuable. Existing NEM 2.0 customers are grandfathered for 20 years.
What is the solar payback period in California?
The typical solar payback period in California is approximately 4-6 years. With a net system cost of about $16,800 after the federal tax credit and annual electricity savings of roughly $3,145-$3,844 (based on 31.2¢/kWh), most California homeowners see full payback within 6 years and enjoy 19+ years of largely free electricity thereafter.
Related Solar Tools
Estimates are based on California average rates, system costs, and the 30% Federal Solar Investment Tax Credit. Actual savings vary by installer, equipment, roof, and utility policy.