California has long been one of the most solar-friendly states, with plenty of sunshine and generous financial incentives.
With big changes to its solar policy last year, the calculus for going solar in the Golden State has shifted significantly. There’s still good reason to invest in home energy upgrades if you live in the state, but your strategy might look a little different than it did a year ago. For one, it’s likely going to take longer to recoup your investment.
“It depends on why you want rooftop solar, [and] how important it is to you that your rooftop solar system pay off its costs in a certain time period,” said Jeff St. John, director of news and special projects at Canary Media.
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Here’s your guide to what changed in California solar policy, and how it affects you as a solar customer.
What happened to net metering in California?
For a long time, California had a pretty standard net metering policy, which meant homeowners with solar would get paid the full utility retail rate for excess power they generated and sold back to the grid. This was a key piece in the economics of investing in solar, as that utility payback helped customers pay off the upfront cost of solar panels.
In 2013, the state started to scale back the incentive, implementing additional fees to make net metering less profitable, according to Sequoya Cross, vice president of energy storage at Briggs and Stratton Energy Solutions.
But the big change came in 2023, with a third iteration of the program that cut back on customer incentives in a big way. In place of traditional net metering, new solar customers in the state are now subject to a net billing tariff. Under this arrangement, ratepayers still get compensated for their excess solar production, but how much is determined by a complex “avoided cost calculator” that depends on the time of day and year.
