California Solar & Battery Report: The 2026 Homeowner's Guide

It is January 2026, and the landscape for residential solar in California has settled into a new, albeit complex, reality. For millions of homeowners, the past year was defined by legislative battles, structural billing changes, and the definitive pivot to energy storage. Whether you are a long-time solar owner holding onto a legacy contract or a new buyer looking to cut ties with rising utility rates, here is the definitive roundup of where things stand right now.

The "Grandfathering" Victory: You Are (Mostly) Safe

For the 1.5 million California households on NEM 1.0 or NEM 2.0 (legacy net metering), the biggest story of 2025 was the bullet you dodged.

Last year, Assembly Bill 942 caused panic across the state. The initial proposal sought to retroactively cut the 20-year "grandfathering" period to just 10 years and ban the transfer of legacy status to new homebuyers. This would have decimated the financial value of existing systems and lowered property resale values.

• Your 20-Year Term: If you are on NEM 1.0 or 2.0, your 20-year eligibility period remains intact from your original Permission to Operate (PTO) date.
• Transferability: Crucially, the right to transfer your NEM 2.0 status to a homebuyer was preserved. If you sell your home in 2026, the new owner inherits the remaining years of your favorable net metering contract. This remains a significant selling point in California real estate.

The New Fixed Charge: It’s Here (Or Coming Soon)

The long-debated "Income-Graduated Fixed Charge" has arrived, though in a flatter, less income-dependent form than originally feared. The California Public Utilities Commission (CPUC) finalized a standard fixed charge of $24.15 per month for most residential customers, aimed at covering grid maintenance costs.

Here is the rollout status by utility for January 2026:

• SDG&E & SCE Customers: You likely already see this charge. San Diego Gas & Electric and Southern California Edison began implementing the "Base Services Charge" in late 2025 (October/November).
• PG&E Customers: You have a brief reprieve. Pacific Gas & Electric is scheduled to add the $24.15 line item to bills starting in March 2026.

The Trade-Off: To offset this new fee, the price per kilowatt-hour (kWh) for electricity was lowered by approximately 5 to 7 cents. For high-usage households (especially those with EVs and heat pumps), this math may actually work in your favor. For low-usage solar homes that previously had near-zero bills, you will now see a minimum monthly cost of roughly $24 that cannot be offset by solar credits.

For New Buyers: The Battery Imperative

If you are buying solar in 2026, you are entering the NEM 3.0 (Net Billing Tariff) era. The old strategy of "offsetting your usage" with solar panels alone is financially obsolete.

• Solar-Only is Dead: Under NEM 3.0, the credit you receive for sending excess power to the grid during the day is roughly 75% lower than retail rates. Sending power back to the utility is now a financial loss.
• Solar + Battery is King: The only way to make the math work is to install a home battery (like a Powerwall or Enphase IQ). You must store your daytime solar energy and use it yourself in the evening (self-consumption) to avoid paying peak grid rates.

The New Income Stream: Virtual Power Plants (VPPs)

With upfront rebates drying up, the new economic engine for batteries is the Virtual Power Plant.

While the statewide mandate for VPPs (AB 740) was vetoed by Governor Newsom in October 2025, utility-specific programs are thriving. Programs like the Demand Side Grid Support (DSGS) and utility-specific partnerships (e.g., the Tesla/PG&E collaboration) pay battery owners to export power during critical grid stress events (typically hot summer evenings).

For a typical homeowner in 2026, participating in a VPP can earn hundreds of dollars annually, helping to recoup the cost of the battery system. If you are buying a battery today, ensuring it is VPP-compatible is as important as the hardware itself.