Whether solar pays back in 8 years or 14 years in California depends almost entirely on which utility you're on. The four big ones in CA work differently under NEM 3.0 — here's a side-by-side honest comparison of how solar economics actually pencil out for PG&E, SCE, SDG&E, and LADWP customers in 2026.

The 30-second answer

LADWP customers: solar still pencils out well with or without battery (they didn't adopt NEM 3.0). Among the four utilities, the friendliest math.
SMUD customers: similar to LADWP — net energy metering still works favorably.
PG&E, SCE, SDG&E customers: NEM 3.0 (called NBT — Net Billing Tariff) is in effect. Export rates dropped ~75%. Solar-only doesn't pay back well anymore. Solar + battery is the new default. Payback typically 8-12 years for $200+/month bill households on Time-of-Use rates.

The rest of this post is the per-utility detail.

Why NEM 3.0 changes everything for IOU customers

Under the old NEM 2.0, when your panels exported excess solar to the grid mid-day, the utility credited you at roughly retail rates — call it $0.30-0.40/kWh in 2024. You used that credit in the evening when your panels weren't producing. The math was simple: every kWh you produced offset a kWh you'd otherwise buy.

Under NEM 3.0 (PG&E, SCE, SDG&E only — effective April 2023), the credit for exported solar dropped to the "avoided cost" rate. In practice this is $0.05-0.10/kWhmid-day. But you're still buying evening power at full Time-of-Use rates — often $0.35-0.55/kWh on a peak summer evening.

The arithmetic: every kWh of solar you export at $0.08 has to be bought back at $0.45 in the evening — net loss of $0.37 per kWh. Solar-only systems now "throw away" most of their export value. The fix is a battery: store your daytime excess, discharge it during peak evening hours, and you offset full retail rates instead of giving them up at avoided-cost.

PG&E (Pacific Gas & Electric)

Coverage: Northern California — Bay Area, Sacramento, Central Valley, North Coast.

NEM 3.0 status: In effect. Solar-only is not recommended.

Recommended setup: Solar + battery + E-ELEC rate plan (or EV2-A if you have an EV).

Typical math for a $300/month bill household: 8-9 kW system + 1-2 Powerwalls = $45,000-55,000 before any incentives. Annual savings of $2,400-3,200. Payback: 9-12 years. 25-year net savings (with conservative 3% utility rate inflation): $35,000-55,000.

Watch out for: PG&E interconnection delays — the utility currently misses its statutory connection timeline 60%+ of the time per CALSSA data. Add 30-60 days of buffer beyond what any installer promises.

SCE (Southern California Edison)

Coverage: Most of Southern California except LA city, San Diego County, and IOU-exempt areas.

NEM 3.0 status: In effect. Solar-only is not recommended.

Recommended setup: Solar + battery + TOU-D-PRIME (if no EV) or TOU-D-5-8PM rate plan.

Typical math for a $300/month bill household: 8-9 kW system + 1-2 Powerwalls = $42,000-52,000 before any incentives. Annual savings of $2,500-3,400 (SCE evening rates are even steeper than PG&E, so battery storage is even more valuable). Payback: 8-11 years. 25-year net savings: $40,000-60,000.

Watch out for: SCE's interconnection backlog is similar to PG&E. Also: SCE's TOU peak rates change every few years — verify what they are at the time of your quote, don't trust 18-month-old numbers in any savings projection.

SDG&E (San Diego Gas & Electric)

Coverage: San Diego County + a small slice of southern Orange County.

NEM 3.0 status: In effect. Solar-only is not recommended.

Recommended setup: Solar + battery + EV-TOU-5 (if EV) or TOU-DR1 rate plan.

Typical math for a $300/month bill household: 8-9 kW system + 1-2 Powerwalls = $42,000-52,000 before any incentives. SDG&E's retail rates are the highest of the three IOUs — peak summer can hit $0.65/kWh on some plans. This makes solar + battery payback faster than PG&E or SCE despite the same NEM 3.0 export rules. Annual savings of $2,800-3,800. Payback: 8-10 years. 25-year net savings: $50,000-70,000.

Watch out for: SDG&E has the highest rates in the country, which means salespeople inflate "projected savings" even more aggressively than in PG&E/SCE territory. Demand the actual TOU rate breakdown by hour, not the averaged-rate marketing number.

LADWP (Los Angeles Department of Water & Power)

Coverage: Los Angeles city (LA City proper — Hollywood, Downtown, Venice, etc., not surrounding cities like Burbank or Long Beach which have their own utilities).

NEM 3.0 status: NOT applicable. LADWP is a municipal utility and operates its own net-metering equivalent (NEM 1.0/2.0 style). Mid-day solar export still credits you at roughly retail rates.

Recommended setup: Solar-only often pencils out without a battery.

Typical math for a $300/month bill LADWP household: 8 kW system = $24,000-30,000 before any incentives. Annual savings of $2,800-3,400. Payback: 7-10 years. 25-year net savings: $50,000-70,000.

Watch out for: LADWP's rates are lower than the IOUs to begin with, so savings per kWh are smaller. Solar still pays back, just less per dollar invested. Battery is still worth considering if you're in a fire-risk area or experience frequent outages, but the financial-only case for battery is weaker than under PG&E.

SMUD (Sacramento Municipal Utility District)

Coverage: Sacramento area.

NEM 3.0 status: NOT applicable. SMUD is a municipal utility with its own net-metering rules. Generally favorable for solar.

Recommended setup: Solar-only typically works well; battery optional.

Same shape as LADWP — slightly lower retail rates so per-kWh savings are smaller, but net metering still pays you near retail for daytime exports.

Side-by-side

For a $300/month bill household in California, 8-9 kW system, 1-2 Powerwalls where applicable:

Utility	NEM 3.0?	Battery needed?	Typical payback	25-yr net savings
PG&E	Yes	Yes	9-12 yrs	$35K-55K
SCE	Yes	Yes	8-11 yrs	$40K-60K
SDG&E	Yes	Yes	8-10 yrs	$50K-70K
LADWP	No	Optional	7-10 yrs	$50K-70K
SMUD	No	Optional	7-11 yrs	$45K-65K

These ranges assume conservative 3% utility rate inflation (the historical 10-year average per EIA — see why salespeople often inflate this to 6%) and account for 0.5-1%/year panel degradation.

What to do next

Get your actual 12-month kWh from your utility account (PG&E, SCE, SDG&E, and LADWP all let you download a full year of usage as CSV from your online account). Then any solar quote you receive should size your system to that actual annual total — not a marketing estimate.

If you want our 60-second quote that uses your utility, your zip code, and your real bill range to give you a payback number specific to your situation, try it here. We'll match you with one installer — never a swarm.

Sources: California Public Utilities Commission (CPUC) — NEM 3.0 / NBT rules; EIA — 10-year utility rate inflation data; CALSSA — interconnection delay statistics; CA Solar & Storage Association — installer cost ranges. NEM 3.0 took effect for new IOU customer applications submitted on or after April 15, 2023. NEM 2.0 customers connected before that date remain on the original tariff for 20 years from their PTO (Permission To Operate) date.