For a decade, rooftop solar in California came with a simple pitch: the federal government pays 30% of the bill, the utility buys your extra power at retail, and the system pays for itself fast. Both halves of that pitch are now gone. The 30% federal credit ended for systems finished after December 31, 2025, and NEM 3.0 slashed what exported solar earns back in 2023. Solar and battery can still make sense for a San Jose home in 2026, but the math works differently now, and the way you sequence the project matters more than it ever has. Here is the honest picture, from a remodeling general contractor who handles the building side of these projects, not a solar company trying to sell you panels.
- The federal 30% Residential Clean Energy Credit is gone for systems placed in service after December 31, 2025. It is not available in 2026.
- Under NEM 3.0, exported solar earns roughly $0.05 to $0.08 per kWh versus roughly $0.30+ retail, which makes a battery essential to good economics.
- Most SGIP battery rebate tiers closed December 30, 2025; what remains in 2026 is mainly an income-qualified tier. Verify current status before you count on anything.
- Many older San Jose homes need a 100A to 200A panel upgrade first, roughly $3,000 to $8,000 in the Bay Area.
- Doing the panel, electrical, and roof work while a remodel is already open avoids paying twice for access.
The 30% federal credit is gone
The Residential Clean Energy Credit, the Section 25D credit that returned 30% of a solar or battery system's cost at tax time, was terminated by the One Big Beautiful Bill Act, signed July 4, 2025. It applies to systems placed in service after December 31, 2025, which means the deadline was about completion and permission to operate, not payment. Prepaying in 2025 for a system finished in 2026 did not preserve the credit.
The practical effect is blunt: a system that effectively cost $21,000 after the credit in 2025 costs the full $30,000 in 2026. That is not a reason to drop the idea, but it is a reason to stop using 2024-era payback numbers. Anyone quoting you a return that quietly assumes the federal credit is quoting a project that no longer exists.
NEM 3.0 already changed what your panels earn
The second change happened earlier and matters just as much. Since April 2023, new solar customers of PG&E and the other big investor-owned utilities fall under NEM 3.0, officially the Net Billing Tariff. Under the old net metering rules, a kilowatt-hour you exported at noon offset a kilowatt-hour you bought at night, roughly one for one. Under NEM 3.0, exports are paid at an "avoided cost" rate that works out to about $0.05 to $0.08 per kWh for most hours, while the power you buy from PG&E costs roughly $0.30 or more.
That gap is the whole story. A solar-only system now sells its biggest product, midday surplus, for pennies. The way to keep the value is to store it: charge a battery at midday, then run the house on it through the expensive evening hours. That is why nearly every system designed for a San Jose home in 2026 is a solar-plus-battery system, and why battery sizing has become the most important design decision, ahead of panel count.
What incentives are left in 2026
Less than there were, but not nothing. California's SGIP battery rebate program largely closed its General Market, Equity, and Equity Resiliency tiers on December 30, 2025. The main SGIP support still standing in 2026 is the income-qualified AB 209 residential solar and storage tier, which can be substantial if your household qualifies. Incentive programs change fast and budgets run out, so check the current SGIP status directly before you count any rebate into your math, and treat anything a salesperson promises as unverified until you see it on the program's own site.
Without the federal credit doing a third of the work, financing structure matters more too. If you are weighing how to fund the project alongside a remodel, our financing page covers the options we see homeowners use.
The panel problem: check your electrical service first
Here is the part of the project that lands squarely in general contractor territory, and the part that surprises the most homeowners. Many San Jose houses built before the 1980s still run on a 100 amp electrical panel. That was fine for a house with a gas furnace and one refrigerator. It is usually not enough for solar plus a battery, and it is definitely not enough once you add an EV charger or swap gas appliances for a heat pump.
A typical 100A to 200A panel upgrade in the Bay Area runs roughly $3,000 to $8,000 as a general market range, and more if the service entrance has to move or the utility needs trenching for new service. PG&E publishes its own roadmap for panel upgrades, linked in the sources below, and the utility side of the timeline is often the slowest part. If a solar quote does not mention your panel at all, ask. Finding out mid-project that you need a service upgrade is how a six-week install becomes a four-month one.
The new payback math
Put the pieces together and the numbers look like this, as general market figures rather than a quote. Cash paybacks on solar-only systems in California have commonly been cited around 4 to 5 years. Add a battery, which NEM 3.0 effectively requires for good economics, and commonly cited paybacks stretch to roughly 8 to 9 years. Losing the 30% federal credit pushes those figures out further for systems built in 2026, so insist that any projection you see is built on 2026 assumptions: no federal credit, Net Billing export rates, and your actual usage pattern.
Is that still worth doing? For many homes, yes. PG&E rates have climbed steadily, a battery carries value that never shows up in a payback spreadsheet, keeping the lights and refrigerator on through outages, and a system that outlives its payback period spends the rest of its 25-year life producing essentially free power. But it is now a long-horizon home improvement, not a fast-payback financial product, and it deserves the same careful scoping as any other major project.
Where a remodeling general contractor fits
Let us be direct about our role: we do not install solar panels. Your solar installer designs the system, mounts the panels, and commissions the battery. What we handle is everything the building needs to be ready for it, and that list is longer than most homeowners expect.
That means the electrical panel upgrade and the permit and electrical coordination around it. It means the roof: if your roof has ten years or less left, reroofing before panels go on saves you the cost of removing and reinstalling the whole array later, and if the framing needs structural work to carry the load, that is our trade too. And it means sequencing. If you are already planning a kitchen, an addition, or a whole-home remodel, the walls are open, the electrician is on site, and the permits are moving. Folding the panel upgrade, the circuit runs, and the roof work into that project means you pay for access once instead of twice, and the solar installer shows up to a house that is actually ready.
That coordination is the value. One schedule, one point of responsibility for the building-side work, and no finger-pointing between trades. You can see how we run that on our process page.