California Solar Spotlight: Navigating the End of the Tax Credit and New Incentives
The solar landscape in California is changing fast. A new federal law signed on July 4 2025 dramatically rewrote clean‑energy tax incentives and has sparked renewed interest in state and local programs. If you’re considering rooftop solar or battery storage for your home, these are the hot topics you should understand—and how My Ally Electric & Solar can help you navigate them.
1 — The federal residential solar tax credit ends after Dec 31 2025
Under the Inflation Reduction Act, homeowners could claim a 30% federal tax credit on the cost of a residential solar system through 2032. But the new One Big Beautiful Bill Act (OBBBA) signed by President Trump in July 2025 repeals the Section 25D Residential Clean Energy Credit after December 31 2025. EnergySage notes that homeowners still installing solar in 2025 can claim the full 30% credit, but there is no phase‑down period—the value falls to 0% on January 1 2026.
What this means:
• Act quickly. Systems installed and operational by December 31 2025 qualify for the 30% credit. If you sign a contract later in the year, supply‑chain delays could jeopardize your eligibility.
• Batteries count. The tax credit also applies to energy‑storage systems installed with solar. My Ally Electric & Solar can design solar‑plus‑storage packages to maximize your incentive before the credit disappears.
2 — Foreign‑entity restrictions may affect equipment choices
The OBBBA also contains Foreign Entity of Concern (FEOC) restrictions. Starting Jan 1 2026, projects using components from certain prohibited foreign entities (notably many Chinese manufacturers) could lose access to credits. While this primarily applies to utility‑scale projects, it underscores the importance of choosing equipment from reputable, domestic‑friendly suppliers. Our team tracks supply‑chain compliance to ensure your system qualifies for available incentives.
3 — State incentives are filling part of the gap
The California Public Utilities Commission’s Self‑Generation Incentive Program (SGIP) launched a Residential Solar and Storage Equity budget on June 2 2025. The program targets low‑income households and offers $3,100 per kW for solar and $1,100 per kWh for storage. More than $280 million in funding is available. These incentives can dramatically reduce upfront costs, especially when coupled with the federal credit before it expires. My Ally Electric & Solar can help determine your eligibility and handle SGIP paperwork.
4 — Net Billing Tariff (NEM 3.0) lowers export compensation
Since April 15 2023, new solar customers in PG&E, SCE and SDG&E territories are enrolled under the Net Billing Tariff (NBT), sometimes called NEM 3.0. Under NBT, exported solar energy is credited at a rate reflecting avoided cost instead of the retail rate, reducing bill savings compared with the earlier NEM 2.0 program. The CPUC notes that customers who interconnect before the end of 2027 receive a small export‑compensation adder for nine years. Homeowners must also switch to special time‑of‑use rates.
Key points:
• Export credits: NBT pays lower rates for excess solar energy, often below retail – encourages self‑consumption and storage.
• Adder: PG&E/SCE customers who interconnect before 2027 get bonus credits for nine years – incentivizes early adoption.
• Battery advantage: Storing energy allows homeowners to use or export it during high‑value hours – maximizes savings under NBT.
My Ally Electric & Solar designs solar‑plus‑battery systems that take advantage of the export adder and reduce reliance on the grid, helping you retain more value under NEM 3.0.
5 — Legal battles over net‑metering cuts
On August 7 2025, the California Supreme Court sided with environmental groups challenging the state’s decision to cut net‑metering payments by about 75%. The justices directed the appeals court to revisit its ruling that had upheld the reduction. They did not overturn the cuts but said the lower court had to consider whether the decision omitted key factors.
Why it matters:
• The court’s decision keeps NEM 3.0 in place for now, but regulators must justify their changes, leaving open the possibility of improved compensation in the future.
• The initial cuts led to an 82% drop in requests for rooftop solar connections and an expected loss of 17,000 jobs. Any reversal could revive demand.
6 — Local permitting and building codes
California’s building code requires solar on most new homes. As electrification policies expand and natural‑gas bans spread across Bay Area cities, new homeowners will need integrated solar, storage and EV charging. My Ally Electric & Solar stays on top of evolving local codes in Walnut Creek and surrounding communities.
7 — How My Ally Electric & Solar can help
As federal incentives sunset and state programs evolve, planning your solar project has never been more complex—or more urgent. Our locally owned company offers:
• Customized solar‑plus‑battery systems that qualify for remaining tax credits and SGIP incentives.
• Compliance with supply‑chain rules to avoid foreign‑entity restrictions.
• Time‑of‑use and rate‑analysis services to optimize savings under NEM 3.0.
• Monitoring of legal developments—including court challenges to net‑metering cuts—so you understand how policy changes affect your investment.
Take action now
With the 30% federal tax credit ending on Dec 31 2025 and state incentives on the table, now is the time to go solar. Contact My Ally Electric & Solar today to schedule a consultation. We’ll help you lock in every available incentive and future‑proof your home’s energy system.