Four sets of rules now shape what home solar or a battery is worth. The federal homeowner credit has ended, so no 2026 install gets 30% off. Your utility’s export rule sets what the power you send to the grid earns. Your rate plan decides whether a battery saves anything on the bill. And utility and state programs are now the main source of money for batteries. Each guide works from the statute, tariff or program page, with worked math you can check a quote against. Read them in this order: credit, exports, rate plans, programs.
General information, not professional, tax or legal advice. Your utility, your state or a tax professional decides what applies to you. Leaf & Watt sells, installs and finances nothing and takes no referral fees.
The federal credit has ended
The 30% homeowner credit is section 25D of the tax code. Section 25D(h) says it “shall not apply with respect to any expenditures made after December 31, 2025”, and an expenditure counts as made when the installation is completed, not when you pay. The IRS confirms in its fact sheet FS-2025-05 that paying in 2025 doesn’t help if installation was completed after that date. Batteries of 3 kWh or more lost it too.
An example 8 kW system at $2.60 a watt, EnergySage’s national average of quotes before incentives (a published estimate), costs $20,800. Without the 30% credit a cash buyer pays $6,240 more: 43% above the old net price of $14,560.
Three things are left, and our guide to what ended with the solar tax credit and what’s left sets out each one with the law behind it:
- Systems finished in 2025 or earlier still qualify, and credit you couldn’t use carries forward to the next tax year.
- Lease and PPA companies may be able to claim a business credit under section 48E on systems they own. For solar it needs construction begun by 4 July 2026 or the system in service by 31 December 2027; batteries are outside that cut-off. No law requires the provider to pass any of it on to you.
- State credits and exemptions. We read state income tax credits in New York, South Carolina, Arizona, Massachusetts, Hawaii and New Mexico. New York’s is 25% of the cost up to $5,000 (form IT-255-I). California has no state income tax credit that we found; its property tax exclusion for new solar is scheduled to sunset on 1 January 2027, so the completion date of a California install matters.
What the power you export earns
The export rule can cut the value of the same panels by more than a third, as the example below shows. There is no national rule. Federal law asks state regulators only to consider net metering (16 USC 2621), so each state commission, city utility or co-op sets its own terms. They fall into two families.
- Net metering. Each kWh you send out cancels a kWh you buy, at the full retail price, netted over a month or a year.
- Net billing. Power you buy costs the normal rate, while power you send out earns a separate, lower export rate in dollars. Arizona Public Service credits new applicants $0.05554 per kWh for the 2026 tranche, down from $0.12900 for the 2017 tranche (APS Rate Rider RCP).
How much that matters: on an example Arizona home whose panels make 12,000 kWh a year, valued at the state’s average residential price of 15.36¢ a kWh (EIA, January to August 2026), full net metering is worth $1,843.20 a year. Under APS-style net billing, with 40% of the output used at home (our assumption), the same panels are worth $1,137.17, or 38% less. Our guide to net metering and how net billing changes it works through that math, why the netting window matters, and the tariffs we read in Arizona, California, Florida, Texas and Virginia.
California’s Net Billing Tariff
PG&E, SCE and SDG&E customers who applied to connect since 15 April 2023 are on the Net Billing Tariff, often called NEM 3.0. Exports earn hourly prices that the California Public Utilities Commission says are “usually lower than the retail rate”, while older NEM 2.0 customers keep their terms for 20 years from interconnection. SCE homes with permission to operate in 2026 also get a small fixed adder of 1.6¢ per exported kWh for nine years, falling to zero from 2028 (SCE Schedule NBT). Our page on California solar after NEM 3.0 covers the bill, a worked 4 kW example, the new fixed charge and home sales.
Time-of-use plans and what a battery saves
A battery shifts midday solar, or cheap grid power, into the evening, so its saving is set by your rate plan. A time-of-use plan charges more in a few evening hours: APS’s TOU-E plan, for example, puts its peak at 4 to 7 pm on weekdays all year (APS Rate Schedule TOU-E).
Two rules come out of the math. First, a battery saves money only when the peak price is above the charging price divided by its round-trip efficiency: at 90%, 1.11 times the charging price. Second, the saving per kWh is the gap in cents, so a wide gap matters more than a high ratio. On three real plans (APS in Arizona, SCE in Southern California and Xcel in Colorado), with our assumed evening use, a 13.5 kWh battery saved an estimated $237 to $760 a year. Against EnergySage’s published typical installed price of $15,647 for that size (EnergySage, before incentives), simple payback ran from about 21 to 66 years, longer than the battery warranties we read.
Batteries are usually bought for backup as well, with the bill saving as a partial offset; a quote that presents it as a payback needs checking. The free first step is moving the dishwasher, laundry and EV charging out of the peak. The time-of-use battery savings calculator runs both answers on your own plan: whether switching to time-of-use saves anything on its own, and what a battery adds, with solar charging valued at the export credit you give up.
Battery rebates and virtual power plants
With no federal credit for a battery you own, utility and state programs are where the money is. Many are virtual power plants: the utility or an aggregator discharges enrolled batteries together during grid events, usually on hot summer afternoons and evenings, and pays for it. Payments come once per kWh of storage, once per kW of output, or each season per kW of average output during events.
Mass Save’s ConnectedSolutions in Massachusetts, for example, pays $275 per kW of average performance during summer events of up to 3 hours (Mass Save). A 13.5 kWh battery that keeps a 20% reserve has 10.8 kWh to give: 10.8 ÷ 3 hours = 3.6 kW, or about $990 a summer if it delivers in every event. Our estimate, not a quote. In Illinois, ComEd’s filed rebate tariff sets $300 per kWh of storage from 1 January 2027, with enrollment in its VPP program required (ComEd Rider DG REBATE, advance copy).
The money comes with conditions: a lower backup reserve on event days, a commitment of 4 to 10 years in many programs with repayment if you leave early, sometimes a required rate plan, and often a reservation or pre-approval before you install. Our list of home battery rebates and VPP programs by state gives each program we could confirm on the utility’s or state’s own page as of 3 November 2026, the ones that are closed or not yet started, and worked payments on one battery.
Putting the rules together
The rules stack in order. Start with the price before incentives, take off nothing federal for a 2026 install, and only a state credit or rebate whose form or program page you have read. Value the solar you use at home at your own price, and exports at your utility’s export rate. Add a battery’s saving from your own peak and off-peak prices, and a program payment only once you hold a reservation. The solar payback calculator puts those numbers into years, with no federal credit, and how we estimate explains where our default figures come from.
What to ask before you sign
- Does any savings or payback figure include a federal tax credit? For a system you buy and have installed in 2026, it shouldn’t.
- On a lease or PPA: who claims the 48E credit, and does the price change if the provider can’t?
- Which tariff, export rate, netting interval and rate plan does the estimate assume, and what share of output used at home?
- Which state credit, rebate or program is counted, on which form, with which cap, and is the money reserved for you before installation starts?
- Who files the permit, the inspection and the utility’s interconnection application? A system must not be switched on until the utility gives permission to operate.
Credits, tariffs and programs change with little notice. Each page shows when its sources were read; confirm current terms with your utility, state or a tax professional.
Sources checked on 4 November 2026.
