Going Solar in the South Bay: What Homeowners Need to Know in 2025

California's NEM 3.0 tariff — which took effect in April 2023 — cut the rate utilities pay for excess solar energy exported to the grid by roughly 75%. For South Bay homeowners considering solar, that changes the math significantly. But it doesn't make solar a bad investment. It changes what a good solar investment looks like.

What changed with NEM 3.0?

Under the old NEM 2.0 rules, excess solar energy you sent to the grid was credited at roughly the same rate you paid for electricity — around $0.25–0.35/kWh depending on your time-of-use rate. Under NEM 3.0, that export credit dropped to an average of about $0.05/kWh. Your solar panels still produce the same power. But if you're exporting a lot of it, you're getting paid a fraction of what you were before.

The practical result: systems designed to maximize export (typically oversized arrays on small homes) no longer pencil out the same way. But systems designed around self-consumption — where you use the solar power you generate rather than sending it to the grid — still produce strong returns.

Self-consumption is now the name of the game

The best NEM 3.0 solar strategy shifts focus from "export as much as possible" to "use as much of your own solar as possible." That means:

• Right-sized arrays. We size systems closer to your actual consumption rather than installing the largest array that will fit on your roof. An oversized system generates excess power you can't use and can't export profitably.
• Battery storage. A home battery lets you store solar energy generated during the day and use it in the evening — when SCE's time-of-use rates are highest and you'd otherwise be pulling from the grid. Under NEM 3.0, this self-consumption is worth roughly $0.30–0.40/kWh, versus $0.05/kWh if you export it.
• EV charging on solar. If you drive an electric vehicle, programming your charger to run during peak solar production hours is one of the most effective ways to increase self-consumption and reduce your net energy costs.

The federal tax credit is gone — what that means for South Bay homeowners

Until the end of 2025, homeowners who bought and owned a solar and battery system outright could claim the 30% federal Residential Clean Energy Credit (Section 25D) on the full cost of the system. The One Big Beautiful Bill Act, signed into law in July 2025, terminated that credit for any residential system not placed in service by December 31, 2025. If you're buying and owning your system today, that federal offset is no longer available.

The credit didn't disappear for everyone, though. Commercial solar tax credits were left largely intact, which means systems installed under a lease or power purchase agreement (PPA) — where a third party owns the equipment and you pay for the power it produces — can still indirectly benefit from a federal credit, since the owner of the system claims it, not you. That's worth understanding as a financing option if the upfront cost of ownership is the main hurdle.

For homeowners buying and owning outright, the case for solar and battery now rests on the NEM 3.0 self-consumption math above — not on a federal subsidy stacked on top of it. It's still a strong investment for the right home, but it's a different conversation than it was a year ago, and we'll walk through both the cash-purchase and lease/PPA numbers so you can see which one actually works for your situation.

What does payback look like now?

Even without the 30% federal credit, a properly sized system with battery storage still lands most South Bay homeowners in the 7–10 year payback range we've quoted for years — system pricing and design have adjusted to keep the numbers working without that offset. Homes with high electricity consumption, EVs, or pool pumps typically see faster payback because they have more loads to shift onto solar and more to save each month.

The homes that see the longest payback under NEM 3.0 are those with small energy usage, no EVs, and roofs that could support large arrays. For those homes, we'll be straightforward: a smaller system focused on base load, paired with behavioral changes around time-of-use, may pencil out better than a large array with battery — or a lease/PPA structure may make more sense than ownership.

What to look for in a South Bay solar installer

California has more solar installers per capita than almost any state — and the quality varies enormously. A few things to look for:

• CSLB licensed and insured. California requires a C-10 (Electrical) or C-46 (Solar) contractor license for solar installation. Verify the license on the CSLB website before signing anything.
• Local permitting experience. South Bay cities — Manhattan Beach, Hermosa Beach, Redondo Beach, Palos Verdes — each have their own permitting offices and requirements. An installer who's done dozens of jobs in your city will navigate this faster and with fewer surprises.
• Their own licensed crew. Some installers are primarily sales organizations that subcontract the actual work. Ask who will be on your roof — and confirm they're the installer's own employees, not day-labor subcontractors.
• Post-installation support. Solar systems require occasional maintenance, and inverters eventually need replacement. An installer who will still be around in 5 years matters more than the lowest bid today.

The bottom line

NEM 3.0 and the loss of the federal tax credit made solar more complex, not less worthwhile. The homeowners who benefit most are those who approach it as a whole-home energy strategy — solar + storage + EV charging — rather than just putting panels on the roof and hoping for the best. If you want to understand what that looks like for your specific home, including whether ownership or a lease/PPA makes more sense under today's rules, we're happy to walk through the numbers with you.