• Residential solar power can lower a homeowner’s carbon footprint, but crucially, also save money in the long-term.
• But a major decision by California’s utility regulator to cut back on net metering, which will reduce the total savings homeowners can make by selling energy to the grid by as much as 60%, changes the economic equation and could have national ramifications.
• Storing electricity in a solar-powered battery, as energy storage costs come down, can make up for net metering reductions, but have a decade-long payback period.
• Local and state tax credits and the Inflation Reduction Act are shortening the payback period for solar installation costs.

California had among the most generous rules of all until this week. But state utility regulators agreed to let utilities pay much less for excess power they are required to buy, after power companies argued that the rates were too high, and raised power prices for other customers.

Wood Mackenzie said the details of California’s decision made it look less onerous than the firm had expected. EnergySage says the payback period for California systems without a battery will be 10 years instead of six after the new rules take effect in April. Savings in the years afterward will be about 60 percent less, the company estimates. Systems with a battery, which pay for themselves after 10 years, will be little affected because their owners keep most of their excess power instead of selling it to the utility, according to EnergySage. 

“The new [California rules] certainly elongate current payback periods for solar and solar-plus-storage, but not by as much as the previous proposal,” Wood Mackenzie said in the Dec. 16 report. “By 2024, the real impacts of the IRA will begin to come to fruition.”

The more expensive power is from a local utility, the more sense home solar will make. And some contractors will back claims about power savings with agreements to pay part of your utility bill if the systems don’t produce as much energy as promised. 

“You have to do your homework before you sign,” Hurwitz said. “But energy costs always go up. That’s another hidden incentive.”