Helping Riverside County homeowners navigate SCE rates and solar options since 2020
If you've been researching solar in 2026, you've probably seen conflicting information about the federal tax credit. Some sites still reference "30% off your solar system." Others say the credit is gone. Both are partially right - depending on which credit they're talking about.
Here is the straightforward breakdown, specific to Temecula and Riverside County homeowners as of March 2026.
1. What Expired: Section 25D (The Residential Purchase Credit)
The credit most homeowners have heard about is Section 25D - the residential energy tax credit that gave homeowners who purchased their own solar system a 30% credit against their federal taxes. For a $27,000 system, that was $8,100 directly off your tax bill.
The One Big Beautiful Bill (OBBB), signed July 4, 2025, eliminated Section 25D approximately seven years ahead of the original IRA schedule. If you install and own a solar system in 2026 or later, there is no federal residential tax credit available. No phase-down, no partial credit, no transition period - it simply expired.
This changes the economics of buying panels outright significantly. The savings story for purchased systems now must be built entirely on rate comparison, energy independence, and system appreciation - not on a tax credit that no longer exists.
2. What's Still Active: Section 48E (The Commercial Credit)
Section 48E is a different credit entirely - the commercial-side Investment Tax Credit that applies to businesses and organizations that own solar energy systems. This includes PPA providers that install and own the systems under lease and PPA agreements.
When a PPA provider installs a solar system on your roof, they own the panels. Because they own the system, they can claim Section 48E - a 30% commercial credit on the installed cost. That credit is a significant part of why they can offer a PPA rate of an example rate near 22¢/kWh (ask your installer for your actual quoted rate) when SCE charges 34.5¢/kWh. The math can depend partly on that credit, alongside the installer's other business factors.
- 1.A PPA provider installs and owns the system on your roof.
- 2.They claim the 30% Section 48E commercial credit on the installed cost.
- 3.That credit reduces their cost basis, allowing them to offer you a below-market rate.
- 4.You pay an example rate near 22¢/kWh (ask your installer for your actual quoted rate) instead of SCE's 34.5¢/kWh - the credit is baked into your rate.
Section 48E was not eliminated by the OBBB. Under the 2025 federal tax law, wind and solar projects generally need to begin construction by July 4, 2026 (a date that has already passed) or be placed in service by December 31, 2027 to keep the credit. The IRS rule defining exactly when a project counts as having "begun construction" was itself vacated by a federal court in June 2026 and, per legal counsel tracking the case, is not settled - the government is expected to appeal. This is your installer's tax position, not a deadline for you to act by; ask your installer directly how it affects the pricing they've quoted you.
3. What the Section 48E Deadline Means for PPA Customers
For a PPA provider to claim the Section 48E commercial credit on a new PPA installation signed today, current law generally requires that project to be placed in service by December 31, 2027, unless it already began construction by July 4, 2026. Whether and how a missed window changes your specific PPA pricing is a question for your installer, not something this site can verify on your behalf.
This rule has real potential economic consequences for PPA pricing, but it is your installer's tax compliance question, not a purchase deadline for you - and the underlying construction-start rule was still contested in court as of mid-2026. Consult a tax professional, and ask your installer directly, for specifics on how it affects your situation.
4. The Other Real Urgency: ACC Plus Adders
There is a second, often-overlooked incentive that decreases with every year you wait - and unlike the tax credit discussion, this one applies directly to any NEM 3.0 solar customer, PPA or purchase.
Under NEM 3.0 (California's current net metering rule), the compensation for solar exported back to the grid averaged just 4–8 cents/kWh in 2025 - down from roughly 30 cents/kWh under NEM 2.0. To partially offset this, the CPUC created ACC Plus Adders: bonus export rate credits available to early NEM 3.0 adopters.
- Early NEM 3.0 adopters receive bonus export credits (~4¢/kWh extra) for the first 9 years of system operation
- These adders decrease by 20% each year through April 2028 - the sooner you install, the higher your adder
- A 2026 install locks in more adder value per kWh than a 2027 install - over 9 years, the difference is real
The ACC Plus Adder is a legitimate, data-backed incentive that diminishes with time - independent of the tax credit discussion. Most solar advisors are not talking about it because they are still focused on the now-expired residential credit story.
5. Buying Solar Without the Tax Credit: The New Math
If you are considering purchasing a solar system outright in 2026, the economics changed significantly on January 1. Here is the honest comparison:
Without the credit, payback periods are longer. The PPA route - $0 down, instant monthly savings, no ownership risk - becomes more attractive for a larger share of homeowners than it was in 2023 or 2024.
Neither option is universally right. If you have the capital and tax liability to benefit from ownership, buying still builds long-term equity. If you want immediate savings with no upfront cost or maintenance responsibility, a PPA starts working on day one. The decision depends on your financial situation, roof, and priorities.
6. What Temecula Homeowners Should Do Now
The tax credit landscape changed. The bill rate trajectory did not - SCE has authorized rate increases for 2026, 2027, and 2028, and rates have doubled over the last decade. The case for solar is still strong. The math just works differently now.
Get an honest savings estimate
60 secondsThe calculator runs a PPA vs. SCE comparison based on your current bill, SCE's projected rate trajectory, and your city's solar data. No credit math involved - just the rate comparison.
Decide: PPA or purchase?
ConsultationTalk through which option fits your situation. This conversation takes 15 minutes and should include real numbers - not assumptions.
If going PPA: give your installer runway
Before Dec 31, 2027To get a system placed in service before the Section 48E deadline, sign with enough time for permitting and installation, which can take a few months depending on your city. The earlier you sign, the more margin you have.
This article is general information, not tax advice. The Section 48E rules are evolving, and the specific impact on any individual project depends on factors including Treasury guidance and project-specific details. Consult a CPA or tax professional for advice specific to your situation.
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Frequently Asked Questions
For homeowners purchasing their own system: no. Section 25D (the residential purchase credit) expired December 31, 2025, under the One Big Beautiful Bill. There is no federal residential tax credit for owned solar systems installed in 2026 or later. The 30% commercial credit (Section 48E) still exists for companies that own and operate solar systems under leases and PPAs - but that credit goes to the installer, not the homeowner.
Generally, yes for projects that already began construction by July 4, 2026 - they need to be placed in service by December 31, 2027 to keep Section 48E. That test date itself was in federal court as of mid-2026 and is not fully settled. Either way, it's your installer's tax position, not something you personally need to hit; ask them directly how it affects your contract.
ACC Plus Adders are bonus export rate credits created by the CPUC to partially offset NEM 3.0's lower compensation rates for solar exported to the grid. Early NEM 3.0 adopters receive these adders for the first 9 years of system operation. The adders decrease 20% per year through April 2028 - meaning a 2026 install locks in higher per-kWh export credits than a 2027 install. They are a legitimate, time-sensitive incentive that most advisors are not talking about.
Because the savings story was never primarily about the tax credit - it was about rate comparison. SCE charges 34.5¢/kWh. A solar PPA charges an example rate near 22¢/kWh (ask your installer for your actual quoted rate). On a $300/month SCE bill, that's roughly $120/month saved from day one with zero money down. SCE has authorized rate increases for 2026, 2027, and 2028. The gap between grid rates and solar rates widens over time, not narrows.
With Section 25D expired, the purchase case weakened and the PPA case strengthened for most homeowners. If you have capital, no tax liability concerns, and want long-term ownership, buying still builds equity. If you want immediate monthly savings with no upfront cost and no maintenance responsibility, a PPA starts working on day one. Neither is universally better - it depends on your financial situation, roof, and timeline.