Two years ago, the comparison between buying solar and going with a PPA was genuinely close. Today it is not. Two policy changes shifted the balance decisively toward PPAs for the majority of SCE customers in Riverside County.
This article explains what changed, what the 2026 math actually looks like for each option, and the specific circumstances where buying still makes sense.
1. What Changed in 2025
Two things happened that changed the solar math for California homeowners.
Section 25D was the 30% federal tax credit for homeowners who purchased their own solar systems. It covered 30% of the total installed cost. For a $20,315 system, that was a $6,095 credit. As of January 1, 2026, this credit no longer exists. Homeowners who buy or finance solar panels today receive zero federal credit.
Under NEM 2.0, solar owners received near-retail credits for excess power sent to the grid. Under NEM 3.0, that credit dropped to 5-6 cents per kWh. This fundamentally changed the payback calculation for owned solar because the daytime export value that offset evening consumption no longer applies. You sell midday solar at 5-6 cents and buy evening power at 34.5 cents.
Before these two changes, buying solar with a 30% credit under NEM 2.0 produced payback periods of 6-8 years. After these changes, the same scenario produces payback periods of 10-14 years or longer, depending on system size and usage patterns.
2. The Purchase Math in 2026
Using the Riverside County average of $2.39 per watt and a median 8.5 kW system:
The NEM 3.0 savings estimate of $1,500-$1,800 per year assumes typical Riverside County usage patterns where a significant portion of solar production is exported at 5-6 cents rather than self-consumed. Systems that consume most of their solar production (through battery storage or strong daytime household load) perform better.
Adding battery storage improves the payback by capturing midday solar for evening peak avoidance, but adds $12,000-$18,000 to the upfront cost. Even with battery optimization, the payback window on a purchased system extends significantly beyond the pre-2026 period.
3. The PPA Math in 2026
A PPA sidesteps the upfront cost entirely. For the same 8.5 kW system:
The PPA savings compound over time as SCE rates rise. At 7% annual SCE rate increases, the gap between your locked 22-cent PPA rate and SCE's rising rate grows every year. By year 10, you may be saving 25+ cents per kWh instead of 12.5 cents.
4. PPA Risks You Should Know
A PPA is not risk-free. Here are the real risks, stated plainly.
A PPA is a long-term commitment. If your circumstances change dramatically - job relocation across the country, major life change - the contract needs to be addressed. Understand the buyout terms and transfer provisions before signing.
PPAs transfer to new homeowners, but the buyer must accept the agreement. Some buyers view an existing PPA as a complication. In most cases, buyers who understand the financial value accept transfers readily, but it can create negotiation friction in a sale.
Some PPA agreements include escalation clauses that increase your per-kWh rate over time. Freedom Forever's current PPA does not include a base rate escalation clause, but verify this in your specific agreement. Any escalation rate above 0% reduces the long-term savings projection.
The 22-cent PPA rate depends on the installer claiming the Section 48E commercial credit. After July 4, 2026, new projects that miss the construction-start deadline will lose access to this credit. PPA rates for new customers signed after the deadline are expected to rise to 26-28 cents per kWh. Sign before May 1 to stay in the current rate window.
5. When Buying Solar Still Makes Sense in 2026
There are specific circumstances where purchasing solar outright is still the better financial decision.
Business owners who can use depreciation strategies (Section 168(k) bonus depreciation) through a business entity may capture significant tax benefits that change the purchase math. This requires working with a tax professional and typically applies to LLCs or S-corps with substantial income.
A homeowner who plans to stay 25+ years, has $20,000+ in available capital, and adds battery storage can maximize long-term return through ownership. You own the asset outright, face no contract constraints, and capture the full value of your solar production.
A homeowner with very low electricity usage who can design a system small enough that virtually all production is self-consumed avoids the NEM 3.0 export problem entirely. If you use 100% of your solar production in-home (through battery or natural daytime consumption), the export credit rate is irrelevant.
For everyone else - which is the majority of Riverside County homeowners - the combination of expired Section 25D, NEM 3.0 export rates, and a $0-down PPA at 22 cents per kWh makes the PPA the better financial decision in 2026.
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Frequently Asked Questions
For most SCE customers in Riverside County, a PPA is the better financial decision in 2026. The 30% Section 25D residential tax credit expired December 31, 2025, eliminating the main advantage of owning solar. NEM 3.0 reduced export credits to 5-6 cents per kWh, extending payback periods for owned systems to 11-13 years. A PPA at 22 cents per kWh provides immediate savings from day 1 with $0 upfront.
Without the Section 25D tax credit and under NEM 3.0 export rates, the estimated payback period for a purchased solar system in Riverside County is approximately 11-13 years. This varies based on system size, self-consumption percentage, and whether battery storage is included.
The main PPA risks are: (1) 20-25 year contract length that requires planning for home sales and major life changes; (2) transferability requirements if you sell your home; (3) rate escalation clauses in some agreements - confirm your specific contract; (4) the Section 48E deadline means PPA rates for new customers may rise after July 4, 2026.
The 22-cent rate is locked for existing customers who sign before the July 4, 2026 Section 48E deadline. For new customers signed after that deadline, PPA providers who can no longer claim the Section 48E commercial credit are expected to raise starting rates to 26-28 cents per kWh. Your locked rate does not change, but the rate available to new customers will rise.
Buying solar outright makes more sense for: (1) business owners who can use depreciation strategies through a business entity; (2) homeowners with available capital who plan to stay 25+ years and add battery storage; (3) homeowners with very low electricity usage who can design a fully self-consuming system that avoids NEM 3.0 export rates entirely.