Going solar in Pacific Gas and Electric (PG&E) territory in 2025 requires navigating Net Billing (NEM 3.0) rules, choosing between solar-only or solar-plus-battery systems, and understanding specific permitting requirements for California's largest utility serving 16 million customers across northern and central California.
Key Facts for PG&E Solar Customers:
Critical 2025 Context: PG&E rates increased six times in 12 months (2024-2025) with no stabilization expected. Solar installations lock in energy costs for 25+ years while utility customers face 6% to 10% annual increases. Early NEM 3.0 adopters receive export rate adders (2.2 cents/kWh) locked in for nine years. California energy requirements continue evolving to support renewable adoption.
Battery Decision: Homeowners with monthly bills exceeding $250 should install battery storage to maximize savings under NEM 3.0's reduced export credits. Smaller electricity users benefit from solar-only systems sized to generate 50% of annual consumption. For complete energy independence, off-grid systems offer alternative solutions.
PG&E's Solar Billing Plan fundamentally changed solar economics compared to previous Net Energy Metering programs. Understanding these changes, proper system sizing, and PG&E's specific interconnection requirements determines whether solar delivers maximum financial returns.
Installing solar panels today requires enrollment in PG&E's Solar Billing Plan (also known as Net Billing or NEM 3.0) and switching to a time-of-use electricity rate structure.
Under the Solar Billing Plan, excess solar energy sent to the grid earns credit at rates lower than the full retail price of electricity. PG&E offers temporary export rate adders starting at 2.2 cents per kWh that decline annually, with customers locking in their adder rate for nine years based on when they receive Permission to Operate.
Homeowners with average monthly PG&E electric bills of $250 or more should consider installing enough solar panels to cover annual electricity usage, paired with battery energy storage systems to maximize savings. Professional residential solar design ensures systems meet PG&E's technical requirements.
Customers using less electricity or those preferring solar without batteries should choose systems sized to generate approximately half of annual electricity consumption. While this approach reduces electric bills less dramatically, it delivers higher savings per kilowatt-hour of solar energy generated. HOA regulations may impact installation timelines.
Average-sized solar installations for PG&E customers typically pay back initial costs in under 7 years without batteries, or approximately 7.5 years with battery storage included. These payback periods become even more favorable as PG&E rates continue increasing. Solar implementation resources support project planning.
The most effective approach involves calculating potential savings and connecting with qualified local solar installers who understand PG&E's specific requirements.
The average single-family homeowner on PG&E's E-1 Residential rate plan pays approximately $400 monthly for electricity, totaling roughly $4,800 annually. However, PG&E rates have increased significantly in recent years, with multiple rate hikes throughout 2024 and 2025. Many customers now face even higher monthly bills.
California electricity prices have historically increased by an average of 4.1% per year, though recent increases have exceeded this historical average, with some years seeing rate hikes of 6% to 10% or more. Without intervention, homeowners could pay $140,000 or more over the next 20 years in electricity costs, and potentially much higher given accelerating rate increases.
Adding solar panels with battery storage can reduce monthly electricity expenses to approximately $15 per month. Energy bill savings from properly sized systems typically offset upfront costs within 7.5 years, providing protection against PG&E's continuing rate escalation.
Homeowners considering solar installations should thoroughly research the process, costs, savings potential, available incentives, and battery storage options before making decisions. With PG&E rates showing no signs of stabilization, locking in energy costs through solar becomes increasingly valuable.
Solar panels generate savings by producing electricity for home use instead of purchasing that power from PG&E. Solar power generation converts sunlight into electricity through photovoltaic cells. Most solar panels generate peak electricity production during midday hours when many homeowners are away from home, creating excess energy.
Without battery storage, this excess electricity flows to neighboring homes through PG&E's distribution infrastructure. The California Public Utilities Commission (CPUC) has established complex rules governing how this excess energy is valued and credited.
In 2022, the CPUC implemented new regulations called "Net Billing" (also referred to as NEM 3.0) that determine how excess solar energy is valued. PG&E administers these rules through their Solar Billing Plan, which became effective for new solar applications submitted after April 14, 2023. According to California's DG stats, this represents a major shift in how distributed generation is compensated. PG&E's billing system implementation was delayed until April 2024.
The plan assigns varying values to exported solar energy throughout the year, with different pricing for every hour that changes based on month, day of week, and time of day.
The Solar Billing Plan requires enrollment in a time-of-use rate structure called the Electric Home Rate Plan (E-ELEC). Under this plan, electricity prices from PG&E vary based on time of day, with significantly higher rates during evening hours.
To ease the transition to lower export credits, PG&E offers temporary export rate adders for customers who install solar under NEM 3.0. These adders start at 2.2 cents per kWh for systems installed in the first year of the program and decline by 20% annually over five years. Customers who receive Permission to Operate lock in their export rate adders for nine years.
The critical factor to understand: solar export credits typically fall well below retail electricity costs, making excess electricity export a financially unfavorable situation that should be minimized. Homeowners can address this through two strategies:
The E-ELEC plan divides each day into three pricing periods: Off-Peak, Part-Peak, and Peak.
Off-Peak hours run from midnight to 3 pm every day. Part-Peak periods occur from 3 to 4 pm and again from 9 pm to midnight. Peak hours span from 4 pm to 9 pm. These time periods remain consistent seven days per week throughout the year, though electricity prices during these periods vary by season.
Electricity purchased during these periods follows the pricing structure below:
Summer (June through September)
Winter (October through May)
Note: PG&E rates are subject to regular adjustments. These figures represent recent pricing structures, but rates have increased in 2025 and continue to rise. Verify current rates at PG&E's website or through qualified solar installers familiar with the latest pricing.
Solar System Cost Breakdown:
Current solar panel costs in California average $3.14 per watt for a 7.2-kW system, which suits homeowners with $250 monthly electric bills. National solar data shows solar panel costs per watt decrease as system size increases and rise as systems get smaller.
Cash purchases for 7.2-kW solar installations cost approximately $22,600 upfront. The federal solar tax credit provides 30% back ($6,780) to taxpayers who paid at least that amount in taxes during the installation year.
Adding an average-sized 16.6-kWh battery to the solar system adds approximately $14,000 to total costs, with a $4,200 federal tax credit available to eligible taxpayers.
Solar panels generate savings by offsetting costs that would otherwise be paid to PG&E for electricity. However, these offsets are reduced with solar-only installations due to the Solar Billing Plan's lower export credit rates.
For homes with monthly bills around $300, solar-only systems typically pay back initial costs in 6.9 years, delivering approximately $74,000 in total savings over 25 years.
The same system with battery storage pays back initial costs in 7.5 years, providing approximately $100,000 in total savings over 25 years, including battery replacement costs after 12 years.
A straightforward guideline applies to battery storage decisions: homeowners with average monthly electric bills exceeding $250 should maximize solar panel coverage and add batteries to store daily excess energy.
Two key reasons support this recommendation:
Solar installations generate fluctuating amounts of excess energy throughout the year, with highest production during summer months. During these periods, significant portions of solar energy may be sent to the grid at unfavorable export rates. Smaller solar installations that don't require maximum coverage are unlikely to generate excess electricity requiring battery storage.
The most substantial cost in adding batteries comes from electrical work required to connect them to home electrical systems. While batteries themselves represent significant investment, the cost difference between small batteries (under 10 kWh) and larger systems is less dramatic than the base electrical work.
Monthly electricity bills under $250 can still create substantial financial burden, and solar panels effectively reduce large portions of these costs. Installing solar systems sized to produce approximately half of annual electricity consumption minimizes the likelihood of sending power back to the grid.
This approach ensures most or all solar energy generated directly reduces electric bills. Upfront costs remain lower while still delivering meaningful savings.
Installing solar panels on homes within PG&E's service area follows this process:
1. Estimate solar panel requirements based on average electricity bills
2. Request quotes from local solar installation companies
3. Evaluate quotes, review company credentials, and select the most qualified installer
4. Solar installer designs the system and applies for construction permits and grid interconnection approval
Proper permit design is critical in PG&E territory. The utility has specific interconnection requirements under Rule 21, and applications must meet PG&E's engineering standards. Understanding California solar permit requirements helps installers avoid application rejections that cause delays and resubmissions.
The interconnection agreement represents a formal contract between property owners and PG&E that governs how solar systems connect to and interact with the utility's distribution grid. This legally binding document is required for all residential solar installations of 30 kilowatts or less in PG&E territory.
The agreement specifies critical operational parameters including safety requirements, metering arrangements, billing procedures, and system compliance standards. Under NEM 3.0, customers sign a Net Billing Tariff interconnection agreement that locks in export credit structures for nine years from the Permission to Operate date (for systems installed before 2028).
PG&E charges a one-time interconnection fee of $145 for residential systems. The agreement remains in effect for the life of the solar installation, typically 30 years or longer, unless the property ownership changes or the system undergoes major modifications. Applications that don't meet PG&E's technical specifications face rejection, requiring corrections that delay final approval by weeks or months.
Solar Permit Solutions specializes in preparing interconnection applications that meet PG&E's exacting standards on first submission. Our expertise in Rule 21 requirements and PG&E's technical documentation ensures applications progress smoothly through review, minimizing delays and accelerating the path to PTO approval.
At Solar Permit Solutions, we specialize in navigating PG&E's specific permit and interconnection requirements. Our solar permit services include expertise in PG&E's engineering standards and Rule 21 compliance, helping installers secure faster approval and avoid common permitting pitfalls.
5. Solar company receives construction and interconnection permission, then completes installation
6. Local building inspector and PG&E electrician inspect the completed installation
7. PG&E grants Permission to Operate (PTO), allowing the system to begin generating electricity
The first steps involve estimating solar panel requirements and obtaining quotes from qualified installers. Many online solar calculators provide system size estimates along with cost and savings projections for specific properties. These tools can generate live quotes from local installers. Understanding permit consequences emphasizes the importance of proper applications.
The complete solar installation process typically requires three to four months from initial planning to final PTO approval, assuming no complications arise.
Physical installation work takes one to two days, with crews working on roofs and installing system components like inverters and main electrical panel connections. Once PG&E grants permission to operate, homeowners can activate their systems and begin generating savings immediately. Solar permitting best practices help expedite approval processes.
Delays most commonly occur during the permitting and interconnection approval phases. PG&E reviews every interconnection application to ensure compliance with their technical standards. Applications that don't meet solar permit requirements face rejection and must be corrected and resubmitted, extending timelines significantly. Solar Permit Solutions specializes in PG&E interconnection expertise.
PG&E maintains specific technical requirements for solar installations that differ from other California utilities. Their Rule 21 interconnection standards outline detailed engineering specifications that must be met for approval. The California permitting guidebook provides comprehensive technical standards for solar installations statewide.
Key areas requiring expertise include:
Local jurisdictions follow solar permitting standards that complement PG&E's interconnection requirements.
Solar installations that fail to meet these requirements face application rejection, requiring corrections and resubmission. Each rejection and resubmission cycle adds weeks or months to project timelines. Learning to streamline permit processing reduces delays significantly.
Professional permit design services specializing in PG&E requirements help avoid these delays. Solar Permit Solutions works extensively within PG&E territory, understanding the utility's specific engineering standards and documentation requirements. We provide commercial solar design and residential services. This expertise helps solar installers navigate PG&E's interconnection process efficiently, securing faster PTO approval for their customers.
The straightforward answer is yes. Despite complexity introduced by the Solar Billing Plan and battery storage decisions, solar installations deliver strong financial returns for PG&E customers, particularly given the utility's aggressive rate increases in recent years.
With average payback periods ranging from 6.9 to 7.5 years for properly designed installations, solar panels provide homeowners an effective way to reduce exposure to PG&E's continuing rate increases. PG&E customers have experienced multiple rate hikes throughout 2024 and 2025, with no signs of stabilization. Over system lifetimes of 25 years or more, savings can reach $75,000 to $100,000 or higher depending on system configuration and electricity usage patterns, with actual savings potentially exceeding these estimates as rates continue climbing.
The value proposition for solar strengthens each time PG&E announces another rate increase. Customers who install solar today lock in predictable energy costs while their neighbors face uncertain and rising utility bills for decades to come. Learn more on the Solar Permit Solutions blog.
Homeowners benefit most by working with qualified installers who understand PG&E's specific requirements and partner with permit design specialists experienced in navigating the utility's interconnection process. Understanding solar permit necessity prevents compliance issues. This approach ensures smooth project progression from initial design through final PTO approval, minimizing delays and maximizing the time systems spend generating savings. Given PG&E's rate trajectory and the temporary export rate adders available to early NEM 3.0 adopters, acting sooner rather than later delivers maximum financial benefit.
What is PG&E's Solar Billing Plan and how does it affect my solar credits?
PG&E's Solar Billing Plan, also known as Net Billing or NEM 3.0, determines how excess solar energy sent to the grid is credited. Under this plan, export credits vary by hour, month, and day type, with rates significantly lower than retail electricity costs. This means selling excess power back to the grid generates less value than using that power directly in the home. The plan also requires enrollment in the E-ELEC time-of-use rate structure, where electricity prices change based on time of day.
How long does it take to get solar panels installed and approved by PG&E?
The complete process typically takes three to four months from initial planning to receiving Permission to Operate (PTO) from PG&E. Physical installation work takes only one to two days. Most of the timeline involves permit applications, PG&E's interconnection review process, and final inspections. Delays most commonly occur during the permitting and interconnection approval phases, especially if applications don't meet PG&E's specific technical requirements on the first submission.
Do I need a battery with my solar system in PG&E territory?
Battery storage makes financial sense for homeowners with average monthly electric bills exceeding $250. At this usage level, solar systems large enough to cover annual electricity needs will generate significant excess energy during peak production months. Without batteries, this excess gets exported at unfavorable rates under the Solar Billing Plan. Batteries allow storage of this excess energy for use during expensive evening peak rate periods. For lower electricity usage, solar-only systems sized to produce about half of annual consumption minimize excess generation without battery investment.
What are PG&E's peak hours and how much more expensive is electricity during these times?
PG&E's E-ELEC rate plan designates 4 pm to 9 pm as peak hours every day of the year. During summer months (June through September), peak electricity costs $0.61 per kWh compared to $0.39 per kWh during off-peak hours (midnight to 3 pm). Winter peak rates are $0.38 per kWh versus $0.34 per kWh off-peak. This significant price difference makes it financially disadvantageous to draw power from the grid during evening hours when solar panels aren't producing.
What are PG&E's specific interconnection requirements for solar installations?
PG&E requires solar installations to comply with Rule 21 interconnection standards, which outline detailed engineering specifications. Applications must include single-line electrical diagrams in PG&E's required format, load calculations meeting their engineering review standards, equipment specifications demonstrating technical compliance, and proper documentation of battery storage systems if included. Understanding required permits in California helps navigate PG&E's process. Applications failing to meet these requirements face rejection and must be corrected and resubmitted, adding weeks or months to project timelines. Working with installers who use experienced permit design services helps ensure first-time approval.
How much can solar panels actually save on my PG&E electric bill?
Savings depend on system size, electricity usage, and whether battery storage is included. For homes with $300 monthly bills, a properly sized solar-only system can save approximately $74,000 over 25 years with a 6.9-year payback period. The same system with battery storage increases total savings to around $100,000 over 25 years (including battery replacement costs) with a 7.5-year payback period. National solar databases track installation costs and performance nationwide. These savings protect against PG&E's average annual rate increases of 4.1%, which could result in paying $140,000 or more in electricity costs over 20 years without solar.
What happens to my solar system if PG&E changes its rates or policies?
Solar installations approved under current Solar Billing Plan rules receive important protections. The interconnection agreement itself remains in effect for the life of the system (typically 30+ years). For export rate structures, customers who receive Permission to Operate lock in their export credit rates for nine years from their PTO date if they install within the first five years of NEM 3.0 (before 2028). This nine-year lock-in includes any export rate adders the customer qualified for at installation. After nine years, export rates may adjust based on updated avoided cost calculations, though the fundamental Net Billing structure is expected to remain. This grandfathering provides substantial financial predictability for solar investments during the critical payback period. Contact us for expert guidance on PG&E's requirements.
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