Big Changes Are Coming to Solar in 2025: Here's What You Need to Know

The solar energy landscape in California is poised for significant transformations in 2025. Homeowners and businesses across Los Angeles, San Diego, Riverside, San Bernardino and Orange County must stay informed to navigate these changes effectively. This guide dives into the anticipated shifts, focusing on rising electricity rates, the growing importance of battery storage, and the advantages of early solar adoption.

Rising Electricity Rates in California

California has experienced substantial increases in electricity rates over the past decade. Between 2013 and 2025, energy rates have surged by at least 90% for all investor-owned utility (IOU) customers in the state. These Investor-Owned Utilities, include Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E) are managed by the California Public Utilities Commission (CPUC). This trend is expected to continue, with projections indicating an average annual increase of approximately 4% across all public and municipal utilities.

Specifically, Southern California Edison (SCE) has proposed a significant rate hike. In its General Rate Case Application filed in May 2023, SCE requested a $1.90 billion increase in 2025, representing a 23% rise over its forecasted 2024 base revenue requirements. If approved, this would result in an average residential monthly bill increase of approximately $17.49 (10.3%) in 2025, with additional increases in subsequent years. In addition, the recent Palisades and Altadena fires in January of 2025, will likely provide SCE with further justification to increase rates. With rising wildfire mitigation costs, infrastructure repairs, and legal liabilities, SCE may pass these expenses onto customers. Given California's history of utilities raising rates after fire-related damages, expect even higher electricity bills in the near future.

Similarly, San Diego Gas and Electric Company (SDG&E) has announced upcoming rate adjustments. While electricity rates are expected to remain relatively stable in January 2025 compared to January 2024, an additional increase is scheduled for March 2025. This will add about $3.40 monthly to residential customer bills to cover the company's 2020 tree trimming costs to help reduce the chance of a wildfire and blackouts.

These escalating costs underscore the importance of exploring alternative energy solutions, such as solar panel installations with home battery backup, to mitigate the financial impact on consumers.

The Heightened Importance of Battery Storage

As the dynamics of solar energy production and consumption evolve, the role of battery storage becomes increasingly critical. Traditionally, excess energy generated by solar panels could be fed back into the grid, often resulting in credits or compensation for the producer. However, changes in net metering policies and the decreasing value of exported solar energy have made this approach less financially attractive.

In response, integrating solar battery storage systems with solar installations in California offers a compelling solution. By storing excess energy produced during peak sunlight hours, homeowners and businesses can utilize this stored power during the evening or periods of low solar generation, thereby reducing reliance on the utility grid and enhancing energy independence.

The market for solar battery storage is experiencing rapid growth. In 2024, the U.S. saw record-breaking storage installations, a trend that is expected to continue into 2025. Especially with the updated Net Energy Metering (NEM 3.0), which reduces the credit incentives. This surge is driven by declining battery costs, evolving policies, and increasing consumer demand for energy resilience.

Financially, the investment in solar battery backup is becoming more accessible. A fully installed 13.5 kWh battery backup system averages around $13,500 after applying the 30% federal tax credit, and roughly $27,000 after applying the 30% federal tax credit when combined with an appropriate number of solar panels to power the battery.. While this represents a significant upfront cost, the long-term savings and increased energy security can offer substantial value.

Advantages of Early Solar Adoption

Given the current trajectory of the solar industry, there are compelling reasons to consider early adoption of solar energy systems in Los Angeles, Orange County, San Diego, and throughout California:

1. Avoiding Potential Price Increases: The solar industry is not immune to global economic factors. A potential trade war, tariffs, and supply chain disruptions can lead to increased costs for solar panels, inverters, and battery storage systems. By investing in solar installations sooner rather than later, consumers can lock in current pricing and avoid potential future cost escalations.
2. Maximizing Financial Incentives: Various federal, state, and local solar incentives are available to offset the initial costs of solar installations. In California, homeowners can take advantage of the Federal Investment Tax Credit of 30% in 2025 on their entire solar and battery system and a Self-Generation Incentive Program (SGIP) rebate for battery backups. However, these programs are subject to change and may become less generous over time. Early adoption ensures that consumers can take full advantage of existing solar rebates, tax credits, and financing options, enhancing the financial viability of solar investments.
3. Mitigating Rising Electricity Costs: With California electricity rates increasing, generating your own power through residential and commercial solar panel installations can provide a hedge against future rate hikes. The sooner a solar system with battery backup is installed, the sooner consumers can begin realizing savings on their energy bills.
4. Enhancing Energy Independence: Coupling solar panel installations with home battery backup not only offers financial benefits but also provides greater control over energy usage. This combination allows for energy availability during peak demand times, power outages, and periods of high electricity prices, reducing dependency on the grid.

Conclusion

The solar energy landscape in California in 2025 is characterized by rising electricity rates, the increasing importance of solar battery storage, and the advantages of early solar adoption. By staying informed and proactive, homeowners and businesses in Los Angeles, Riverside, San Bernardino, San Diego and Orange County can navigate these changes effectively, ensuring long-term solar savings, energy security, and sustainability. If you're considering installing solar panels and a home battery backup system, now is the best time to act before costs rise and incentives diminish.

Forme Solar References and Resources - Big Changes Coming to Solar in 2025:

• California Public Utility Commission
• US Storage Market Continues Uptrend in 2025
• Solar Battery Prices and Trends
• California Utility Rate Hikes