SMUD is a municipal utility, so Sacramento rooftop solar is exempt from California’s NEM 3.0 net billing. New solar goes on SMUD’s Solar and Storage Rate, which credits exported power at 9.6 cents per kWh (as of June 2026), flat by time of day. Legacy NEM 1.0 customers keep their old rate through 2030. The 30% federal 25D homeowner credit ended December 31, 2025.
If SMUD, the Sacramento Municipal Utility District, is your electric utility, this is how rooftop solar pays you back in 2026. SMUD serves about 680,000 customer accounts and roughly 1.6 million people across Sacramento County (SMUD Company Information). The single most important thing to know is that SMUD is a publicly owned municipal utility, not an investor-owned utility, so it sets its own solar rules and does not fall under California’s NEM 3.0 net billing tariff. That one fact makes solar in SMUD territory work differently from PG&E, SCE, and SDG&E. This page explains SMUD’s Solar and Storage Rate, how it differs from the IOU rules, how to interconnect, and how to tell if your home is a good fit.
SMUD solar at a glance
SMUD runs its own crediting and interconnection process. Because it is a municipal utility, its successor solar tariff is set by the SMUD Board, not the California Public Utilities Commission, so the terms below come straight from SMUD.
| Detail | What to know |
|---|---|
| Utility | SMUD, the Sacramento Municipal Utility District, a publicly owned utility |
| Service area | Sacramento County and small adjacent areas; about 680,000 accounts, roughly 1.6 million people |
| NEM 3.0 status | Exempt. As a municipal utility, SMUD is outside the CPUC net billing tariff that governs PG&E, SCE, and SDG&E |
| Solar crediting program | Solar and Storage Rate (SSR) for systems approved on or after March 1, 2022 |
| Export credit | 9.6 cents per kWh as of June 1, 2026, flat regardless of time or season |
| Legacy NEM 1.0 | Existing NEM 1.0 solar customers can stay on that rate through December 31, 2030 |
| Source | SMUD Solar and Storage Rate |
What a typical Sacramento system produces. According to MySolarFY’s own analysis (August 2026), a typical 7 kW rooftop system in Sacramento produces about 11,300 kWh a year (NREL PVWatts). At a representative SMUD residential energy price near 16 cents per kWh (SMUD Time-of-Day schedule), that is roughly $1,800 of grid electricity your panels would offset in a year. Worth noting: California’s statewide residential average is about 35.25 cents per kWh (EIA, April 2026), but that number is driven by the big investor-owned utilities. SMUD’s municipal rates run well below the state average, which is a defining feature of going solar in SMUD territory. Your own number depends on your roof, shade, TOU plan, and usage, so treat this as a planning estimate and get a site-specific production figure from an installer.
How SMUD net metering works now: the Solar and Storage Rate
SMUD credits new rooftop solar under its Solar and Storage Rate, and because SMUD is a municipal utility it is exempt from California’s NEM 3.0 net billing. This is the key difference from the rest of California. The state’s investor-owned utilities (PG&E, SCE, SDG&E) moved to NEM 3.0 net billing on April 15, 2023, which values exports well below the retail rate and pushes homeowners toward batteries (CPUC net energy metering). SMUD sits outside CPUC jurisdiction, so it never adopted NEM 3.0. Instead, SMUD placed customers approved to install solar or storage on or after March 1, 2022 on its Solar and Storage Rate, and as of June 1, 2026 it credits the excess electricity you export to the grid at a flat 9.6 cents per kWh, regardless of time of day or season (SMUD). For the mechanics of export credits in general, see how net metering credits your solar exports.
| SMUD (municipal) | PG&E / SCE / SDG&E (investor-owned) |
|---|---|
| Exempt from NEM 3.0; SMUD sets its own solar tariff | Under CPUC NEM 3.0 net billing since April 15, 2023 |
| Exports credited at a flat 9.6 cents per kWh (June 2026) | Exports valued on avoided-cost rates, often far below retail |
| Batteries help but are not required to make solar pencil | A battery is usually central to the payback math |
| Lower underlying municipal rates than the CA average | Among the highest retail rates in the country |
A battery still helps a SMUD customer, because storing your midday solar to use during the 5 to 8 p.m. peak is worth more than exporting it at 9.6 cents. But unlike an IOU customer under NEM 3.0, you do not need a battery just to make the numbers work. To see how the bill credit lowers your monthly cost, read how solar lowers your electricity bill, and to weigh payback under SMUD’s export credit, see the financial case for whether solar panels are worth it.
See what solar programs are available in your ZIP code
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SolarShares: SMUD’s community solar option
If your roof is shaded, rented, or otherwise a poor fit for panels, SMUD also runs SolarShares, a community solar program where you subscribe to a share of a SMUD solar project and see the credit on your regular SMUD bill instead of installing anything. It is a different product from rooftop solar, and customers on the Solar and Storage Rate are generally not eligible to also enroll, so treat these as either-or paths. Terms, pricing, and availability change, so confirm the current SolarShares details directly with SMUD before you sign up (SMUD).
What changed federally, and what it means for SMUD customers
The 30% federal homeowner solar credit ended after December 31, 2025. SMUD’s Solar and Storage Rate and its lower municipal rates did not change with it. The federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after that date, under the One Big Beautiful Bill Act, so a SMUD customer who buys solar with cash or a loan in 2026 cannot claim it (IRS OBBB FAQ; SEIA). SMUD’s export crediting was not changed by that federal law. A separate commercial credit, Section 48E, is claimed by the business that owns a leased or PPA system, not by the homeowner, so on a lease or PPA you do not file for a federal credit yourself. The 25D homeowner credit, by contrast, ended after December 31, 2025. For the full timeline, see what the federal solar tax credit change means in 2026.
How to connect solar to SMUD
Connecting a home system to SMUD follows a set order, and the key rule is that you cannot turn the system on until SMUD grants permission to operate. The general path is:
- Interconnection application. You or your installer file a SMUD interconnection application for your solar and any battery storage.
- Review and agreement. SMUD reviews the application and returns the interconnection and Solar and Storage Rate agreement to sign.
- Install and inspect. The system is installed and passes your city or county electrical inspection.
- Meter set. SMUD installs or reconfigures a bidirectional meter and places your account on the Solar and Storage Rate.
- Permission to operate. SMUD issues permission to operate. The system may not run on the grid before this.
A licensed installer normally manages this whole process for you, and the details and fees can change, so confirm the current SMUD interconnection and Solar and Storage Rate terms before you commit. For the questions to ask, see the right questions to ask a solar installer. You can also compare more utilities in our Solar by Utility guides, and see statewide context on our California solar hub and our local Sacramento solar guide.
How to choose a solar installer in SMUD territory
Sacramento has an active solar market, so you have licensed installers to compare. Rather than chasing a “best” list, screen any installer against objective criteria:
- NABCEP certification, the industry’s professional standard for PV installers.
- Proper California licensing (CSLB) and any required local electrical and building permits.
- A clear workmanship and equipment warranty in writing.
- Real experience with SMUD interconnection and the Solar and Storage Rate, so the paperwork and permission to operate go smoothly.
- A written production estimate and a transparent quote that is honest about the 9.6 cents per kWh export credit and how a battery would change your payback.
MySolarFY matches you with licensed installers that serve your area so you can compare real local quotes side by side, with no obligation.
Frequently asked questions
Is SMUD under California’s NEM 3.0 net billing?
No. SMUD is a publicly owned municipal utility and sits outside California Public Utilities Commission jurisdiction, so it never adopted NEM 3.0. NEM 3.0 net billing applies to the state’s investor-owned utilities (PG&E, SCE, SDG&E), which moved to it on April 15, 2023. SMUD instead credits new rooftop solar under its own Solar and Storage Rate, so the export rules in Sacramento are set by SMUD, not the CPUC.
How does SMUD credit my exported solar in 2026?
SMUD places customers approved to install solar or storage on or after March 1, 2022 on its Solar and Storage Rate. As of June 1, 2026, it credits the excess electricity you send to the grid at a flat 9.6 cents per kWh, regardless of time of day or season. Because that credit is below SMUD’s peak retail price, using your solar during the 5 to 8 p.m. peak, or storing it in a battery, is worth more than exporting it. Confirm the current rate with SMUD before you decide.
Can existing SMUD solar customers keep their old net metering rate?
Yes. SMUD has said solar customers on the legacy NEM 1.0 rate can remain on that rate through December 31, 2030. The Solar and Storage Rate applies to systems approved to install on or after March 1, 2022. If you already have solar under an older SMUD program, check your current rate schedule with SMUD so you know which rules apply to you.
What happened to the federal solar tax credit?
The 30% federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, under the One Big Beautiful Bill Act. A SMUD customer who buys solar in 2026 with cash or a loan cannot claim it. A separate commercial credit (Section 48E) can apply to leased and PPA systems, but the business that owns the system claims it, not the homeowner. SMUD’s Solar and Storage Rate was not affected by the federal change.
Do I need a battery to go solar with SMUD?
No, not the way an IOU customer under NEM 3.0 effectively does. SMUD’s flat 9.6 cents per kWh export credit means solar can pencil without storage, though a battery still adds value by letting you use your own solar during the 5 to 8 p.m. peak instead of exporting it. Whether a battery is worth it depends on your usage and budget, so ask your installer to model both.
Do I qualify for the SMUD solar credit if I lease or sign a PPA?
The Solar and Storage Rate crediting follows your SMUD account, but on a lease or PPA the company that owns the panels typically keeps the incentives, while your benefit is a lower or fixed power price with no up-front cost. If you want the export credit and any tax benefits in your own name, owning the system through cash or a loan is the path that captures them.
Reviewed by the MySolarFY team. Figures were verified against the linked SMUD, California Public Utilities Commission, EIA, NREL PVWatts, IRS, and SEIA sources as of August 2026. SMUD’s Solar and Storage Rate, export credit, and residential rates all change over time, so confirm current terms with SMUD before you decide. MySolarFY does not provide tax or financial advice; consult a licensed professional about your own situation. Learn more about the MySolarFY team and how we work.
MySolarFY is a free service that matches homeowners with licensed solar installers. We are not an installer, financing company, or government program. “No up-front cost” refers to qualifying lease or PPA financing, where eligible homeowners may have no out-of-pocket cost at installation. Lease and PPA terms typically run 20 to 25 years, may include an annual price escalator, and total payments may exceed the cost of a cash purchase; on a lease or PPA the incentives and bill credits often go to the company that owns the system, not the homeowner. Homeowners do not get the federal residential credit that ended after December 31, 2025. Solar panels are not free and monthly payments apply. Eligibility, savings, incentives, and rates vary and are not guaranteed. See our full disclaimer.
