Why More Southern Californians Are Choosing Solar to Combat Soaring SCE Rates 

By Scott Thomas, Solar Energy Expert

Scott Thomas is an expert in renewable energy policy and utility rate analysis, with over a decade of experience helping Southern California residents navigate complex energy markets. Their insights are regularly featured in industry publications.

With a nearly 13 percent Southern California Edison (SCE) rate hike looming on October 1, 2025, homeowners and businesses are bracing for an average monthly electricity bill increase of $16. This significant jump is fueling a surge in solar panel installations across Southern California as property owners look to slash their electric bills and lock in long-term savings. Let's dive into what's driving these rising SCE rates, how solar energy offers a dependable solution, which incentives will maximize your value in 2025, how battery storage under NEM 3.0 boosts your savings, and why Option One Solar is your go-to partner for top-quality installations.

Key Takeaways

• SCE Rate Hike: A nearly 13% increase is expected by October 2025, driven by infrastructure upgrades, wildfire prevention, and operational costs.

• Solar as a Solution: Solar energy systems provide a reliable buffer against rising utility costs, offering significant long-term savings and energy independence.

• Incentives for 2025: While the Federal ITC is phasing out, state and local programs like SGIP and property tax exclusions still offer substantial financial benefits.

• NEM 3.0 & Battery Storage: Under NEM 3.0, battery storage is crucial for maximizing savings by enabling self-consumption and reducing reliance on low export credits.

• Option One Solar: A trusted partner offering customized, high-performance solar and battery solutions with industry-leading warranties.

What's Fueling the Southern California Edison (SCE) Rate Increase in 2025?

The SCE rate hike is a direct result of a CPUC-approved plan to cover the costs of crucial infrastructure upgrades, wildfire prevention measures, and baseline revenue needs, leading to an almost 13 percent increase in customer electricity rates. Investing in upgraded transmission lines and enhanced safety protocols is essential for a more reliable grid and better wildfire resilience, but it also means higher monthly bills. Residential accounts can expect an average increase of $16 per month, while commercial rates will adjust based on demand and usage patterns, prompting many to explore solar alternatives that offer a buffer against utility price swings.

Why Are SCE Rates Climbing: Infrastructure, Wildfire Costs, and Revenue Demands?

Several key factors are behind the 2025 SCE rate increase, each contributing to the rising costs on customer bills:

• Infrastructure Investments: Funding substation upgrades and grid modernization to ensure dependable transmission.

• Wildfire Mitigation: Covering expanded inspections, vegetation management, and advanced safety equipment installations.

• Revenue Requirements: Allowing SCE to recoup approved operating expenses and capital projects as directed by the CPUC.

How Will the 2025 Rate Hike Affect Residential and Commercial Customers?

The SCE rate adjustment impacts different customer groups uniquely, with residential accounts facing a 13 percent increase and commercial rates seeing an approximate 9 percent rise.

These projected cost escalations underscore the pressing need for alternative energy solutions that can shield you from volatile utility pricing.

SCE’s History of Rising Rates

The recent 13% price increase by SCE is not an isolated event but rather part of a long-term trend of rising electricity costs in California. Historical data from the past decade clearly show that rate hikes have been frequent and substantial. The past decade shows a 38.1% total increase in electricity rates, rising from 12.65 cents per kWh in 2015 to 17.47 cents per kWh in 2025. This represents an additional cost of 4.82 cents per kilowatt-hour over the 10-year period.

How Can Solar Energy Provide a Reliable Solution to Rising SCE Rates?

Solar energy systems harness sunlight to generate electricity using photovoltaic panels, directly reducing your reliance on grid power and locking in savings ranging from 50% to 90%, depending on system size, energy consumption, and net energy metering policies. This approach minimizes your exposure to fluctuating time-of-use rates and peak demand charges, leading to stable energy costs and predictable budgeting. Homeowners and businesses that invest in solar panel installation in Southern California not only lower their electric bills but also build greater resilience against future price hikes.

How Do Solar Panels Help Southern Californians Save on Electricity Bills?

Solar panels produce electricity right at your location, offsetting the power you'd otherwise buy from the utility during daylight hours. The primary ways you save include:

• Direct Grid Offset: Generating kilowatt-hours that reduce your net metered charges.

• Peak Load Reduction: Rooftop systems help lower demand fees during midday hours.

• Tariff Shielding: Self-generated power bypasses time-of-use surcharges during peak pricing periods.

Together, these benefits translate into significant savings that effectively counteract the impact of SCE rate increases.

The Cost of Solar vs Utility Over Time

Financing a solar energy system with a battery—even with $0 down—helps you start saving money right away because Southern California Edison's electricity rates keep rising over time. Historically, SCE’s rates have increased on average around 7% per year in recent years and are expected to continue climbing. This means that while you’re making loan payments, the cumulative cost of electricity from the utility is increasing faster than the cumulative cost of your loan payments.

For example, a system costing $25k at $0 down over 12 years at ~7% APR financing agaisnt the cost of utility power, assuming 7% annual rate increases, would look like this:

So even before your loan is fully paid off, your solar system is already saving you money by reducing your electricity bill. Once the loan is paid off, your system can essentially pay for itself very quickly, even considering the basic connection fee you still pay to the utility company. This long-term benefit is a key reason why investing in solar energy with battery storage is a smart financial move in areas with rising utility rates like Southern California.

What Role Does Energy Independence Play in Fighting Rising Utility Costs?

Energy independence means having the ability to generate and manage your own power supply, reducing your dependence on external utilities like SCE. Achieving this independence with solar, especially when paired with battery storage, ensures you have electricity even during outages and protects you from sudden rate hikes. This self-sufficiency allows Southern California homeowners and businesses to create long-term budgets without the uncertainty of utility pricing, leading us to the next topic: maximizing savings with available incentives.

What Are the Best Solar Incentives Available in Southern California for 2025?

Solar incentives are designed to lower the initial cost of installations by utilizing government and utility programs. These initiatives reward the adoption of renewable energy through tax credits, rebates, and performance-based incentives, ultimately reducing the net system expenses for 2025 projects. Southern Californians can take advantage of multiple overlapping benefits to maximize their return on investment.

How Does the Federal Investment Tax Credit (ITC) Reduce Solar Installation Costs?

In the past, the Federal Investment Tax Credit (ITC) provided a valuable 30% tax credit for homeowners installing solar systems and batteries, making it a great benefit for those with enough tax liability to use it. However, as we approach the end of 2025, this incentive is phasing out, and fewer people are likely to take advantage of it. The good news is that even without the ITC, switching to solar remains a smart financial choice. For Southern Californians, a range of local and state incentives continue to offer strong returns on investment, helping make solar energy an appealing and affordable option today and into the future.

Which Local and State Incentives Can Southern Californians Use in 2025?

Beyond federal savings, regional incentives offer additional benefits, including:

• Self-Generation Incentive Program (SGIP): Provides performance-based rebates specifically for battery storage.

• California Property Tax Exclusion: Protects the increased value of your home from higher property tax assessments.

• State Solar Rebates: Offers further upfront discounts through partnerships with regional utilities.

By combining these incentives, Southern California residents can achieve even greater cost reductions and faster break-even timelines.

What Is NEM 3.0 and How Does It Affect Solar Energy Savings?

Net Energy Metering 3.0 (NEM 3.0) is a policy established by the CPUC that reduces the compensation rate for electricity exported to the grid. This change encourages customers to store and use their solar electricity onsite. As export credits decrease, homeowners and businesses need to adapt their system designs to maximize self-consumption and minimize grid exports. For further information, you can read about NEM 3.0.

Currently, Southern California Edison’s average electricity cost is around 31 cents per kilowatt-hour, while under NEM 3.0, the export credit for excess energy is closer to 5 to 8 cents per kilowatt-hour, making it much more valuable to store and use the energy onsite rather than export it back to the grid.

How Does Battery Storage Maximize Solar Savings Under NEM 3.0?

Under NEM 3.0, the compensation rates for excess solar energy sent back to the grid are low, making self-consumption of your generated power more critical than ever. Battery storage systems allow you to store surplus electricity for later use, shifting your energy consumption away from the grid and significantly boosting your savings under the current net metering rules. This strategy ensures that every kilowatt-hour you produce is optimized for the highest possible return on your solar investment.

How Does Battery Storage Enhance Energy Independence and Bill Reduction?

Battery storage offers a range of compelling advantages:

• Load Shifting: Store excess energy generated midday for use during evening hours, reducing peak electricity charges.

• Backup Power: Keep essential appliances running during grid outages, ensuring uninterrupted operations.

• Demand Charge Savings: Lower maximum demand readings, particularly beneficial for commercial accounts.

These capabilities significantly strengthen your energy independence and further reduce your utility expenses.

Frequently Asked Questions

Q: What is the main reason for the SCE rate hike in 2025?

A: The primary drivers are CPUC-approved infrastructure upgrades, wildfire prevention measures, and covering essential operating expenses to maintain a reliable grid.

Q: How much can I save by switching to solar in Southern California?

A: Savings can range from 50% to 90% on your electricity bills, depending on your system size, energy consumption, and how effectively you utilize battery storage under NEM 3.0.

Q: Is the Federal Investment Tax Credit (ITC) still available for solar installations?

A: The ITC is phasing out towards the end of 2025. However, significant state and local incentives, such as the SGIP for battery storage and California Property Tax Exclusion, continue to make solar a financially attractive option.

Q: Why is battery storage so important under NEM 3.0?

A: Under NEM 3.0, the compensation for exporting excess solar energy to the grid is significantly lower. Battery storage allows you to store your self-generated power for use during peak demand hours or at night, maximizing self-consumption and your overall savings.

Why Choose Option One Solar for Your Southern California Installation?

Option One Solar delivers durable, high-performance systems backed by industry-leading warranties and workmanship standards:

• Top-tier Equipment: Photovoltaic modules tested for high UV exposure and extreme heat

• Durable Mounting: Corrosion-resistant structures built for coastal and desert climates

• Long-Term Assurance: 25-year warranty covering parts and labor; 10-warranty covering battery backups

These rigorous standards ensure reliable energy independence and sustained cost savings for decades.

Customized Solar Solutions for Homes and Businesses

Our tailored approach includes:

• Home Systems: Custom sizing based on detailed analysis of your usage to maximize self-consumption under NEM 3.0

• Commercial Designs: Configurations aligned with operational load profiles and available roof or ground space

• Flexible Financing: Options to fit various budgets, enabling you to start saving immediately

With rates continuing to rise, now is the perfect time to lock in predictable energy costs and strengthen your resilience with solar plus battery storage. By pairing local, state, and federal incentives with advanced storage solutions, you’ll boost your return on investment and enjoy greater peace of mind.

Request Your Free Solar Quote Today!

Discover how Option One Solar’s commitment to quality, customization, and customer satisfaction can transform your energy future. Call Option One Solar today at (855) 502-6363 to schedule your free quote and start the journey to savings today!

References

• California Public Utilities Commission (CPUC). Official website for energy policy and rate decisions. www.cpuc.ca.gov

• Southern California Edison (SCE). Official information on rates, tariffs, and energy programs. www.sce.com

• U.S. Department of Energy. Information on the Federal Investment Tax Credit (ITC). www.energy.gov