Why This Is a Genuinely Hard Call Right Now
In some parts of California, this is an easy question — big utility rebates make heat pumps a clear win. In PG&E territory, it's not so simple. PG&E's own heat pump rebate is small, around $250–$500. And solar lost some of its shine when NEM 3.0 replaced the old export-payment rules, which now pay much less for power you send back to the grid. Neither option is a slam dunk. Here's how to actually decide.
Questions to Ask Yourself
1. How old and how broken is your current furnace?
If your gas furnace is dying or already dead, that decision is partly made for you — you need heating now. A heat pump replacing a dead furnace is an easier call than a heat pump replacing a furnace with 10 good years left.
2. Is your roof actually good for solar?
Shading, roof age, and orientation all matter. If your roof needs replacing in the next few years anyway, or gets significant shade, solar's payback period stretches out — sometimes past the point where NEM 3.0's lower export rate makes sense.
3. Do you want backup power?
If outages matter to you, solar paired with a battery is really a different product than solar alone — it's about resilience, not just bill savings. That changes the math in solar's favor even under NEM 3.0.
4. Which one do BayREN and income-qualified programs help with more?
Check BayREN's incentive finder for your specific address — sometimes one side of the decision has meaningfully better funding available than the other in a given year.
A Reasonable Default
If your furnace is aging but functional and your roof is solid, many Bay Area homeowners are better served starting with the heat pump (lower upfront cost, replaces a system you'll need to replace eventually anyway) and revisiting solar once NEM 3.0 economics are clearer or panel prices drop further. But this isn't universal advice — run your own numbers with a local contractor before deciding.
Full PG&E/BayREN process: PG&E Pre-Approval Guide. Local pages: Berkeley, Bay Area hub.