Why utilities are rewriting the rules now
Utility commissions and power companies have spent the last several years arguing that traditional net metering shifted costs onto customers without solar. The California Public Utilities Commission argued that the old NEM structure forced non-solar customers to subsidize the grid maintenance costs of solar owners. That argument has since been echoed in states from North Carolina to Virginia, where utilities say solar households pay less toward maintaining the wires and substations everyone still relies on.
The pushback has produced a genuine wave of change. As of 2026, roughly a third of U.S. states have reduced, replaced, or are actively revising traditional one-to-one retail net metering. Some of these shifts are gradual rate tweaks; others, like California’s overhaul, arrived almost overnight and reshaped the entire economics of going solar.
California’s net billing tariff and the 75 percent cut
No state illustrates the shift better than California. NEM 3.0, officially California’s Net Billing Tariff, was approved by the California Public Utilities Commission on December 15, 2022, and took effect April 15, 2023. Credits fell about 75 percent, from near-retail rates to an hourly avoided cost.
The dollar figures make the shift tangible. Export credit fell roughly 75%: from about $0.30 per kWh under NEM 2.0 (near retail) to an average of about $0.05–$0.08 per kWh under NEM 3.0, while the power you import still costs $0.30–$0.55 per kWh at peak. It’s a wide gap, and it’s why the value of exporting midday solar has quietly collapsed even as the value of using that same electricity inside your own home hasn’t changed at all.
What legacy solar owners actually keep
If you installed panels before the cutoff, the good news is that you likely didn’t lose anything. NEM 2.0 closed to new applications on April 14, 2023, but if you already have NEM 2.0, you are grandfathered for 20 years from your interconnection date. That grandfathering has become the dividing line in the California solar market, separating households on old, generous terms from everyone who signs up now.
Timing matters more than most people realize, too. Your tariff is set by when your interconnection application was submitted, not when the system was installed. A similar grandfathering logic is showing up elsewhere: in North Carolina, homeowners who install solar before the end of 2026 may still qualify for Duke Energy’s Net Metering Bridge Rider and lock in that billing structure for up to 15 years.
Other states are following California’s playbook
California was first, but it isn’t alone anymore. A second group, led by California, Arizona, and Utah, has transitioned to net billing or reduced-export frameworks. Meanwhile a third group, exemplified by Texas and Illinois, operates hybrid structures where compensation depends on the specific utility or, in Texas’s deregulated market, on the retail electric provider a homeowner has contracted with.
Virginia offers a live example of a decision still unfolding. Virginia’s net metering rules are on the verge of their biggest change in years, with the State Corporation Commission required to issue a ruling by May 1, 2026, on Dominion Energy’s proposal to cut the value of solar credits for new customers. Pennsylvania has its own version brewing, with PPL tariff changes proposed for July 2026, and installing solar before that change is strongly recommended for current PPL customers.
New fixed fees are showing up on solar bills
Export rates aren’t the only thing changing. Some utilities have added or increased flat monthly charges aimed specifically at solar households. In Florida, utilities can petition for higher monthly base charges for net metering customers, and Orlando Utilities Commission has implemented fixed charges of $5-15/month based on peak usage starting in early 2026.
Arizona has taken a different approach, tying the fee to how much power a household draws rather than a flat number. Arizona: APS charges a demand-based fee for solar customers that can effectively raise the cost of ownership even when export credits themselves stay steady. These charges are smaller line items than the export rate cuts, but they add up over a year and they rarely get reversed once approved.
Time-of-use pricing has become the default
Another quiet shift is that new solar customers in many territories no longer get a choice about rate structure. Time-of-use plans became mandatory, meaning new solar customers must enroll in rate plans with rates that swing from roughly $0.10/kWh at off-peak hours to $0.55 or more during peak summer evenings. That spread isn’t accidental.
Utilities designed it this way on purpose. The wide spread is intentional; it pushes people to store solar and discharge it at 6–9 PM rather than export it at noon. If your bill has gotten more complicated to read lately, with different rates depending on the hour and season, that’s the mechanism at work, and it rewards people who can shift when they use power just as much as how much they use.
Batteries have gone from nice-to-have to essential
The clearest behavioral shift among solar owners has been the rush toward battery storage. Despite initial industry disruption with 17,000 job cuts, battery attachment rates have surged from 11% to over 50% by 2024, demonstrating successful market adaptation to NEM 3.0’s economics. By 2026 that trend has only deepened.
The reasoning is straightforward once you see the numbers side by side. Pairing solar with battery storage is now essential, cutting payback to roughly 7–9 years versus 9–13 for solar alone, because a battery lets you use your power in the expensive evening hours instead of selling it cheap at midday. Storing your own excess electricity and using it later, rather than selling it to the grid for pennies, has simply become the better math for most new installations.
The federal tax credit disappearing adds another layer
Utility rule changes aren’t happening in isolation. The federal picture changed too: the 30% residential tax credit expired at the end of 2025 for homeowners who buy. That removes a subsidy that had softened the blow of any state-level rate cuts for the better part of a decade.
The combined effect is real, though not necessarily fatal to the case for solar. The math is genuinely tighter than it was under NEM 2.0, especially since the federal 30% tax credit also expired at the end of 2025, but the case is still positive over a 25-year system lifetime. It just means the calculation now depends more heavily on local utility rules than it used to, since there’s no longer a flat federal cushion evening things out nationwide.
What happens if you sell a home with solar panels
New rules have also complicated something that used to be simple: selling your house. Net metering credits are tied to the meter, not the customer, so if you sell your home with solar panels, the new owner inherits the net metering arrangement, and any accumulated credits at the time of sale are typically forfeited. That detail catches a lot of sellers off guard when they assume banked credits transfer like a gift card.
In California specifically, the rules have tightened further for anyone selling a home under the newer tariff. Under 2026 rules, NEM 3.0 also applies to home sales, ending the transferability of grandfathered rates to new owners. If you’re weighing a sale, it’s worth checking with your utility directly, since some utilities allow credit transfer as part of a property sale, so it pays to check with your specific utility.
Battery-sharing programs offer a partial offset
Not every recent development has cut against solar owners. A handful of states are experimenting with programs that pay households for the flexibility their batteries provide, rather than just the electrons they export. Progressive states are launching virtual power plant programmes that compensate battery-owning households for exporting power during grid emergencies, creating a new revenue stream that partially offsets lower export credits.
These programs vary widely in payout and enrollment terms, and they’re not available everywhere yet. In parts of the Northeast, battery storage and ConnectedSolutions ($225-275/kW/year) are emerging as net metering alternatives in states with declining credits. It’s a smaller and more regional trend than the export rate cuts, but it’s worth asking your utility about directly if you already own a battery or are thinking about adding one.
