California Cuts Rooftop Solar Net Metering Compensation By Approximately 75% To 80%

California Court of Appeal Upholds PUC Ruling, Slashing Rooftop Solar Export Compensation by Approximately 75% to 80%

 

 

The California Court of Appeal has upheld the Public Utilities Commission's decision to drastically reduce the compensation paid to homes and businesses for the rooftop solar electricity they export to the grid. This ruling marks a major setback for rooftop solar advocates, who had sought to overturn the 2022 decision that significantly lowered compensation rates for solar power exports. The case was remanded to the Court of Appeal for reconsideration in August 2025, following a directive from the California Supreme Court.

 

The Court of Appeal's ruling affirms the "Net Billing Tariff" policy, which transitioned the market away from the previous NEM 2.0 framework and slashed compensation rates for exported electricity by approximately 75% to 80%. In its decision, the court validated the California Public Utilities Commission's assessment of the cost-effectiveness of distributed generation, finding that it satisfied the requirements of Assembly Bill 327 by adequately addressing the issue of "cost shifts" between solar and non-solar customers.

 

Petitioners leveled sharp criticism against the decision, noting that since the implementation of NEM 3.0 in April 2023, California's residential solar market has contracted significantly; industry data indicates a 60% to 80% decline in sales and the loss of over 17,000 jobs. For homeowners, the value proposition has increasingly shifted toward solar-plus-storage configurations, rather than standalone solar-only projects. Under NEM 3.0, because the "avoided cost" rates for exporting electricity to the grid are at historic lows, battery storage systems are now required to capture the full value of on-site power generation. Homeowners and businesses are increasingly exploring how does a battery energy storage system work, diving deeper into the lithium battery for 2c energy storage system market, weighing whether mechanical batteries the future of energy storage, and carefully analyzing the economics of battery energy storage-with innovative providers like BLOO POWER stepping up to deliver practical, high-performance solutions tailored to California's evolving energy landscape. The ruling solidifies the position of the state's three investor-owned utilities: Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E).