title: "Net Metering Under Pressure: 2026 State Policy Update" date: 2026-02-05 category: Policy tags: ["net metering", "net billing", "policy", "solar", "utility rates"] summary: "More states are transitioning from traditional net metering to net billing or value-of-solar tariffs. Here's what's changing."
Net Metering Under Pressure: 2026 Update
The policy landscape for rooftop solar compensation continues to shift. Several states moved away from one-for-one net metering in 2025, and more transitions are underway in 2026.
What's Changing
Traditional net metering credits solar exports at the full retail electricity rate — meaning every kWh you send to the grid offsets a kWh you'd otherwise buy. This simple mechanism has been the primary financial driver of residential solar growth.
Net billing (sometimes called "net metering 2.0" or "NEM 3.0") credits exports at a lower rate — typically the avoided cost or wholesale rate, which can be 50–75% less than retail.
State-by-State Status
States That Transitioned Away from Full Net Metering
| State | New Policy | Export Credit Rate | Effective Date | |-------|-----------|:-:|:-:| | California | NEM 3.0 (Net Billing Tariff) | ~$0.04–$0.08/kWh (varies by hour) | April 2023 | | Arkansas | Net Billing (Act 278) | ~$0.05/kWh (avoided cost) | 2023 | | Idaho | Customer generation rate | ~60% of retail | 2024 | | Louisiana | Net Billing | ~50% of retail | 2024 | | Hawaii | Customer Self-Supply / Grid Supply | $0.10–$0.15/kWh (varies by island) | 2015/2022 | | South Carolina | Solar Choice | Declining block rate | 2024 |
States Actively Considering Changes (2026)
| State | Proposed Change | Status | |-------|----------------|--------| | Arizona | APS/TEP rate case proposals for reduced export credits | Pending at ACC | | Indiana | Net metering phase-down for new customers | Legislation pending | | Nevada | Value-of-Solar tariff under study | PUC proceeding open | | North Carolina | Duke Energy proposal for reduced credits | Contested at NCUC | | Virginia | Review of net metering cap and rate structure | Stakeholder process |
States with Strong Net Metering Protections
| State | Protection | Notes | |-------|-----------|-------| | New Jersey | 1:1 net metering guaranteed through 2030 | Legislative protection | | Massachusetts | Net metering with SMART program credits | Strong solar policies | | New York | VDER (Value of DER) — transition but remains favorable | Monthly compensation based on multiple value components | | Maryland | Full retail net metering through 2028 | Protected by Clean Energy Act | | Connecticut | Transitioning but with consumer protections | Virtual NM for community solar | | Illinois | Full retail through CEJA | Strong legislative framework |
Impact on Solar Economics
California as a Case Study
California's NEM 3.0 reduced export credits by approximately 75%. The impact:
- Solar-only payback periods increased from 5–7 years to 8–12 years
- Battery attachment rates surged to over 80% of new installations
- System design shifted to maximize self-consumption (smaller systems with battery)
- Installation volume initially dropped 40–60% in the months after implementation, then recovered as the industry adapted
The Battery Imperative
In states with reduced export value, batteries become economically essential:
- Without battery: Export excess solar at low credit rate, import grid power at high retail rate during peak
- With battery: Store excess solar during the day, use it during evening peak — avoiding both low export credits and high peak rates
- The spread between export credit and peak retail rate determines the battery's value
What This Means for Homeowners
If You're in a State with Full Net Metering
- Install solar now. Many states grandfather existing systems under the current policy when changes occur. Being installed before a policy transition preserves favorable terms (typically for 20–25 years).
- You may not need a battery for financial reasons (though backup value exists).
If You're in a State with Net Billing
- Solar still makes economic sense but the system design matters more
- Right-size the system to match your consumption rather than maximizing generation
- Add battery storage to capture the value lost from reduced export credits
- Shift consumption to solar production hours (run dishwasher, laundry, EV charging during midday)
If You Have Existing Net Metering
- Check your grandfathering terms — how long are you protected?
- Plan ahead — if considering a battery or system expansion, understand how changes might affect expanded capacity
The Broader Trend
The industry consensus is that net metering as we know it will gradually be replaced nationwide. The question is not if, but when, and what replaces it. Time-varying export rates (like California's NEM 3.0), value-of-solar tariffs, and fixed monthly charges for grid-connected solar are all variants being considered.
The good news: solar + battery systems remain economically attractive even under reduced export compensation, because the primary value shifts from exporting excess to avoiding grid purchases during expensive periods.