Supreme Court Orders Reconsideration of NEM 3 Policy

In a unanimous decision on August 7, 2025, the California Supreme Court directed the Court of Appeal to reassess the legality of the state’s controversial NEM 3.0 policy—marking a pivotal moment in the fight for fair solar compensation‍.

Previously, the lower court had upheld solar export rate cuts without sufficiently considering the broader benefits rooftop solar brings to the grid, communities, and the environment—a move the Supreme Court found overly deferential ‍. Now, regulators must justify whether those cuts align with California law and don’t unfairly disadvantage solar homeowners.

It’s important to note that NEM 3.0 remains in effect for now—even as the appeals process unfolds:

What Changed Under NEM 3.0—and Why This Ruling Matters

Under NEM 1.0 and 2.0, homeowners received retail-rate credit—matching what utilities charged—for sending excess energy back to the grid. But NEM 3.0 replaced that with an "avoided cost" model: credits dropped by roughly 75–80%, based solely on what utilities save—rather than retail value—sparking widespread backlash.

This policy shift made rooftop solar significantly less lucrative, adding around $63 per month to the typical homeowner’s electricity bill—a potential loss of up to $20,000 in lifetime savings. The fallout was immediate: solar demand plummeted by 80%, many local companies shut down, and an estimated 17,000 solar jobs vanished.

In light of these developments, environmental groups including the Environmental Working Group, Center for Biological Diversity, and Protect Our Communities Foundation spearheaded litigation that has now reached a hopeful turning point.

Why This Legal Reversal Matters to You

This ruling sends a strong message: regulatory bodies like the CPUC are not immune from judicial scrutiny. The appeal must now consider whether NEM 3.0 lawfully disregards solar’s full value, including benefits to disadvantaged communities, grid resilience, and environmental goals.

Although solar customers are still under NEM 3.0, the court’s decision opens a pathway for more equitable solar compensation—and potentially restores stronger incentives for rooftop solar installations across California.

What’s Next?

• Court Proceedings: The Court of Appeal will hold a complete review—potentially in the next few months—to determine whether NEM 3.0 policies align with legal and statutory requirements.
• Policy Implications: The outcome could reshape how solar exports are credited and influence future statewide solar policy.
• Homeowner Impact: For those who installed under NEM 1 or 2, your favorable rate remains locked in for the original contract duration—even beyond 2040. New solar adopters may see improved credit rates if the appeal rules against NEM 3.0.

The Bottom Line

While NEM 3.0 stays in effect for now, California’s rooftop solar market just received a massive boost of hope. The Supreme Court is ensuring regulators uphold transparency, fairness, and legal accountability.

How US Power Can Help You Take Action Now

At US Power, we believe solar makes sense—now more than ever:

• Expert Guidance Through Uncertainty
  Our team keeps a close watch on policy updates like NEM 3.0. Whether waiting for court outcomes or acting now under current incentives, we’re here to help you make smart, strategic choices.
• Customized, Zero Down Solar Solutions
  We design systems tailored to your home's energy needs and budget—many of our clients can start with no upfront cost and benefit immediately from solar savings.
• Maximize Federal Tax Incentives
  With the 30% federal solar tax credit set to expire at the end of 2025, the clock is ticking. US Power helps you lock in these savings before the deadline.
• Future-Proof with Battery Integration
  Storage paired with solar can help you get the most from your system, especially if NEM 3.0 remains but is eventually revised. We offer seamless solar + battery packages.
• Local Reputation You Can Trust
  Proudly serving Southern California, US Power in partnership with QCells for high-quality, U.S.-made panels—and thousands of homeowners trust us to deliver value, reliability, and peace of mind.

Ready to Shine with Solar?

Don’t wait for policy clarity—take control of your energy future today:

1. Contact US Power for a FREE consultation to explore your solar options.
2. Secure current federal tax credits before they expire.
3. Stay informed: we’ll keep you updated as NEM 3.0 legal developments unfold.
4. Make a smart move now, and potentially reap benefits both under current programs and future revisions.

With the sun on your side and US Power by your side, there’s never been a better time to go solar.