August 16, 2025
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:
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.
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.
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.
At US Power, we believe solar makes sense—now more than ever:
Don’t wait for policy clarity—take control of your energy future today:
With the sun on your side and US Power by your side, there’s never been a better time to go solar.
Solar and Roofing Consultant
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