Solar in California: how the rules work
How California credits the power solar panels send back to the grid, what homes there pay for electricity, and what to check when a home with solar is bought or sold.
How exported power is credited
Power sent to the grid is credited at an export rate well below retail, often tied to the utility’s avoided cost.
Systems applying on/after April 15, 2023 are on the Net Billing Tariff (NEM 3.0): exports are credited hourly at Avoided Cost Calculator values (roughly 5-8 cents/kWh midday vs ~35-45 cents retail), so the 0.2 is a rough average. NEM 1.0/2.0 systems applied for before April 15, 2023 keep retail netting for 20 years from interconnection; a state appeals court upheld the Net Billing Tariff on March 11, 2026; AB 942 (changing grandfathering on home sale) was narrowed and no enactment was found when the 2026 session ended Aug 31.
What changes for a home with solar
A savings estimate that assumes full retail credit for exported power overstates the value of that power for systems on the current rules. Power used in the home still offsets the full retail rate.
Older systems are often grandfathered on earlier, better terms for a set number of years. Which rules a particular system is on depends on its interconnection date, stated in the note above.
Electricity here costs about 33.3¢ per kWh (2026) and has risen about 7.0% a year over the last decade. A lease or PPA escalator above that pace makes the solar payment rise faster than utility rates have.
When a home with solar is sold in California
- Owned outright: proof it is paid off, the warranties, and the utility’s interconnection or net-metering agreement, which has to move into the buyer’s name.
- Loan: a payoff letter, and whether the buyer can assume the loan. Many solar loans are secured by a UCC-1 fixture filing that title will find.
- Lease or PPA: the transfer process and how long approval takes, the buyer’s credit check, the current payment or rate and its yearly increase, and a buyout quote.
- Every case: whether the export-credit terms above stay with the home after the sale, and the last 12 months of production from the monitoring app.
Have the solar contract for a California home?
Upload it and get a letter-graded report card: price, production, payment changes, value and transfer terms, measured against California’s rates and rules.
Grade a solar contractSources
- cali-energy.com/blog/nem-2-grandfathering-california (2026-08)
- www.pv-tech.org/california-solar-net-metering-bill-ab-942-moves-forward/ (2025)
- www.pv-magazine.com/2026/03/11/u-s-court-upholds-current-net-billing-mechanism-dealing-blo (2026-03-11)
- Electricity prices: EIA Electric Power Monthly, Table 5.6.B (2026) and EIA state annual averages 2014–2024
- Installed price: EnergySage marketplace, September 2026