The California Public Utilities Commission’s Net Energy Metering (NEM) program is one of the main rooftop solar incentive programs in the state, with over 1 million households enrolled. It allows households that go solar to substantially reduce their monthly power bills by compensating them for electricity their solar systems generate.

NEM provides a financial incentive tied to the full, retail electric rate. Critical state programs, such as new electric transmission lines and wildfire mitigation activities, are funded through retail rates. Since NEM customers are effectively able to avoid paying for these programs, customers without rooftop solar pay higher rates to compensate for the gap in funding.

In December 2022, the CPUC made numerous updates to the program. The changes were made primarily to address the program’s growing costs, encourage more paired solar systems with batteries, and drive more installations at low-income households.


In under a decade, rooftop solar has become a large share of California’s electric generation capacity. Driven by California’s climate and energy policies, rooftop solar installations will continue to grow for the foreseeable future. As annual rooftop solar growth has increased more than 30-fold since 2006 with minimal NEM incentive structure changes, its cost impact has also increased. The average customer without rooftop solar pays 10 to 20% on their electricity bills to subsidize rooftop solar on the homes of others.

We support updates to the program that provide incentives for households to pair solar with battery storage, while reducing the growing costs of the program on nonparticipants. These include:

  1. Ramping down incentives for legacy systems that have been paid off;

  2. Regularly recalibrating incentives to account for market changes and grid needs; and

  3. Applying “income-based fixed charges” to customers based on annual income.




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