Net Metering's Evolution: States to Monitor in 2026
U.S. states continue to adjust net metering policies, which determine compensation for excess solar energy fed back to the grid. These revisions influence residential and commercial solar installations, with analysts projecting impacts on over 14 gigawatts of distributed capacity. Developers, installers, and investors face the need to recalibrate strategies amid varying state approaches.
California's Pioneering Shift to Net Billing
California leads with its transition from net metering to net billing, where export credits align with wholesale rather than retail rates. This change, implemented recently, has led to a more than 40 percent drop in new residential solar applications, based on data from the California Public Utilities Commission. The policy encourages pairing solar panels with batteries to optimize energy use and reduce reliance on grid exports.
John Berger, chief executive officer of Sunnova Energy International, described the impact as a temporary slowdown that boosts demand for storage solutions. Customers now view batteries as vital components for maintaining savings under the new framework. Installers respond by prioritizing bundled systems that enhance self-consumption and financial returns.
Arizona and Nevada Adjust Export Compensation
Regulators in Arizona and Nevada examine updates to how solar customers earn credits for surplus power. These states already shifted from full retail net metering to value-of-solar tariffs, which base payments on utility avoided costs. Further reductions could extend payback periods for homeowners, potentially beyond 12 years if rates dip below 5 cents per kilowatt-hour, per Wood Mackenzie analysis.
Utilities such as NV Energy and Arizona Public Service advocate for these adjustments to avoid burdening non-solar ratepayers with higher bills. The Solar Energy Industries Association counters that lower valuations hinder investment in clean energy. Stakeholders must balance equitable pricing with incentives that drive solar growth in the Southwest.
Southeast States Consider Time-of-Use Transitions
North Carolina, South Carolina, and Florida explore gradual reforms tying export credits to time-of-use rates, rewarding energy production during peak grid demand. This strategy aligns individual solar output with broader system requirements, fostering more efficient energy distribution. Regulators aim to implement changes without abrupt disruptions to market momentum.
Duke Energy spokesperson Catherine Butler emphasized the value of predictable reforms. The company favors phased approaches that sustain customer trust while adapting to grid realities. Installers in these regions prepare by modeling projects around peak-hour generation to preserve economic viability.
Midwest Introduces Fixed Charges for Solar Owners
Utilities in Michigan, Wisconsin, and Indiana propose fixed monthly fees for solar system owners to recover revenues lost from reduced grid sales. These mechanisms target the growth of distributed solar, with proposals suggesting charges exceeding 20 dollars per month. Such fees could diminish annual savings by up to 15 percent for a standard 6-kilowatt system, according to National Renewable Energy Laboratory findings.
Local advocates, including Laura Sherman, president of the Michigan Energy Innovation Business Council, argue these policies undermine state renewable goals. They call for rate designs that promote rather than deter participation. Installers in emerging Midwest markets focus on educating customers about long-term benefits despite added costs.
Navigating Policy Uncertainty in Supply Chains
Inconsistent state rules challenge equipment suppliers and project developers with unpredictable demand. Mounting system providers adjust inventories as installers pause amid regulatory deliberations. Inverter and tracker manufacturers align production with regional trends to minimize excess stock.
Lenders tighten criteria for solar financing, factoring in longer payback horizons and diminished export values. Homeowners in transition zones may encounter higher interest rates or reduced loan amounts. Financial advisors recommend early applications to secure favorable terms before broader market adjustments.
Strategies for Solar Industry Adaptation
Engineering, procurement, and construction firms diversify into energy storage and EV charging to bolster revenue streams. These additions complement solar installations, improving overall system performance under revised policies. Manufacturers innovate with hybrid solutions that ease deployment and enhance value in net billing environments.
By 2026, dynamic pricing will dominate, prioritizing exports during high-demand periods and self-use otherwise. Industry leaders emphasize agile planning and comprehensive energy solutions. Professionals who integrate forecasting tools and customer education position themselves for sustained success in evolving markets.