Residential Solar Net Metering Policies in the United States: Navigating the Transition to a Sustainable Future

By Griffen Dayton

In the quest for a cleaner, more sustainable future, residential solar power stands out as a beacon of potential. Net metering has played a pivotal role in the adoption of rooftop solar panels by homeowners across the United States and across the world. Net metering allows homeowners to send excess electricity generated by their personal solar panels back to the grid in exchange for credits, effectively lowering their utility bills and contributing to the energy system’s supply of renewably generated energy.1 However, this incentive is currently under significant scrutiny and change across many different states, posing both challenges and opportunities for the future of solar energy.

States such as Arizona, California, North Carolina, Arkansas, and many more, have initiated rollbacks or alterations to their net metering schemes.2 For instance, Arizona’s utility regulators have reopened discussions on the “value of solar,” with intentions to modify the rates utilities pay solar customers for excess power.3 Utilities argue that the power generated by residential solar cannot be valued at the same rate that utilities sell for – one reason being that the cost of transmission maintenance and improvement is “baked” into electricity costs.4 This move reflects a broader national conversation about the sustainability of net metering as a compensation model, where concerns about cost shifts to non-solar customers are growing.

In addition, California has significantly reduced its net metering rates, affecting the solar industry’s growth trajectory.5These changes come at a critical time when the federal government, through initiatives like the Inflation Reduction Act, offers substantial tax credits for solar installations, aiming to encourage the uptake of renewable energy sources. Policymakers in California were intending to encourage residents to store excess energy in large batteries for use during peak grid stress, as opposed to selling excess energy back to the grid.6

The modification of net metering policies raises concerns about the viability and attractiveness of future residential solar investments. Critics argue that reducing compensation for solar energy fed back into the grid could discourage homeowners from adopting solar power, potentially derailing progress toward renewable energy goals.7 The National Academy of Sciences has reported the downturn in new solar installations following alterations to net metering policies. This phenomenon highlights the delicate balance between fostering renewable energy adoption and ensuring the economic stability of the energy grid.8 “As the industry started growing, utilities realized their customers were becoming their competitors,” said Sean Gallagher, senior vice president of policy for the Solar Energy Industries Association (SEIA). “When customers generate their power, utilities have less revenue and less opportunity for investment.”9

The evolving debate around net metering policies necessitates a thoughtful, balanced approach that considers the interests of all stakeholders involved.

One recommendation is to develop alternative incentive programs to replace and/or supplement net metering policies on a federal level. These might include upfront rebates, tax credits, or performance-based incentives that pay homeowners for the electricity their solar panels produce. This plan would forward the Department of Energy’s goal to have a carbon-free grid by 203510 without undermining utility financial structures. A similar example of this solution in another context is the $7,500 tax credit offered by the IRS to qualifying buyers of new, electric vehicles.11

Next, Value of Solar (VOS) tariffs stand out as a balanced solution for both homeowners and utilities. Unlike traditional net metering, VOS tariffs aim to accurately reflect the true value of the electricity that residential solar systems contribute to the grid; this includes environmental benefits, reduced transmission costs, and enhanced grid resilience.12 This strategy not only encourages the adoption of rooftop solar but also supports utilities in integrating solar power into their energy mix in a sustainable and economically viable way. California is an early adopter of VOS tariffs with their own “Net Billing Tariff” (NBT),13 and other states should consider following their lead.

Additionally, fostering the development of community solar projects could serve as an equitable alternative to individual rooftop solar installations. This strategy would particularly benefit those who cannot install solar panels due to financial constraints or unsuitable rooftop geometry.14 Community solar allows multiple individuals to invest in or subscribe to a solar project located offsite, democratizing access to solar energy and its benefits.

As the United States strides towards a carbon-free grid by 2035,15 the recalibration of net metering policies emerges as an important piece of the puzzle in the broader energy transition narrative. By embracing technological advancements, equitable policy frameworks, and community-centric solutions, the future of residential solar energy can shine brightly, contributing significantly to our domestic environmental goals. The journey towards sustainable energy is not simple. However, with thoughtful policy adjustments and a commitment to innovation, the path forward can lead to a more resilient, equitable, economical, and renewable energy landscape.

  1. “Net Metering.” Solar Energy Industry Association,,home%20uses%20during%20daylight%20hours. Accessed 22 Mar. 2024. 
  2. Plautz, Jason. “State Rooftop Solar Crackdowns Cloud the Industry’s Future.” E&E News by POLITICO, 1 Nov. 2023,
  3. Meiners, Joan. “Corporation Commission Reopens ‘value of Solar’ Rate Discussions despite Strong Opposition.” The Arizona Republic, Arizona Republic, 12 Oct. 2023,
  4. “What Is Net Metering & Why Is It Controversial?” ENGIE Impact, 2024, 
  5. Hooker, Brad. “After Leading the Nation in On-Farm Solar, California Rolls Back Incentives.” AgriPulse Communications Inc RSS, Agri-Pulse Communications, Inc., 8 Jan. 2024,
  6. Plautz, Jason. “State Rooftop Solar Crackdowns Cloud the Industry’s Future.” E&E News by POLITICO, 1 Nov. 2023,
  7. Plautz, Jason. “State Rooftop Solar Crackdowns Cloud the Industry’s Future.” E&E News by POLITICO, 1 Nov. 2023, cloud-the-industrys-future/. 
  8. Nationalacademies.Org, Jan. 2024,
  9. Plautz, Jason. “State Rooftop Solar Crackdowns Cloud the Industry’s Future.” E&E News by POLITICO, 1 Nov. 2023,
  10. “On the Path to 100% Clean Electricity.” United States Department of Energy, May 2023, – 100% Clean Electricity – Final.pdf. 
  11. “New and Used Clean Vehicle Tax Credits.” Energy.Gov, 2024, 
  12. “Value of Solar Tariffs.” National Renewable Energy Laboratory, Oct. 2014, 
  13. “Net Billing Tariff.” California Public Utilities Commission, 2023,
  14. “Community Solar.” National Renewable Energy Laboratory,,solar%20photovoltaic%20(PV)%20system. Accessed 22 Mar. 2024. 
  15. “On the Path to 100% Clean Electricity.” United States Department of Energy, May 2023, – 100% Clean Electricity – Final.pdf.

3 thoughts on “Residential Solar Net Metering Policies in the United States: Navigating the Transition to a Sustainable Future

  1. Griffen, your analysis of the changing landscape of net metering policies and their impact on residential solar energy adoption does a great job of highlighting the complexity of transitioning towards a sustainable energy future. As many states are struggling with modifications to net metering schemes, the debate surrounding fair compensation for solar energy fed back into the grid becomes even more applicable. I think your exploration of alternative incentive programs, such as upfront rebates and performance-based incentives, offers useful insights into potential pathways for incentivizing solar investment while ensuring grid stability. Also, your advocacy for VOS tariffs and community solar projects presents optimistic approaches for balancing interests of both homeowners and utilities while empowering access to renewable resources. Your push for a strategy incorporating innovation and fairness not only stresses the need for teamwork but also shows us how we can approach the challenges of moving towards a carbon-free grid.

  2. Thanks for sharing this, Griffen! Super interesting! I love the point you made about individuals who are interested in using solar energy sources but are not able to due to financial strain or the physical structure of their homes or office buildings. To ensure equitable distribution, those unable to make the initial investment should be given this option of subscribing to a solar project elsewhere.

    A movement towards net metering would lead to more solar energy demand and more jobs for manufacturers, electricians, and panel installers (1). Depending on how these jobs are given monetary value, a cost-benefit analysis could help determine if investments in solar are worthwhile despite those who continue to use nonrenewable energy sources being burdened with higher utility costs. Although I’m not too familiar with the energy sector, it seems like sharing energy reserves would benefit the greater good — it might just be a matter of conducting research to discover ways to equitably distribute both the costs and savings associated with net metering.


  3. Hey Griffen, I thought your analysis of residential solar energy and the challenges surrounding net metering policies is both insightful and thought-provoking. Specifically, the examples you’ve provided, specifically in Arizona and California, highlight the complexities of balancing the interests of homeowners, utilities, and broader environmental goals. Your recommendations offer a nuanced approach to addressing these challenges. Developing alternative incentive programs, such as upfront rebates or performance-based incentives, could provide a more flexible and equitable means of encouraging solar adoption without unduly burdening utilities. Moreover, the concept of Value of Solar (VOS) tariffs will accurately valuing the contributions of residential solar systems to the grid. By enabling broader participation in solar energy initiatives, particularly among underserved communities, we can ensure that the benefits of clean energy are shared equitably across society.

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