Net energy metering (NEM) is the mechanism that determines how much a utility pays a solar homeowner for electricity exported to the grid. For homes sold in California, Arizona, Nevada, Hawaii, and a growing list of other states, the NEM rate a seller enjoys may not be the NEM rate the buyer receives — and that difference can make or break the financial case for owning the solar system at all. This article explains how NEM transfer works, where it fails, and what real estate professionals need to disclose to their clients.
What net energy metering is
When a solar system produces more electricity than a home uses in a given hour, the excess goes to the grid. Net energy metering determines what credit the homeowner receives for that export. Under legacy NEM programs, the credit was roughly equal to the retail electricity rate — meaning exported solar was worth approximately what the homeowner would have paid to buy that electricity from the utility.
Under current NEM programs (NEM 3.0 in California, updated rates in Arizona and Nevada), the export credit has been dramatically reduced. In California, the move to NEM 3.0 in 2023 reduced export credits by approximately 75% for most customers. A solar homeowner who received $0.30/kWh for exported electricity under NEM 2.0 now receives roughly $0.08/kWh for the same export under NEM 3.0.
This changes the financial model of solar ownership significantly. A system that paid back its cost in 7 years under NEM 2.0 may take 12–15 years under NEM 3.0 — and that's if the buyer can retain the legacy rate. If they can't, the economics may not work at all without a battery to self-consume the solar instead of exporting it.
Grandfathering: the key concept
Most states that changed their NEM rates grandfathered existing solar customers into the legacy rate for a period of time. A California homeowner who interconnected under NEM 2.0 before April 2023 is grandfathered into NEM 2.0 rates for up to 20 years from their interconnection date — not the sale date, not the buyer's name change date, but the original interconnection date.
The question for real estate is whether that grandfathering transfers to the buyer. The answer varies by state and utility, and in California specifically, it's conditional — the buyer gets the remaining years of the seller's grandfathering period only if the transfer is properly executed and certain conditions are met.
Selling? The step-by-step for owned, loan, lease, PPA and PACE systems, with who to call at each solar company, is in selling a house with solar panels: the seller's guide.
State-by-state NEM transfer rules
| State / Utility | Legacy NEM transfers? | Notes |
|---|---|---|
| California (IOUs) | Yes, for the rest of the 20-year legacy period | Legacy NEM 1.0 and 2.0 run 20 years from the system's original interconnection and do not end on a sale if the system stays at the property (PG&E Schedule NEM2, Special Condition 8.a; SCE and SDG&E follow the same 20-year rule). A 2025 bill, AB 942, would have moved buyers to the current tariff; that provision was removed in the Senate in July 2025 (see below). |
| Arizona (APS) | Yes, if the rate plan is kept | APS grandfathering runs 20 years from interconnection and stays with the home and its rate plan. A buyer who picks a different APS rate plan when starting service gives it up. For new systems, the export rate for interconnection requests after 2026-09-01 is about 5.55 cents per kWh, the seventh straight 10 percent annual cut; existing customers keep the rate in effect at their application for 10 years from interconnection. Arizona guide. |
| Arizona (SRP) | Varies by plan | SRP has plan-specific transfer rules. Contact SRP directly with the account number. |
| Nevada (NV Energy) | Transfers for current term | NEM grandfathering transfers with the property but has a defined end date. Buyer inherits remaining term only. |
| Hawaii (HECO) | Closed to new enrollment; verify transfer | Hawaiian Electric said in 2024 that legacy NEM and NEM Plus customers need no changes; Customer Grid Supply and Smart Export customers move to Smart Renewable Energy at the end of their 7-year term. Get the transfer answer from Hawaiian Electric in writing for the specific account. |
| Virginia (Dominion) | Yes | On 2026-04-30 the SCC rejected the core of Dominion's NEM 2.0 request: 1:1 kWh netting stays and existing customers are grandfathered. The changes apply only to customers who are not low-income and who connect a new or modified system after the implementation date, the first of the month at least 12 months after the order (about May 2027): a $1 monthly administrative charge and year-end excess paid at about 5.8 cents per kWh. The proposed $100 to $750 application fee was rejected (SCC case PUR-2025-00079). |
| North Carolina (Duke) | Depends on the rider | Duke Energy's Net Metering Bridge rider closes to new participants on 2027-01-01 and has a yearly capacity cap (38,700 kW AC for Duke Energy Carolinas and 43,500 kW AC for Duke Energy Progress in 2026). Customers keep it up to 15 calendar years from the date their interconnection application was submitted. Residential customers on the original Rider NM must move to the Bridge rider or another rider by 2027-01-01. Full guide. |
| Texas | Varies by utility | Texas has no statewide NEM mandate. Rules vary entirely by local utility and co-op. |
| Florida | Transfers | Florida's 2022 bill to phase down net metering was vetoed. The state change log we checked lists no statewide Florida change for 2026. Verify with the utility at the time of sale. |
Reviewed October 15, 2026. Tariff rules change. Always verify the specific utility's current policy, in writing, before representing NEM transfer status to a client.
What changed in 2026, and what is scheduled
- California AB 942. As introduced in 2025, it would have moved anyone who buys a home with legacy-NEM solar onto the current net billing tariff. The Senate Energy Committee removed that provision in July 2025, so legacy agreements still pass to buyers. The bill was last re-referred on 2025-08-29 and, as of the LegiScan record we checked, was not enacted. Expect the idea to come back; watch any 2027 bill that mentions Public Utilities Code 2827.
- Arizona. The export rate for new APS and UNS interconnection requests fell 10 percent on 2026-09-01. Arizona caps the annual cut at 10 percent, and it has been cut every year since 2018. Tucson Electric Power's rate follows on its own annual cycle.
- Virginia. Dominion's request to cut compensation was largely rejected on 2026-04-30. Appalachian Power's net metering was preserved in 2025.
- North Carolina. Duke's Net Metering Bridge rider closes to new participants on 2027-01-01, and Rider NM customers must switch riders by then. Expect heavy door-to-door selling in Duke territory through December. Duke guide.
- Federal. The 30 percent homeowner tax credit (25D) ended for expenditures after 2025-12-31. Leases and PPAs can still carry the business credit (48E) for systems that began construction by 2026-07-04 or are placed in service by 2027-12-31, which is why leases and PPAs dominate the pitch now.
Policy changes over time, by state: solar policy history. Full state-by-state schedule: net metering by state, 2026 changes and what is next. New solar sales laws by state: solar consumer protection laws, 2026.
Financial impact for buyers
The financial difference between inheriting legacy NEM and being placed on current rates can be substantial enough to change whether a buyer should value the solar system as an asset at all.
A 7 kW system in San Diego generating 10,500 kWh/year with 40% self-consumption and 60% export:
Under NEM 2.0 (legacy): 6,300 kWh exported at $0.30/kWh = $1,890/year in credits, plus $1,200 in avoided electricity costs = $3,090/year total value.
Under NEM 3.0 (current): 6,300 kWh exported at $0.08/kWh = $504/year in credits, plus $1,200 avoided = $1,704/year total value.
The annual value difference is $1,386 — or about $34,650 over the remaining 25-year system life. A seller who has been marketing the solar system as "saves $250/month on electricity" may be describing their experience under NEM 2.0. The buyer's experience under NEM 3.0 will be materially different.
This isn't fraud — it may be innocent — but it is a disclosure issue. Buyers should receive the utility account documentation showing the current rate plan and the actual 12-month export credit history, not an estimate from the seller.
Why a battery changes the calculus
A battery storage system changes the NEM math by enabling self-consumption of solar production instead of export. A home with a properly sized battery can self-consume 85–90% of its solar output, eliminating the export compensation problem almost entirely.
For buyers who cannot transfer the legacy NEM rate — or in markets like Hawaii where legacy NEM is unavailable — a battery retrofit often makes the solar system financially viable again. For agents representing buyers of solar homes in unfavorable NEM markets, the battery advisory is a meaningful service to offer.
What agents are required to disclose
Most state disclosure forms now include solar-specific questions about system ownership, lease status, and financing. NEM tariff status is less consistently required — but the general disclosure duty (material facts that affect value) almost certainly applies in any state where NEM rate changes materially affect the system's economics.
Best practice: request the seller's utility account documentation showing the current NEM tariff, rate plan designation, and the most recent 12 months of production and export credits. Provide this to the buyer as part of the disclosure package, not as a verbal representation.
If you don't know the seller's NEM status, ask. If the seller doesn't know, have them log into their utility account and pull the rate plan. In California, the PG&E, SCE, and SDG&E apps all display the NEM rate plan designation prominently.
Know the NEM tariff status on every solar listing
SolarDisclosure™ reports include NEM tariff status, export credit history, and the battery advisory — so your buyers know exactly what they're inheriting.
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