California Supreme Court Rules: Solar Credits Get a Second Chance

EnergyClean TechPolicy & California NewsPolicy & Market UncertaintyFor Homeowners
Written By Katrina Kramer
California home with solar panels under bright sunlight, representing the impact of the California Supreme Court’s NEM 3.0 decision.

A California home with rooftop solar — the future of clean energy is back in the spotlight after a major court ruling.

What the California Supreme Court Just Did — and Why It Matters for Your Solar Savings

California’s solar scene got a surprising boost on August 7, 2025, when the state’s highest court told the appeals court to take one more look—this time with sharper eyes—at the Public Utilities Commission’s 2022 decision to slash net-metering credits. Nobody declared victory just yet, but the sun’s rays of hope are brighter for rooftop solar fans.

Here’s the twist: prior net-metering programs (NEM 1.0 and 2.0) paid homeowners the full retail rate for sending unused solar energy back to the grid. Starting in mid-April 2023, the NEM 3.0 regime slashed that to about 25% of the value—only the “avoided cost” that utilities saved, not the full retail rate. That change caused solar installations to tumble—requests dropped more than 80%, and thousands of solar-industry jobs vanished.

Environmental groups—including the Environmental Working Group, Center for Biological Diversity, and Protect Our Communities Foundation—filed suit. They argued the CPUC bypassed state law that requires courts to treat its decisions with the same scrutiny as those of other agencies.

In a unanimous ruling, the Supreme Court said the appeals court was too cozy with the CPUC’s decisions. Instead of deferring to the Commission, courts must now apply what’s called de novo review—meaning they independently examine whether regulators stuck to law and fair reasoning.

The ruling doesn’t change NEM 3.0 yet—but it sets the stage for lower courts to revisit whether the CPUC overstepped when it sliced solar credits.

Why it matters for homeowners

  • Could tilt the scales back toward fairer compensation for solar users—possibly recapturing thousands in lifetime savings lost under NEM 3.0.

  • Reaffirms that regulatory bodies must still answer to the law—not operate in a murky “deferential” zone.

Homeowner Action Checklist

  1. If you already have solar under NEM 1.0 or 2.0

    • No immediate change—your grandfathered terms remain.

    • Keep an eye on policy updates; any future rollback could impact you once your lock-in period ends.

  2. If you installed under NEM 3.0

    • Monitor your bill and credits closely.

    • If the ruling changes credit values, your savings could improve without any system changes.

  3. If you’re considering solar now

    • Don’t wait for the court process to finish—it could take months or more.

    • Get a system designed for high self-consumption to maximize value under current rules, with potential upside if credits improve.

  4. Stay informed

    • Sign up for Viva Energy updates to get plain-English breakdowns of policy changes.

    • Follow credible sources—not just social media rumors.

  5. Plan for flexibility

    • Choose equipment and financing options that allow for future expansion or battery add-ons.

    • This keeps your system adaptable to both policy changes and your household’s energy needs.

Ready to see what solar can do for your home? Get a custom design and savings estimate from Viva Energy today.

References

This article was drafted with the assistance of AI and reviewed by the Viva Energy team for accuracy and clarity. If you spot an error or have a suggestion, please let us know at vivainsider@gmail.com.
Katrina Kramer
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