California Supreme Court Rewrites Solar Economics: What Bay Area Homeowners Need to Know

In a decision that could reshape the future of rooftop solar, the California Supreme Court ruled last week that recent cuts to Net Energy Metering (NEM-3) must undergo further legal review. This ruling has thrown open the possibility of reviving fair compensation for solar customers, giving Bay Area homeowners a renewed reason to consider solar + battery storage now.

What Is Net Energy Metering?

Net Energy Metering (NEM) is the policy that allows homeowners to send excess solar power back to the grid and receive credits on their electric bills.

Under NEM-2: Customers were credited at or near the full retail rate of electricity, making solar payback periods very attractive.
Under NEM-3 (implemented in 2023): Export credits were slashed by ~75%, drastically reducing the value of rooftop solar systems without paired batteries.

What the Supreme Court Ruled

On August 22, 2025, the California Supreme Court unanimously directed the lower courts to reconsider NEM-3, citing gaps in how consumer impacts and renewable energy goals were evaluated.

This ruling does not immediately overturn NEM-3, but it raises the real possibility of:

Restored compensation closer to retail rates.
A more balanced policy that encourages both solar and storage.

Why This Matters for Bay Area Homeowners

Faster Payback Periods: If NEM-3 is rolled back, solar systems could once again pay for themselves much more quickly.
Solar + Storage Advantage: With or without NEM changes, pairing solar with a battery system (like Enphase, FranklinWH, or Tesla Powerwall) ensures you use more of your own solar power, avoid peak utility rates, and gain resiliency during outages.
Tax Credits Still Ending Soon: The 30% Federal Solar Investment Tax Credit is still set to expire after 2025. Acting now secures these savings regardless of future policy changes.

How Ally Electric and Solar Inc. Can Help

At Ally Electric and Solar Inc. (Richmond, CA), we specialize in helping Bay Area families navigate policy shifts while delivering top-tier installations:

Certified installer for Tesla Powerwall, Enphase IQ Batteries, and FranklinWH aPower.
Assistance with NEM applications, permits, and utility interconnections.
Full service from system design to inspections and maintenance.
Local expertise for homeowners in Richmond, San Leandro, Contra Costa, and the greater Bay Area.