Solar Energy Policy

Utility-scale solar and battery deployment continue to expand in California, while rooftop solar remains shaped by the NEM 3.0 compensation framework, financing conditions, and new state and federal policy changes.

Last updated: September 14, 2026

1. Executive overview

Solar remains a major source of California electricity, supported increasingly by battery storage that shifts daytime generation into evening hours. Utility-scale projects continue to move through state and local permitting, while solar generation has displaced a larger share of natural-gas generation during daylight periods.

Distributed solar is developing under a different set of conditions. The NEM 3.0 net-billing framework remains in effect after the conclusion of litigation challenging the CPUC decision, while the residential financing market continues to adjust. State legislation and federal trade policy are also affecting equipment, interconnection and project economics.

2. Current status

NEM 3.0 remains in effect — the California Supreme Court declined further review on June 10, 2026, ending the principal court challenge to the CPUC’s net-billing tariff.

SB 868 is awaiting gubernatorial action — the Legislature completed action on the portable solar bill in August, and it was presented to Gov. Gavin Newsom on August 31, 2026.

AB 1813 has advanced to the governor — the community solar and storage bill cleared the Senate at the end of August after earlier Assembly approval.

AB 2389 stalled in committee — the proposal to extend the property-tax exclusion for certain new customer-sited solar systems was held in the Assembly Appropriations Committee.

Utility-scale development continues — large solar and storage projects are moving through state and local permitting, while interconnection capacity, transmission availability and equipment costs remain important constraints.

Federal trade policy is raising project-cost questions — new tariffs and pending trade cases may affect the price and sourcing of solar components used in California projects.

3. Why it matters to California energy policy

Solar is central to California’s clean-electricity strategy, but utility-scale and customer-sited projects now face different policy conditions. Large projects depend on land-use approvals, transmission and interconnection, while rooftop economics depend heavily on retail rates, export compensation, financing and tax policy.

The rapid growth of battery storage is changing solar’s role on the grid. Storage can move daytime generation into evening hours and reduce curtailment, but additional solar and storage still require coordinated resource planning, sufficient interconnection capacity and market rules that value their contributions to reliability.

Customer costs remain a central policy question. NEM 3.0 was designed to reduce cost shifts associated with rooftop exports, while solar advocates argue that lower compensation has weakened installation economics and industry employment. Pending portable-solar and community-solar legislation would create additional participation options, particularly for renters and customers who cannot install conventional rooftop systems.

4. Timeline

From CPUC’s 2022 NEM 3.0 decision through this year’s California Supreme Court resolution, utility-scale approvals, and trade-policy shifts.

Dec 2022: CPUC adopts NEM 3.0 (the “net billing tariff”), cutting rooftop solar export compensation roughly 75–80% versus NEM 2.0; effective April 2023.
2023: Environmental Working Group, Center for Biological Diversity, and Protect Our Communities Foundation sue CPUC challenging NEM 3.0.
Mar 2025: California Court of Appeal (First Appellate District) upholds NEM 3.0, siding with CPUC.
Aug 2025 (approx.): California Supreme Court grants review and remands, finding the Court of Appeal gave CPUC too much deference under the Legislature’s 1998 guidance; a modest procedural win for solar advocates.
Jun 9, 2025: Sunnova Energy files for Chapter 11 bankruptcy, citing ~$10.67 billion in total debt; links its collapse partly to NEM 3.0’s effect on residential solar economics.
Jul 2025: EPA moves to terminate the $7 billion “Solar for All” program nationally, including California’s ~$250 million award.
Nov 12–14, 2025: Sunnova’s bankruptcy plan confirmed; sale to Solaris Assets LLC (~$118M) becomes effective November 14. Successor entity SunStrong Management begins operating the portfolio.
Nov 25, 2025: 18 California legislators send CPUC a letter demanding enforcement of Rule 21 interconnection timelines, citing compliance rates as low as 27%–45% on some process steps.
Jan 2026: A federal judge denies 22 states’ (including California’s) motion for a preliminary injunction to restore Solar for All funding; EPA commits not to repurpose funds until 2031 pending merits litigation.
Feb 2026: Wire reports confirm rooftop solar installers nationally, including in California, are cutting jobs and restructuring following expiration of the federal residential solar tax credit.
Mar 10, 2026: On remand, the Court of Appeal reaffirms its original ruling upholding NEM 3.0.
Mar 27, 2026: Kern County Board of Supervisors gives final approval to the Buttonbush Solar and Storage Project (~2 GW), described as the state’s largest proposed solar project.
Apr 2026: Advocacy coalition petitions the California Supreme Court a second time to review the reaffirmed NEM 3.0 ruling.
Apr 29, 2026: California Energy Commission approves the ~300 MW Soda Mountain Solar and Battery Storage Project in San Bernardino County, using AB 205 siting authority to override local opposition.
Apr 29, 2026: Gov. Newsom’s office announces completion of Project Nexus, the first solar-covered irrigation canal in California, in the Central Valley.
May 14, 2026: A coalition of U.S. solar manufacturers files an anti-circumvention petition alleging Ethiopian firms are finishing Chinese-origin solar components to evade existing tariffs.
May 20–22, 2026: SB 868, the “Plug and Play Solar Act,” passes the California Senate.
Jun 2026: Kern County Board of Supervisors approves the Discovery Solar and Storage Project (1.4 GW solar + 1,000 MW/8,000 MWh storage), expected to generate ~$44M in first-year property tax revenue.
Jun 10, 2026: California Supreme Court declines to hear the second NEM 3.0 appeal, ending the litigation; NEM 3.0 becomes permanent.
Jun 16, 2026: AB 1813, a community solar bill promising average subscriber savings of ~$200/year, passes the Senate Energy, Utilities & Communications Committee.
Jun 18, 2026: EIA and multiple outlets report solar generation exceeded natural gas generation on 82% of days in CAISO for the Jan–May 2026 period.
Aug 7, 2026 (approx.): President Trump signs a Section 232 order imposing a 15% tariff on polysilicon imports plus minimum price floors on ingots, wafers, cells, and modules, effective December 4, 2026.
Aug 2026: CEC announces California has surpassed 21,000 MW of battery storage resources connected to the grid.
Aug 30–31, 2026: AB 1813 clears the Senate, and SB 868 is presented to the governor.

5. Key legislation

SB 868: Legalizes small plug-in/portable “balcony solar” devices up to 1,200 watts that plug into a standard outlet without formal utility interconnection review; requires NEC/UL-equivalent safety compliance; exemption sunsets January 1, 2030. Author: Wiener; Status: Presented to governor Aug. 31, 2026.

SB 710: Guarantees the solar/battery property-tax exclusion continues indefinitely (until sale) for systems installed before January 1, 2027. Author: Blakespear; Status: Signed October 4, 2025.

AB 2389: Would extend the property-tax exclusion to qualifying new residential installations of 10 kW or less through January 1, 2031. Author: Irwin. Status: Held in Assembly Appropriations.

AB 1813: Would establish a community renewable energy program for qualifying solar and storage projects, including requirements intended to serve low-income subscribers. Author: Ward. Status: Passed Legislature; awaiting gubernatorial action

6. Legal framework and agencies

CPUC

NEM 3.0 / Net Billing Tariff
Net metering rulemaking
Adopted December 2022, effective April 2023; upheld through the full appellate process ending June 10, 2026, when the CA Supreme Court declined a second review. Now permanent.

CPUC Rule 21

Interconnection oversight
Governs interconnection timelines for investor-owned utilities; a November 2025 legislator letter cited low compliance on several process steps.

California Energy Commission (CEC) / AB 205

Utility-scale siting
2022 law giving CEC authority to directly site large clean-energy projects, used to approve Soda Mountain over local opposition in April 2026.

U.S. EPA — Solar for All Program

Low-income solar access
$7 billion IRA Greenhouse Gas Reduction Fund program; California’s ~$250M award is in legal limbo after EPA’s July 2025 termination move and the ongoing 22-state lawsuit.

Commerce Dept. — Section 232 & Anti-Circumvention (Solar III/IV)

Trade/national security
Section 232 polysilicon tariffs effective Dec. 4, 2026; separately, ongoing antidumping/countervailing-duty regimes targeting Southeast Asian and now potentially Ethiopian solar component sourcing.

Kern County Board of Supervisors

County/local siting
Approved both the Buttonbush (March 2026) and Discovery Solar (June 2026) projects.

7. Litigation

EWG et al. v. CPUC (NEM 3.0 challenge)

Resolved June 10, 2026
Filed 2023 by Environmental Working Group, Center for Biological Diversity, and Protect Our Communities Foundation. Upheld by the Court of Appeal in March 2025, remanded by the CA Supreme Court in August 2025, reaffirmed in March 2026, and finally ended June 10, 2026. NEM 3.0 is now permanent.

State of Arizona, et al. v. EPA, et al. (Solar for All)

Active, merits stage
22 states plus D.C., including California (AG Bonta), sued to restore the $7 billion Solar for All program. A preliminary injunction was denied in January 2026; a companion breach-of-contract suit proceeds in the U.S. Court of Federal Claims.

Alliance for American Solar Manufacturing and Trade — Ethiopia petition

Petition filed May 14, 2026
The coalition alleges that Toyo Solar Manufacturing and Origin Solar Manufacturing use Chinese-origin inputs in Ethiopian production to evade existing duties.

8. Key data

Figures are the best-supported estimates as of August 2026, drawn from EIA, SEIA, CEC, and CAISO-derived reporting. SEIA figures are industry-association-reported; cross-check against CEC/EIA where a neutral citation is needed.

55.5 GW

Total installed CA solar capacity (SEIA); #1 nationally, 38.03% of in-state generation

21%

YoY growth in CA solar generation, Jan–May 2026 vs. prior-year period

-60%

YoY decline in CAISO natural gas generation, same period

82%

Share of Jan–May 2026 days solar output exceeded gas output, up from 21% in 2024/2025

21,000+ MW

Battery storage connected statewide as of August 2026 (CEC), up from ~15.7 GW mid-2025

11.5%

Solar curtailment as share of generation, Jan–May 2025 (down from 13% YoY) — 2025 data point

53,713 GWh

CA utility-scale solar generation in 2025 — Texas’s 58,634 GWh surpassed it, per EIA

17,000+

CA solar jobs reportedly lost since NEM 3.0’s 2023 implementation (secondary citation)

78,982

Solar jobs statewide and 2,263 solar companies operating in California (SEIA)

$122.4B

Cumulative solar investment in California (SEIA)

3.6+ GW

New utility-scale solar approved across Buttonbush, Discovery, and Soda Mountain, Mar–Jun 2026

15%

Section 232 tariff on polysilicon imports, effective Dec. 4, 2026, plus price floors

9. Key players and organizations

Legislators & Officials

Sen. Scott Wiener (D–San Francisco): SB 868 author. Authored the “Plug and Play Solar Act” legalizing small plug-in balcony solar devices; bill passed both houses by August 2026 and awaits the governor’s desk.

Sen. Catherine Blakespear (D–Encinitas): SB 710 author. Authored the signed (Oct. 2025) grandfather-clause bill protecting the solar property-tax exclusion for installs completed before January 1, 2027.

Asm. Jacqui Irwin (D–Thousand Oaks): AB 2389 author. Introduced legislation to extend the property-tax exclusion to new installs through 2031; the bill was held in Assembly Appropriations on May 14, 2026.

Asm. Dawn Addis (D–Morro Bay): Named signatory among 18 legislators pressing CPUC to enforce Rule 21 interconnection timelines against PG&E and SCE.

CA Attorney General Rob Bonta: Joined the 22-state coalition suing EPA over termination of the Solar for All program; California’s award is roughly $250 million.

Gov. Gavin Newsom: Term ends Jan. 2027. Signed SB 710 (Oct. 2025) and announced Project Nexus’s completion (Apr. 2026); has not yet acted on SB 868 as of this hub’s publication.

Regulators & Agencies

California Public Utilities Commission (CPUC): Adopted NEM 3.0 in 2022 and successfully defended it through three years of litigation ending June 2026; separately the target of legislator pressure over interconnection delays.

California Energy Commission (CEC): Used AB 205 authority to approve the Soda Mountain project over local opposition (April 2026); also administers California’s share of Solar for All funding.

U.S. EPA: Moved to terminate the $7 billion Solar for All program in July 2025, prompting the 22-state lawsuit; funds remain in legal limbo as of September 2026.

Advocacy & Litigants

Environmental Working Group / Center for Biological Diversity / Protect Our Communities Foundation: Led the three-year legal challenge to NEM 3.0 that ended with the California Supreme Court’s June 2026 denial of review.

California Solar & Storage Association (CALSSA): Published the November 2025 press release backing legislators’ letter to CPUC on interconnection delays; active voice on rooftop-industry policy generally.

Alliance for American Solar Manufacturing and Trade: Coalition including First Solar, Hanwha Q CELLS, Silfab Solar, and Suniva that filed the May 2026 Ethiopia anti-circumvention petition.

10. Major companies

SunStrong Management (successor to Sunnova): Residential financier, post-bankruptcy. Operates the approximately 500,000-customer distributed-generation portfolio acquired by Solaris Assets LLC after Sunnova’s Chapter 11 case and November 2025 sale.

Terra-Gen: Utility-scale developer. Developer of the Discovery Solar and Storage Project (1.4 GW + 1,000 MW/8,000 MWh storage) near Mojave, using First Solar PV modules.

First Solar: Module manufacturer. Domestic thin-film module manufacturer; supplying the Discovery Solar project and a named member of the Alliance for American Solar Manufacturing and Trade.

Silfab Solar / Suniva: Domestic manufacturer. U.S.-based cell and module manufacturers; both named petitioners in the May 2026 Ethiopia anti-circumvention trade complaint.

PG&E, SCE, SDG&E: Investor-owned utilities. Real parties in interest in the NEM 3.0 litigation; PG&E and SCE are the specific targets of the November 2025 legislator letter on interconnection delays.

11. What happens next

Governor’s decisions — action on SB 868 and AB 1813 will determine whether California creates new frameworks for portable solar and community solar and storage.

Property-tax treatment — AB 2389 did not advance, leaving the treatment of new systems installed after the existing deadline as an issue for future legislation.

NEM 3.0 market effects — installation, employment and storage-attachment data will show how the residential market adjusts after the litigation’s conclusion.

Interconnection reform — CPUC and utility responses to project delays will affect both distributed and utility-scale deployment.

Trade and supply-chain costs — federal tariffs and trade cases may change module prices, contracting decisions and project schedules.

12. Open policy questions

Will Gov. Newsom sign SB 868 and AB 1813, and how will regulators implement either program if enacted?

Will the Legislature revisit the property-tax treatment of solar systems that do not qualify after the existing deadline?

How will rooftop installations, storage attachment and employment change under NEM 3.0 after the litigation’s conclusion?

Can utilities and the CPUC reduce interconnection delays without shifting unreasonable costs to nonparticipating customers?

How will federal tariffs, tax changes and trade cases affect California solar-project costs and schedules?

13. CEJ coverage

DOI Approves Three New Riverside Solar Projects (Jul 28, 2022).
BOE: Solar “Partnership Flips” Do Not Trigger Property Tax Reassessment (Aug 2, 2022).
California Legislature Passes Solar Property Tax Exclusion Bill (Aug 29, 2022).
California Extends Solar Property Tax Exclusion (Sep 20, 2022).
California Implements Streamlined Automated Residential Solar Permitting (Sep 21, 2022).
CPUC Revises Rooftop Solar Subsidy to Promote Battery Storage (Dec 16, 2022).
CPUC Rejects Solar Microgrid Plan (Apr 12, 2023).
CPUC Reduces Solar Compensation Rates for Farms, Schools, and Rental Properties (Nov 20, 2023).
CPUC Rejects Net Value Billing Proposal for Community Solar (Jun 4, 2024).
Newsom Vetoes Solar Bill Benefitting Schools (Oct 14, 2024).
California Supreme Court Orders New Review of NEM 3.0 Rooftop Solar Policy (Aug 11, 2025).
Treasury Reduces Solar and Wind Projects Eligible for Remaining Tax Credits (Aug 20, 2025).
Regulators Reject PG&E’s Proposal to Exit Ivanpah Solar Contracts, Keeping Solar Facility Online (Dec 8, 2025).
CEJ Alert: Legislature Passes Plug-In Solar Bill (Sep 2, 2026).