In this New York Times feature, TPR excerpts reporting by Francesca Paris on the eroding economics of residential solar, following President Trump's repeal of the federal residential solar tax credit last year and a decade-long, state-by-state rollback of net metering — the rate mechanism, dating to the 1980s, that has underwritten rooftop solar's return on investment. More than a third of U.S. states have restructured their net metering rules over the past ten years, and in some cases the changes have cut homeowner savings by hundreds or thousands of dollars annually. The reporting traces how the transition is unfolding differently state to state, and why battery storage is emerging as the policy tool states are using to soften the blow.
"Net metering was created in a different era." – Leah Stokes, Professor, University of California, Santa Barbara
President Trump's elimination of the federal solar tax credit last year compounds a longer-running shift already underway at the state level. Net metering credits solar households for grid-exported power at the retail rate (10 to 30-plus cents per kilowatt-hour) offsetting the cost of power drawn back from the grid at night. The problem, as regulators and utilities have increasingly argued, is structural: solar generates most of its output at midday, while households consume power throughout the day. Under the new net billing structures replacing net metering, utilities instead buy back excess solar at a much lower rate, often 2 to 10 cents. Arkansas's 2024 switch is illustrative: new solar customers now receive roughly 3 cents per kilowatt-hour for exported power, down from about 12 cents, though existing systems were grandfathered into the old terms.
The rollback has proceeded through three distinct regulatory pathways, a distinction that matters for anyone tracking where the next transitions will occur. Some states ended net metering by statute outright; in others, public utility commissions granted individual utilities permission to migrate to new compensation programs; and a third group has kept net metering nominally intact while layering on fees or rule changes that erode the underlying savings. Utilities have campaigned against the policy for years and, since the mid-2010s, have largely prevailed – most consequentially in California, which accounts for more than a third of the nation's residential rooftop solar capacity.
The economics driving that campaign are a function of scale. Net metering originated in the 1980s as a subsidy to seed a rooftop market when installation costs were prohibitive, and through the early 2010s utilities were compensating a relatively small pool of exporting customers. As panel costs fell and enrollment climbed into the millions, the programs became materially expensive for utilities, which began petitioning their regulators for authority to pay less — a trajectory Stokes attributes to a policy that legislators and utilities never anticipated would scale as it did.
Utilities justify the lower buyback rates on cost-allocation grounds, arguing that solar households still rely on the same poles, wires, and maintenance infrastructure as non-solar customers while contributing less to fund it — a cost shift, they say, onto everyone else. The research here is limited and contested: one analysis found net metering added less than half a cent per kilowatt-hour to average electricity costs in most markets, rising to about 2 cents in high-penetration states like California. Utilities also point out they can procure power more cheaply elsewhere; in Vermont, utilities will soon pay 46 percent more for rooftop solar than for other solar sources, per the state's public utility commission. Net metering's incentive effect tends to matter most in states with small existing solar markets and comparatively cheap electricity — both Indiana and Louisiana ended the policy in recent years for that reason. Solar advocates counter that more rooftop capacity reduces strain on the grid and lowers costly upgrade needs for everyone, is particularly valuable for tamping down peak summer demand during heat waves, transmits easily from one neighbor to another, and can add clean supply quickly.
How a state executes the transition appears to matter as much as the substance of the change. California terminated traditional net metering abruptly in 2023, replacing it with much lower payback rates that vary by day and hour; the state's solar industry staggered before beginning to rebound, aided by retail electricity prices high enough that panels still pay off quickly even without retail-rate export credit. Illinois, which phased its transition over more than three years and settled on export compensation near half the retail rate, avoided comparable disruption. “California got rid of traditional net metering, and Illinois got rid of traditional net metering,” said Amy Heart, VP of Public Policy at Sunrun, the country's largest residential solar and storage company.You didn’t hear about it in Illinois because it was planned out.”
The underlying tension is structural midday oversupply, driven by abundance on rooftops and in utility-scale solar farms alike. California now curtails excess solar on some days, and even in New England, rooftop capacity has begun suppressing spring-afternoon demand, only for gas plants to ramp back up after sunset. Batteries are the policy response — several states, including Illinois, now subsidize home battery installations directly, letting homeowners store midday output for evening use rather than sell it back at a diminished rate. The effect is to cut both emissions and grid demand, and in some markets homeowners can be compensated for discharging. Attach rates are rising fastest where net metering is gone entirely: in Hawai'i, the vast majority of new solar installations now include a battery, and California's attach rate soared after net metering ended.
Nationally, excluding California, the share of new installations paired with a battery rose more modestly, from 5 percent to 8 percent, according to Lawrence Berkeley National Laboratory data. That strategy faces its own economic pressure, however batteries can be expensive enough that homeowners never recoup the cost, and Trump ended the federal residential battery subsidy last year alongside the solar credit.
This excerpt has been condensed and paraphrased by TPR from the original report published on July 21, 2026. For the report's full text, see here
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