Original research
What NEM 3.0 did to California rooftop solar, utility by utility
Residential net-metered connections at PG&E, SCE and SDG&E through the 15 April 2023 tariff change.
The finding
Key findings
- 1 IOU connections fell 44.3% in the first full year of net billing
From 254,201 to 141,681 across PG&E, SCE and SDG&E combined.
- 2 The steepest fall is in the highest-priced territory
San Diego Gas & Electric fell 58.3%, against 39.1% at Southern California Edison. Net billing removes retail-rate export value, so the more expensive the retail rate, the more there is to lose.
- 3 Against a pre-announcement baseline the fall is smaller
2024 is -13.4% against 2021 and -35.7% against 2022. The headline comparison uses 2023, which the grandfathering rush inflated.
- 4 California is 49% of the national decline
A single state's tariff change moved the US national series. No other state has that weight in rooftop solar.
- 5 Households responded by buying batteries
California's battery attachment rate reached 10.6% of its installed solar fleet: the state holds 74% of every paired residential battery in the country.
- 6 The municipal utilities are a separate story
SMUD, LADWP and the other publicly owned utilities were not subject to the CPUC decision. They account for 14% of California's 2024 connections.
The tariff change
-
December 2022
CPUC adopts the net billing tariffDecision 22-12-056 replaces retail-rate net energy metering for new residential customers of PG&E, SCE and SDG&E. Exports are compensated at avoided-cost values that vary by hour and month rather than at the retail rate.
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15 April 2023
NEM 3.0 takes effectInterconnection applications submitted on or after this date go onto net billing. Applications filed before it are grandfathered onto NEM 2.0 for 20 years, which created a strong incentive to file early.
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Through 2023
The grandfathering rush landsSystems filed before the deadline are energised over the following months, inflating the 2023 connection count. California's three IOUs connected 254,201 residential customers that year, the highest in the series.
-
2024
The first clean post-NEM 3.0 yearIOU connections fall to 141,681. This is the first full year in which essentially every new residential customer is on net billing rather than net metering.
Watching it happen inside each territory
Most coverage of NEM 3.0 works from statewide installation counts or from installer survey data. EIA-861 lets us do something better: it reports the net-metered residential customer count for each utility separately, so the three territories the tariff actually applies to can be tracked individually across the change.
All three peak in 2023 and fall in 2024, which is the shape a pull-forward followed by a demand drop produces. What differs is the depth.
New residential net-metered connections by utility
| Utility | EIA number | 2020 | 2021 | 2022 | 2023 | 2024 | Change 2024 |
|---|---|---|---|---|---|---|---|
| Pacific Gas & Electric | 14328 | 63,880 | 76,783 | 94,035 | 113,317 | 64,254 | -43.3% |
| Southern California Edison | 17609 | 45,285 | 60,525 | 90,089 | 97,494 | 59,326 | -39.1% |
| San Diego Gas & Electric | 16609 | 26,999 | 26,267 | 36,301 | 43,390 | 18,101 | -58.3% |
HyreSolar calculation from EIA-861.
Figures labelled HyreSolar calculation are computed by us from the EIA source files named below. EIA publishes the inputs; it does not publish these ratios.
Why San Diego fell hardest
San Diego Gas & Electric is the smallest of the three territories and the one with the highest residential electricity prices, which under retail-rate net metering made it one of the most attractive places in the country to install solar. Net billing removes exactly that advantage: it is the retail rate that the export credit is being detached from, so the higher the retail rate, the larger the loss.
That is a testable prediction and the ordering of the data matches it: the steepest fall of the three is in the highest-priced territory, and the shallowest is in the lowest-priced. It is not proof. Territory composition, roof stock, installer density and the local mix of new-build versus retrofit all differ, and with three observations no statistical claim is available. But it is the pattern net billing would produce, and the alternative explanations would have to work quite hard to reproduce the same ordering.
The pull-forward, and how not to overstate it
Comparing 2024 against 2023 alone overstates the effect, because 2023 contains the grandfathering rush. A fairer reference is the pre-announcement trend. California’s IOUs connected 163,575 residential customers in 2021 and 220,425 in 2022; 2024 came in at 141,681.
Measured that way, 2024 is -13.4% against 2021 and -35.7% against 2022, still a substantial contraction, but a smaller one than the headline comparison against the inflated 2023 figure. Both framings are honest; publishing only the larger one is not.
The same caution applies in the other direction. Some industry commentary has argued that because 2023 was inflated, the 2024 fall is an artefact. It is not: even against the calmest available baseline, 2024 is well below the pre-tariff trend, and the decline is concentrated in exactly the three utilities the tariff covers.
California statewide, year by year
| Year | New connections | Change on prior year | Cumulative fleet | Household penetration |
|---|---|---|---|---|
| 2015 | 160,557 | — | 485,086 | 3.63% |
| 2016 | 159,818 | -0.5% | 644,904 | 4.80% |
| 2017 | 140,311 | -12.2% | 785,215 | 5.80% |
| 2018 | 125,963 | -10.2% | 911,178 | 6.70% |
| 2019 | 154,456 | +22.6% | 1,065,634 | 7.77% |
| 2020 | 151,444 | -2.0% | 1,217,078 | 8.80% |
| 2021 | 184,009 | +21.5% | 1,401,087 | 10.09% |
| 2022 | 247,304 | +34.4% | 1,648,391 | 11.82% |
| 2023 | 278,068 | +12.4% | 1,926,459 | 13.70% |
| 2024 | 164,524 | -40.8% | 2,090,983 | 14.71% |
HyreSolar calculation from EIA-861. Statewide figures include municipal utilities such as SMUD and LADWP, which set their own tariffs and were not subject to Decision 22-12-056.
What Californians did instead
Net billing does not make solar worthless. It moves where the value sits: from exporting surplus at the retail rate to consuming your own generation, and to shifting evening load off the grid with a battery.
The data shows households making exactly that move. California’s battery attachment rate reached 10.6% of its installed solar fleet by the end of 2024, against a national rate of 5.9%. The state holds 74% of every paired residential battery in the United States.
The tariff context supports it too: 36% of California households are on a time-varying tariff, against 11.1% nationally, and 86.6% of its residential meters are interval meters. California has both the price signal and the metering to make a battery pay in a way most states do not. The full state comparison is here.
There is one precedent, and it is not encouraging in the short run
California is not the first US state to end retail-rate net metering. Hawaii did it in October 2015, when the Public Utilities Commission closed the programme to new participants and replaced it with a capped grid-supply option and an uncapped customer self-supply option. That makes Hawaii the only available natural experiment for what happens next.
The shape is familiar. Hawaii’s new connections peaked at 10,966 in 2015, the year of the closure, and have not come close since. The lowest positive year was 2,370 in 2022, 78.4% below the peak. 2024, nine years on, is -56.4% against that pre-closure peak.
One figure in that series is not real and we would rather say so than quietly drop it: Hawaii’s reported cumulative count falls in 2018, which almost certainly reflects a utility reclassification rather than systems coming off roofs. It is left in the chart and excluded from the trough calculation above.
Two cautions before this is read as a forecast for California. Hawaii’s market was far more saturated at the point of closure, it was already above 14% household penetration, against California’s 11.8% in 2022, so some of the slowdown is simply running out of easy roofs. And Hawaii’s replacement tariffs were capped in ways California’s are not. The precedent tells you the direction, not the magnitude.
What Hawaii does establish clearly is the battery response. It has the country’s second-highest battery attachment rate at 18.2% of its installed fleet, reached over a decade in which exporting stopped paying. California is three years into the same transition and already at 10.6%.
Two transitions compared
| Hawaii | California | |
|---|---|---|
| Retail net metering closed to new customers | October 2015 | 15 April 2023 |
| Replaced with | Capped grid-supply and uncapped self-supply | Net billing at hourly avoided cost |
| Household penetration at closure | 14.2% (2015) | 11.8% (2022) |
| Peak annual connections before closure | 10,966 (2015) | 278,068 (2023) |
| Connections in the first full year after | 7,916 (2016) | 164,524 (2024) |
| Change | -27.8% | -40.8% |
| Battery attachment, 2024 | 18.2% | 10.6% |
| Household penetration, 2024 | 22.0% | 14.7% |
HyreSolar calculation from EIA-861, with policy dates from the Hawaii PUC and CPUC decisions cited in the sources below.
The two transitions are not equivalent (Hawaii was far more saturated at closure and its replacement tariffs were capped) so this table is a comparison, not a projection.
Methodology
Utility identification
Utilities are matched on EIA utility number (Pacific Gas & Electric 14328; Southern California Edison 17609; San Diego Gas & Electric 16609), never on name. Across the eleven annual files PG&E is filed under two different spellings, and grouping by name splits its series in half: an error that would halve the apparent size of the largest territory in the study.
What "connections" means here
EIA-861 reports the cumulative count of net-metered residential customers at year end. Differencing consecutive years gives net additions, which approximates new connections but nets out disconnections and any account reclassification. It is not the same as an interconnection application count, and the two will not match.
There is also a timing offset that matters for this particular question. A system is counted when it is energised and interconnected, not when its application was filed. The grandfathering deadline was an application deadline, so systems filed just before 15 April 2023 appear in the 2023 and even 2024 counts. This blurs the boundary between the two years and, if anything, understates the size of the drop.
Scope
Investor-owned utilities only in the utility table. California’s municipal utilities (SMUD, LADWP, Imperial Irrigation District and others) set their own tariffs, were not subject to Decision 22-12-056, and are included in the statewide totals but not in the three-utility comparison. They account for 14% of California's 2024 connections.
Three observations is not a sample
The claim that the steepest fall sits in the highest-priced territory is an observation about the ordering of three numbers. It is consistent with the mechanism and inconsistent with several alternatives, but it is not a statistical result and we do not present it as one.
What this does not establish
That NEM 3.0 caused the decline. What the data shows is a large fall, concentrated in the three utilities the tariff applies to, in the first full year after it took effect, steepest where the tariff change should bite hardest, and accompanied by a battery attachment surge of exactly the kind net billing incentivises. That is strong circumstantial evidence and it is how we describe it. Interest rates and installer insolvencies affected California too, and this analysis cannot separate them.
Terms used on this page
- NEM 2.0
- California’s previous net energy metering tariff, crediting exports at close to the full retail rate. Customers who applied before 15 April 2023 remain on it for 20 years.
- NEM 3.0 / net billing
- The successor tariff adopted in CPUC Decision 22-12-056. Exports are credited at hourly avoided-cost values, typically a small fraction of the retail rate in the middle of the day.
- Avoided cost
- What it would have cost the utility to procure the same energy at that hour. The basis for export credits under net billing.
- Investor-owned utility (IOU)
- A privately owned, CPUC-regulated utility. PG&E, SCE and SDG&E are California’s three; the CPUC decision applies to them and not to municipal utilities.
- Grandfathering
- Keeping customers who applied before a deadline on the previous terms. The mechanism that pulled installations forward into 2023.
Citation, reuse and corrections
How to cite this study
Full citation. HyreSolar Research, “What NEM 3.0 did to California rooftop solar, utility by utility”, September 2026. Analysis of US Energy Information Administration Form EIA-861, 2014–2024. Available at https://hyresolar.com/research/nem-3-california/
In text. “according to a HyreSolar analysis of federal utility filings” — with a link to this page.
In a chart or table. “Source: HyreSolar analysis of EIA-861 (2024)”.
What you may reuse
The underlying data is a public US government dataset and carries no restriction. The analysis, rankings, derived ratios and charts on this page are ours, and you are welcome to reproduce them — including the charts — for editorial, academic and non-commercial purposes with attribution and a link to this page.
We ask for the link rather than a bare mention because the methodology and the limitations live here. A figure quoted without them is easy to misread, and several of the numbers on this page carry conditions that change what they mean.
Who produced this
The HyreSolar research desk. We do not attach an individual byline to these studies, because the work is a scripted analysis of a public federal dataset rather than an authored opinion, and a personal byline would imply a kind of authorship that is not what happened here. What is accountable instead is the method: the source files are named, the arithmetic is stated, the extraction is scripted, and the validation is published.
HyreSolar is an independent analysis and matching service. We are not an installer, a lender or a utility, and no installer pays for placement, ranking or mention in this research. See the editorial policy.
How this study is built
Annual Form EIA-861 workbooks for 2014–2024 are downloaded from EIA and parsed by script into a single dataset. Every figure on this page — in the prose, in the tables and in every mark on every chart — is read from that dataset at build time. Nothing is typed by hand.
That is not a stylistic preference. It means a number in a sentence and the same number in the table beneath it cannot drift apart, a chart cannot disagree with its own caption, and next year's EIA release updates the entire study by regenerating one file rather than by someone editing 4,000 words and hoping they caught every instance.
The workbooks are not consistent between years — sheet names change, header rows move, a measure is renamed, a column appears in one year only, and one large utility is filed under two different spellings. The extraction addresses columns by their header meaning rather than their position, and keys utilities on their EIA number rather than their name, because every one of those inconsistencies silently produces wrong output if ignored.
Corrections
If you find an error, tell us and we will fix it on the page with a dated note rather than silently. That includes disagreements about method: the inputs are public and the arithmetic is stated, so the argument can be had on the evidence.
Update schedule
EIA publishes final Form EIA-861 data for a year in approximately October of the following year. This study is rebuilt against the new release and republished at the same URL, so links do not break and the accumulated citations stay attached to the current numbers.
Questions
How much did California solar installations drop after NEM 3.0?
What is NEM 3.0?
Which California utility was hit hardest?
Does solar still pay in California under NEM 3.0?
Am I grandfathered if I installed before April 2023?
What happens to the systems already installed under NEM 2.0?
Will California installations recover?
Do municipal utilities have NEM 3.0?
How does this compare with Hawaii, which ended net metering earlier?
Is the 2024 fall just the pull-forward unwinding?
Written and audited by
HyreSolar Research
Primary-source research, data analysis and fact checking
We are a research desk, not a sales floor. We read the statute, the tariff, the code section, the federal filing or the manufacturer data sheet ourselves, and we publish the figure with the document it came from and the date we retrieved it. Where a number cannot be traced to a primary source, we publish the shorter page and say what we could not verify. That rule has cost us whole sections, and it is the reason the rest can be trusted.
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How this desk works
- Primary sources only. Statutes from the legislature’s own publishing system, federal data from the agency that collects it, code text from the adopted edition, manufacturer claims from the data sheet. We do not cite an article that cites a source; we go and read the source.
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Data as of EIA-861 2024 final release. Authorship on this site is organisational: the analysis belongs to the desk rather than to a named individual, and we do not publish credentials we do not hold. Our editorial policy sets out how we source, date and correct what we publish.
Sources & retrieval dates
- US EIA, Form EIA-861 — Net Metering (annual files, 2014–2024) — Utility-level net-metered capacity, installations and energy sold back by state and customer sector, plus PV-paired battery capacity and installations from 2023. Downloaded as the published annual ZIP archives. Retrieved 2 September 2026.
- US EIA, Form EIA-861 — Sales to Ultimate Customers (annual files, 2014–2024) — Utility-level residential revenue, sales and customer counts by state, used to derive the average residential price and to count the households a state actually meters. Retrieved 2 September 2026.
- US EIA, Form EIA-861 — Distributed Generation that is not Net Metered (2024) — Residential photovoltaic capacity served under buyback, feed-in and utility-owned arrangements rather than net metering. Capacity only; this schedule collects no installation count. Retrieved 2 September 2026.
- US EIA, Average Price of Electricity to Ultimate Customers by End-Use Sector — EIA’s own published state price series, used only to validate our derivation. Agreement across all 357 overlapping state-years is within 0.005¢/kWh, i.e. EIA’s own rounding. Retrieved 2 September 2026.
- California Public Utilities Commission, Decision 22-12-056 — Adopted the net billing tariff replacing net energy metering for new residential customers of PG&E, SCE and SDG&E; effective for interconnection applications from 15 April 2023, with 20-year grandfathering for earlier applicants. Retrieved 2 September 2026.
- Hawaii Public Utilities Commission, Docket 2014-0192, Decision and Order No. 33258 (October 2015) — Closed Hawaii’s net energy metering programme to new participants, replacing it with capped grid-supply and uncapped customer self-supply options. Hawaii was the first US state to end retail-rate net metering. Retrieved 2 September 2026.
Pricing a California system under net billing
Export credits are worth a fraction of what they were. The model uses net billing values, not retail-rate assumptions.
HyreSolar is an independent analysis and matching service. We are not an installer, lender or utility. When a reader asks to be introduced, installers may pay us a referral fee. That fee never buys ranking, scores or placement in research. Our editorial policy sets out the rules.