How California’s AB 942 Could Dim the Future of Home Solar

California Bill AB 942: What Every Homeowner Should Know About Solar, NEM Contracts, and the Future of Energy Savings. If you’re a California homeowner, especially one with solar panels or considering installing them, it’s time to pay close attention to Assembly Bill 942 (AB 942). This proposed legislation could drastically change how rooftop solar benefits and impacts your property’s value.

AB 942 targets California’s Net Energy Metering (NEM) program. If passed, it would require homes with existing NEM contracts to forfeit those agreements when they are sold. Instead, new owners would be forced into the newer, less favorable NEM 3.0 plan, which would cut export compensation rates by about 75% compared to earlier versions [1].

This change could devalue solar homes, confuse buyers, and potentially violate existing 20-year agreements made by over 1.5 million homeowners [4].

NEM Contracts: What Are They? Net Energy Metering allows solar users to return excess electricity to the utility grid in exchange for bill credits. These agreements helped make solar affordable and attractive for homeowners.

There are three versions:

NEM 1.0/2.0: Generous credits at near-retail rates.
NEM 3.0: Slashed credits based on utility costs, implemented in 2023 [6].

Currently, NEM contracts are tied to the system—not the homeowner—so benefits transfer with the sale. AB 942 would break that rule.

On-Grid vs. Off-Grid: Why It Matters

Grid-Tied Systems (most common): Connected to the public grid, use NEM, and offer utility bill savings [6].
Off-Grid Systems: Fully independent with battery backup. No utility connection, no NEM benefits. Ideal for remote living, but more expensive to install [1].

Only grid-tied systems qualify for NEM, making AB 942 extremely relevant for most solar homes.

Why AB 942 Matters

This bill:

Reduces solar’s resale value
Discourages solar adoption
Benefits utilities by reducing what they pay for your energy
Threatens California’s clean energy goals

Final Thoughts AB 942 isn’t just a bill—it’s a warning. It signals a shift away from homeowner-friendly solar policies and toward utility-driven economics. Whether you’re a current solar owner or thinking about going solar, now’s the time to understand your rights, your contracts, and what’s at stake for the future of energy in California.

🏡 Case Study: 2,100 Sq. Ft. Home with Solar in Southern California Edison (SCE) Territory

Home Profile:

Size: 2,100 square feet
Occupants: Family of 4
Location: Southern California, serviced by SCE
Solar System: Fully paid-off rooftop solar installation under NEM 2.0SCE.com+10Reddit+10IntegrateSun+10 Solar.com+3SCE.com+3SolarReviews+3

🔋 Current Scenario Under NEM 2.0

Under the Net Energy Metering (NEM) 2.0 program, homeowners receive near-retail rates for excess electricity their solar panels feed back into the grid. This arrangement significantly offsets their electricity bills.

Average Monthly Electricity Bill: Approximately $10 to $50, depending on seasonal usage and system efficiency.SolarReviews+1SCE.com+1

This low bill reflects the substantial savings achieved through the NEM 2.0 program, which credits homeowners generously for their solar contributions.

Potential Impact if AB 942 Passes AB 942 proposes that when a home with an existing NEM agreement is sold, the new owner must transition to the Net Billing Tariff (NBT), also known as NEM 3.0. Under NEM 3.0, compensation for excess solar energy is significantly reduced, often based on the utility’s avoided cost, which is closer to wholesale prices.

The Estimated Average Monthly Electricity Bill for the New Owner is approximately $150 to $200, depending on usage patterns and system performance.

This represents a substantial increase compared to the original homeowner’s bill under NEM 2.0.

⚖️ Understanding the Difference: NEM 2.0 vs. NEM 3.0

Feature	NEM 2.0	NEM 3.0 (NBT)
Compensation Rate	Near-retail rates for excess energy	Reduced rates based on utility’s avoided cost
Contract Duration	20 years, transferable to new owners	Shorter terms, not transferable
Impact on Bills	Significant reduction, often minimal bills	Higher bills due to lower compensation

Implications for Homeowners and Buyers

For Sellers:

Reduced Property Value: The inability to transfer the favorable NEM 2.0 agreement could make the property less attractive to potential buyers.

For Buyers:

Higher Operating Costs: Transitioning to NEM 3.0 means higher electricity bills, reducing the financial benefits of the existing solar installation.

For the Solar Market:

Potential Slowdown: The diminished financial incentives could decrease new solar installations, affecting the state’s renewable energy goals.

The proposed AB 942 legislation could significantly impact homeowners with solar installations, particularly concerning the transferability of favorable NEM agreements. Understanding the differences between NEM 2.0 and NEM 3.0 is crucial for both current homeowners and prospective buyers to make informed decisions about solar investments and property transactions.

Hope you enjoyed the info, Robbyn Battles

🌐 Sources

Main Content

The Impact on Homeowners and Home Values