Which states are phasing out net metering in 2026?

As of mid-2026, Arizona, Nevada, North Carolina, Connecticut, Illinois, and Kentucky have either implemented or proposed significant net metering reductions. Arizona's APS and TEP utilities now offer avoided-cost rates for new solar customers instead of full retail credit. Nevada moved to a lower export rate structure. North Carolina's HB 951 implementation reduces NEM credits for new systems. Each state's timeline and rate structure differs, but the trend is clear: full retail net metering is disappearing across the country.

How does a net metering phase-out affect my existing solar panels?

Most NEM changes apply to new solar installations, with existing systems grandfathered for 10-20 years depending on the state. However, grandfathering typically applies to the original system — if you expand your solar array or replace your inverter, you may be moved to the new, less favorable rate structure. Check your state's specific grandfathering rules and your utility's terms of service.

Does adding a battery protect me from NEM phase-out losses?

Yes. When export credits drop from $0.15-0.25/kWh (full retail) to $0.03-0.05/kWh (avoided cost), sending solar back to the grid becomes a money-losing proposition. A home battery lets you store your solar energy and use it yourself (self-consumption) instead of exporting at low rates. In most scenarios, adding battery storage to a solar system in a post-NEM state recovers $800-2,000 per year in lost export value.

How much less will I earn from solar exports after my state phases out NEM?

The reduction depends on your state and utility, but typically export credits drop 60-80%. For example, a homeowner exporting 5,000 kWh per year at $0.20/kWh earns $1,000 under full NEM. After a phase-out, that same export might earn only $150-250 at avoided-cost rates ($0.03-0.05/kWh). The $750-850 annual loss extends your solar payback by 3-5 years without battery storage.

Can I still get the 30% federal tax credit on battery storage in a post-NEM state?

Yes. The federal Investment Tax Credit (ITC) provides a 30% credit on battery storage regardless of your state's net metering policy. The battery must be charged by solar at least 70% of the time to qualify. On a $10,000 battery installation, the credit saves $3,000 on your federal taxes. See our [solar battery tax credit guide](/blog/solar-battery-tax-credit-guide/) for full qualification details.

Is solar still worth installing without net metering?

Solar remains worthwhile without full net metering, but the economics shift. Without NEM, your savings come primarily from self-consumption — using your own solar generation directly rather than exporting it. Adding battery storage maximizes self-consumption from 25-35% (solar-only) to 70-85% (solar + battery). In most states, solar-plus-storage achieves a 7-10 year payback even without generous export credits.

What is the difference between net metering and net billing?

Net metering credits you at the full retail electricity rate for each kWh exported to the grid. Net billing credits you at a lower rate — often the utility's avoided cost or wholesale rate — which is typically 60-80% less than retail. California's NEM 3.0 switched from net metering to net billing, and other states are following this model. The impact on your solar savings is dramatic, making battery storage essential for maximizing self-consumption.

How do I know if my state is planning NEM changes?

Check your state public utility commission (PUC) website for open dockets related to net metering or distributed generation. The Solar Energy Industries Association (SEIA) tracks state net metering policies. Your solar installer should also be aware of pending changes. If your state is considering NEM reforms, installing solar now may lock in current favorable rates through grandfathering provisions.

Net Metering Phase-Out 2026: Which States Are Ending NEM and How Battery Storage Protects Your Solar Savings

Quick Answer

At least six U.S. states are actively reducing or eliminating full-retail net metering in 2026, following California’s controversial NEM 3.0 transition. Arizona, Nevada, North Carolina, Connecticut, Illinois, and others are moving toward net billing structures that pay solar homeowners 60-80% less for exported electricity. For homeowners with or considering solar, adding battery storage is the most effective defense — it lets you store solar energy for self-consumption instead of exporting it at rock-bottom rates, preserving $800-2,000 in annual savings that would otherwise be lost.

Key Takeaways

Full-retail net metering is disappearing: States are shifting to net billing at avoided-cost rates, reducing export credits by 60-80% and extending solar-only payback by 3-5 years.
Arizona, Nevada, North Carolina, Connecticut, and Illinois lead the 2026 NEM reform wave, with more states expected to follow through 2027.
Battery storage transforms the economics: Solar-plus-storage achieves 70-85% self-consumption versus 25-35% for solar-only, recovering $800-2,000/year in lost export value.
Grandfathering protects existing systems for 10-20 years, but typically doesn’t cover system expansions or equipment upgrades.
The 30% federal ITC still applies to battery storage in all states, reducing a $10,000 battery installation to $7,000 net.
Installing solar before your state’s NEM transition may lock in current favorable export rates — timing matters.

The End of Full-Retail Net Metering: A National Trend

What Net Metering Was — And Why It’s Going Away

Traditional net metering (NEM) allowed solar homeowners to spin their meter backward at the full retail electricity rate for every kilowatt-hour exported to the grid. If you paid $0.20/kWh for electricity, you earned $0.20/kWh for your solar exports. It was simple, fair-seeming, and highly favorable to solar adopters.

But utilities have long argued that full-retail NEM shifts grid maintenance costs to non-solar customers. As solar penetration grew — exceeding 10% of residential electricity in states like California, Arizona, and Hawaii — the cost-shift argument gained political traction. The result: a nationwide wave of NEM reforms that replace full-retail credits with lower “avoided cost” or wholesale rates.

California’s NEM 3.0, implemented in April 2023, became the template. Under NEM 3.0, export credits dropped from an average of $0.22/kWh to roughly $0.04-0.08/kWh depending on time of day — a 65-80% reduction. Our NEM 3.0 battery savings analysis documents the dramatic impact on California solar economics.

Now, the same pattern is spreading nationwide.

State-by-State: Who’s Next After California

Arizona — NEM Phase-Out Already Underway

Arizona’s two largest utilities, Arizona Public Service (APS) and Tucson Electric Power (TEP), have moved to net billing structures for new solar customers.

APS (serving Phoenix metro):

Export rate: ~$0.038/kWh (avoided cost) versus $0.12-0.15/kWh retail
Effective export credit reduction: ~70-75%
Grandfathering: 20 years from installation date for existing NEM customers
Impact on typical 8 kW solar system: ~$900/year in lost export revenue

TEP (serving Tucson):

Export rate: ~$0.042/kWh avoided cost
New solar customers automatically placed on net billing
Monthly settlement of export credits (no carryover beyond billing period)

Arizona’s abundant sunshine means solar systems overproduce significantly during winter and spring, when self-consumption is lowest. Without battery storage, a Phoenix homeowner with a 10 kW system could lose $1,000-1,400 per year in export value compared to the old NEM structure.

Nevada — Net Billing Since 2022, Expanded in 2026

Nevada transitioned away from full NEM in 2022 and further reduced export rates in its 2026 rate case.

Current export rate: ~$0.045-0.055/kWh (time-varying)
Retail electricity rate: $0.13-0.16/kWh
Export credit reduction: ~65-70%
Grandfathering: Existing NEM customers protected through original 20-year term

Nevada’s rapidly growing solar market — driven by Las Vegas’s population boom — means thousands of new solar customers are entering under the less favorable net billing regime. For these homeowners, battery storage is not optional; it’s essential for achieving reasonable payback periods.

North Carolina — HB 951 Implementation

North Carolina’s House Bill 951 directed the Utilities Commission to reform net metering, with implementation ongoing through 2026-2027.

Duke Energy Carolinas and Duke Energy Progress: Transitioning to a “Solar Choice” tariff with reduced export credits
Export rate structure: Time-varying, with peak export credits of $0.06-0.08/kWh and off-peak as low as $0.02-0.03/kWh
Grandfathering: 10 years from interconnection date for existing NEM customers

North Carolina was the #3 state for residential solar installations in 2025, meaning a large cohort of homeowners will face reduced export credits as their grandfathering periods expire between 2027-2035.

Connecticut — Expanded Residential Solar Rate Reform

Connecticut’s Public Utilities Regulatory Authority (PURA) approved new rate structures for residential solar in 2025-2026:

Eversource and UI: Moving to a “buy-all, sell-all” model for new solar customers
Export credits: ~$0.04-0.06/kWh versus $0.24-0.28/kWh retail
Export credit reduction: ~80%
Grandfathering: 20 years for existing NEM customers

Connecticut’s high retail electricity rates ($0.25-0.28/kWh) make the export credit reduction especially painful. A homeowner who was earning $1,500/year in export credits could see that drop to $250-350 — a $1,150-1,250 annual loss.

Illinois — Adjustable Block Program Changes

Illinois is reforming its net metering as the Adjustable Block Program (ABP) evolves:

Ameren and ComEd: Transitioning to net billing for new ABP participants
Export rate: Based on wholesale market rate, ~$0.03-0.05/kWh
Retail rate: $0.12-0.14/kWh
Supplemental SREC payments partially offset the reduction but are declining

Illinois represents a middle ground — the state hasn’t eliminated NEM entirely, but the trend toward reduced credits is clear, and future rate cases are expected to further diminish export value.

Other States to Watch (2026-2027)

Kentucky: House Bill 4 (2026 session) proposes moving new solar customers to avoided-cost rates
Georgia: Georgia Power’s 2026 rate case includes a proposal for reduced solar export credits
South Carolina: Stakeholder proceedings underway to reform net metering by 2027
Texas: No state-level NEM mandate (already market-based), but ERCOT nodal pricing changes affect export value

The Financial Impact: NEM vs Net Billing vs Solar+Battery

Side-by-Side Comparison for a Typical 8 kW Solar System

Metric	Full NEM	Net Billing (Post-Phase-Out)	Net Billing + Battery
Annual solar production	11,000 kWh	11,000 kWh	11,000 kWh
Self-consumption	3,850 kWh (35%)	3,850 kWh (35%)	8,800 kWh (80%)
Exported to grid	7,150 kWh (65%)	7,150 kWh (65%)	2,200 kWh (20%)
Export rate	$0.20/kWh	$0.04/kWh	$0.04/kWh
Export revenue	$1,430	$286	$88
Self-consumption savings	$770	$770	$1,760
Total annual value	$2,200	$1,056	$1,848
Lost value vs Full NEM	—	-$1,144/year	-$352/year
Battery value recovery	—	—	+$792/year

The numbers are clear: without battery storage, a net billing transition costs the average homeowner $1,100+ per year. With a battery, 70% of that lost value is recovered through increased self-consumption.

Payback Period Impact

Using a typical 8 kW solar system ($18,000 installed) and a 13.5 kWh battery ($10,500 installed, $7,350 after ITC):

Solar + Full NEM: Payback in 6-7 years
Solar + Net Billing (no battery): Payback in 11-13 years
Solar + Net Billing + Battery: Payback in 8-9 years

Adding battery storage under net billing extends payback by 1-2 years compared to full NEM — but without a battery, payback stretches by 5-6 years. The battery is the clear financial choice.

Use our solar battery ROI calculator to model your specific rates, solar production, and battery costs.

Why Battery Storage Solves the NEM Problem

Self-Consumption Is the New Solar Strategy

Under full NEM, the grid served as a “free battery” — export excess solar during the day, import at night, and settle at zero net cost. With net billing, that free battery disappears. Your exports are worth pennies, while your imports cost dollars.

Battery storage replaces the grid-as-battery with an actual battery. The strategy shifts from “export everything” to “store and self-consume”:

Morning: Solar production ramps up. Battery charges from solar surplus.
Midday: Solar covers home loads. Battery reaches full charge.
Afternoon/Evening: Solar production drops. Battery discharges to power the home instead of importing from the grid.
Night: Battery continues powering the home from stored solar energy.

This pattern maximizes the value of every kWh your solar panels produce, because each self-consumed kWh replaces a kWh you would have purchased at retail rates ($0.12-0.28/kWh depending on your state).

Time-of-Use Rate Optimization

Many states implementing net billing simultaneously introduce time-of-use (TOU) rates, where electricity costs more during peak hours (typically 4-9 PM). This actually creates an opportunity for battery owners:

Off-peak rate: $0.08-0.12/kWh (overnight and morning)
Peak rate: $0.25-0.45/kWh (evening)
Battery strategy: Charge from solar during off-peak/midday, discharge during peak hours

In states with aggressive TOU pricing, the battery earns back its cost faster than in flat-rate states, because each kWh of peak avoidance saves $0.20-0.35 versus off-peak rates. Our time-of-use battery savings guide covers peak shaving strategies in detail.

Virtual Power Plant Participation

An emerging benefit for battery owners in post-NEM states is virtual power plant (VPP) enrollment. Utilities and grid operators pay battery owners $200-500 per year to dispatch stored energy during peak demand events.

California: SGIP requires VPP enrollment for incentive recipients
Arizona: APS Cool Rewards program pays up to $125/year per battery
Connecticut: ConnectedSolutions pays $225/kWh of enrolled capacity
Massachusetts: Similar to Connecticut, $200-250/kWh

VPP earnings can offset 15-25% of a battery’s annual cost of ownership. See our virtual power plant earnings guide for program details by state.

What to Do If Your State Hasn’t Changed Yet

Lock In Current NEM Rates

If your state still offers full-retail net metering, consider installing solar now to lock in favorable grandfathering terms. Most NEM reforms grandfather existing systems for 10-20 years from the interconnection date.

States with NEM reforms under active consideration:

Georgia, South Carolina, Kentucky, Michigan, Minnesota, Virginia

Installing before a reform locks in your rate for the grandfathering period. Even if you add a battery later, the grandfathered NEM rate means you can choose when to self-consume (maximum savings) versus export (still at full retail).

Plan for the Inevitable

Even in states with strong NEM protections today, the trend is clear. Plan your solar investment with battery-readiness in mind:

Install a hybrid or battery-ready inverter even if you’re not adding a battery immediately
Ensure your electrical panel has space for a battery backup gateway
Size your solar system for future battery charging — a slightly oversized system gives you surplus for battery charging when you add storage
Budget for a battery within 3-5 years as part of your total solar investment plan

The 30% Federal Tax Credit Sweetens the Deal

Regardless of your state’s NEM policy, the federal Investment Tax Credit (ITC) covers 30% of battery storage costs through 2032. This applies to both standalone batteries and solar-plus-storage systems.

Battery cost examples after 30% ITC:

Battery System	Installed Cost	After 30% ITC
Tesla Powerwall 3 (13.5 kWh)	$10,500-13,000	$7,350-9,100
Enphase IQ 5P × 3 (15 kWh)	$12,000-15,000	$8,400-10,500
FranklinWH aPower (13.6 kWh)	$9,000-12,000	$6,300-8,400

Combined with state incentives and VPP earnings, the effective payback for battery storage in post-NEM states is often 5-7 years — making it a solid investment even without generous export credits.

For a complete walkthrough of tax credit qualification, see our solar battery tax credit guide.

State Incentives That Help Offset NEM Losses

Several states offer battery-specific incentives that partially compensate for reduced export credits:

California SGIP: Up to $1,000/kWh for battery storage in high-fire-risk areas
Connecticut: Battery storage incentive of $200-500/kWh through the ConnectedSolutions program
Massachusetts: Clean Peak Energy Standard provides ongoing credits for battery discharge during peak periods
New York: NY-Sun storage adder of $1,500-2,500 per system
Maryland: Energy Storage Income Tax Credit covers 30% of costs up to $5,000

Check our state-by-state battery rebates guide for a complete list of available incentives.

Real-World Example: Arizona Homeowner NEM Transition

Scenario: Phoenix homeowner with a 10 kW solar system installed in 2025, facing APS net billing.

Before NEM phase-out (full retail credit):

Annual production: 16,000 kWh
Self-consumption: 5,600 kWh (35%)
Exports at $0.14/kWh: 10,400 kWh = $1,456
Self-consumption savings at $0.14/kWh: $784
Total annual value: $2,240
System cost: $22,000
Payback: ~10 years

After NEM phase-out (net billing, no battery):

Self-consumption: 5,600 kWh at $0.14/kWh = $784
Exports at $0.038/kWh: 10,400 kWh = $395
Total annual value: $1,179
Payback: ~19 years (nearly double)

After NEM phase-out (net billing + Tesla Powerwall 3):

Self-consumption: 13,600 kWh (85%) at $0.14/kWh = $1,904
Exports at $0.038/kWh: 2,400 kWh = $91
Total annual value: $1,995
Combined system cost: $32,500 ($22K solar + $10.5K battery)
After 30% ITC: $22,750
Payback: ~11.4 years

Adding the battery under net billing still extends payback versus full NEM, but the difference is only 1.4 years — far better than the 9-year extension without a battery. The battery recovers $816/year in value that would otherwise be lost to low export rates.

Use our home battery payback calculator to run this analysis with your actual electricity rates and solar production.

Getting Started: Your Action Plan

If your state still has full NEM:

Install solar now to lock in grandfathered rates
Choose a battery-ready inverter for easy future battery addition
Monitor your state’s regulatory proceedings for early warning of NEM changes
Budget for battery storage within 3-5 years

If your state has already reformed NEM:

Add battery storage to your existing solar system — this is the single most impactful step
Maximize self-consumption by shifting heavy loads (EV charging, laundry, dishwasher) to solar production hours
Enroll in virtual power plant programs for additional revenue
Optimize for time-of-use rates if your utility uses TOU pricing
Claim the 30% federal ITC on your battery installation

If you’re planning a new solar installation:

Size your system for solar-plus-storage from day one
Get quotes for solar + battery as a package — bundled installations are typically 10-15% cheaper than adding a battery later
Choose equipment compatible with your state’s rate structure (TOU optimization features matter more in post-NEM states)
Check grandfathering rules — if NEM is still available, lock it in before it’s gone

Ready to calculate how much a battery saves you under your state’s net billing rules? Use our solar plus storage payback calculator to model your specific scenario with current rates and incentives.