NEM 2.0 Grandfathering in California

Net Energy Metering (NEM) is how California utilities credit rooftop solar for the power it sends back to the grid. Under NEM 2.0, exported solar is credited close to the retail rate \u2014 roughly $0.30\u2013$0.39/kWh in much of Southern California. Under NEM 3.0 (the current default for new systems), exports are credited at the avoided-cost rate \u2014 roughly $0.05\u2013$0.08/kWh, a cut of about 75%.

Systems that were interconnected before the NEM 3.0 transition are grandfatheredonto the older, far higher export rate for a fixed period. That grandfathering is the single most valuable attribute of an existing California solar system, and the reason a used NEM 2.0 home is worth more than an identical NEM 3.0 home.

NEM 2.0 grandfathering runs for 20 years from the system\u2019s Permission to Operate (PTO) date \u2014 the date the utility switched the system on and approved it to export power. The CPUC set the 20-year term in Decision D.22-12-056.

That means a system turned on in 2019 is grandfathered through roughly 2039; a system from 2023 is grandfathered through roughly 2043. The clock starts at PTO, not at the contract or install date. Want the exact number for your home? Use the NEM 2.0 grandfathering calculator.

April 15, 2026 was the final PTO deadline to lock in NEM 2.0. Systems that reached PTO after that date are on NEM 3.0. The NEM 2.0 enrollment window is now closed.

• Adding battery storage \u2014 a battery is a load-side addition and generally does not require a new solar interconnection application, so it does not reset the 20-year clock. (See the adding-a-battery guide.)
• Inverter or panel service/replacement like-for-like \u2014 warranty replacements that do not increase the system size do not trigger a new NEM agreement.
• Small expansions within the limit \u2014 you may expand the solar array by up to 10% or 1 kW (whichever is greater) beyond the original approved size without ending grandfathering.

Grandfathering can be reset if you:

• Expand the solar array beyond the 10% / 1 kW expansion limit.
• File a new interconnection application for the solar (rather than a battery-only add).
• Let the grandfathering term run out (20 years from PTO).

The most common way homeowners accidentally end grandfathering is by upsizing the solar array past the expansion limit during a battery add. A reputable contractor checks this before filing anything.

Grandfathering runs with the meter and the property, not the original owner. When the home is sold, the new owner inherits the remaining grandfathering years. A system with 10+ years of NEM 2.0 left is a meaningful selling point \u2014 roughly $3.50\u2013$4.00/W of added home value versus an NEM 3.0 system.

If you are the buyer, verify the NEM status before close \u2014 do not take \u201cthere\u2019s solar\u201d at face value. See our buying a home with NEM 2.0 guide for the verification checklist.

AB 942 is not law as of August 2026. The bill would have ended NEM 2.0 grandfathering early \u2014 including a provision that grandfathering would not transfer on home sale. That transfer-ending provision was removed in 2025, and the bill has not passed. Existing 20-year grandfathering terms are intact.

More detail in our AB 942 guide.

You can confirm whether a home is on NEM 2.0 or NEM 3.0 from the utility bill and the utility\u2019s online portal \u2014 look for the NEM schedule (NEM2 vs NBT) and the true-up period. Our how to check your NEM status guide walks through it step by step for SCE, PG&E, and SDG&E.