Navigating the Impact of California’s AB 942 on Solar Energy and Real Estate
Introduction
California has long led the charge in renewable energy, with policies designed to make solar power accessible and financially rewarding for homeowners. But a new piece of legislation—Assembly Bill 942 (AB 942)—is set to shake things up. This bill proposes a major shift in how rooftop solar users are compensated, and it carries significant implications not only for current solar customers, but also for homeowners, buyers, sellers, and real estate professionals across the state.
Understanding AB 942
AB 942 was authored by Assembly member Lisa Calderon, a Democrat representing California’s 56th Assembly District. Before serving in the state legislature, Calderon spent more than two decades working for Southern California Edison and its parent company, Edison International, as a government affairs executive. That background has drawn scrutiny, especially given the bill’s implications for rooftop solar users and the utilities’ interests.
The bill aims to amend the Public Utilities Code concerning net energy metering (NEM) and tariffs for eligible customer-generators. Its primary focus is to require homes with existing rooftop solar systems to transition to the less favorable NEM 3.0 tariff upon sale or transfer of the property. NEM 3.0 significantly reduces the compensation homeowners receive for sending excess electricity back to the grid—thus diminishing the financial return on solar investments.
Key Provisions of AB 942
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Mandatory Shift to NEM 3.0: If you sell or transfer a property with solar, the buyer will be automatically placed on NEM 3.0—even if the system was originally on a more favorable NEM 1.0 or 2.0 agreement.
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Increased Monthly Costs: New homeowners could see an average increase of $63/month on their utility bills under NEM 3.0, making solar less financially beneficial.
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Title and Escrow Complexity: Escrow officers, real estate agents, and sellers will need to verify NEM status, understand the implications, and ensure proper disclosure during property transfers. This includes inheritance, divorce, and rental property transitions—any event that triggers ownership change.
Industry Reaction
The California Solar and Storage Association (CALSSA) has been vocal in its criticism, stating that AB 942 undermines existing contractual promises made to solar customers. Critics argue the bill could discourage future solar adoption, devalue existing systems, and stall progress toward California’s ambitious clean energy goals.
Supporters of the bill argue it will help curb the cost burden on non-solar customers, suggesting it promotes rate fairness. But many question whether the bill is truly about consumer benefit—or utility profit protection.
Implications for Homeowners and Real Estate Transactions
For current homeowners, the value of their solar investment may be affected if that investment becomes a future liability in the eyes of a buyer. While solar panels have often been a selling point, this bill could turn them into a point of contention if buyers are saddled with lower compensation rates and higher monthly bills.
For real estate professionals, it’s more important than ever to understand and communicate the details of NEM agreements. Sellers should expect questions. Buyers will want clarity. And everyone involved needs to approach solar disclosures with accuracy and transparency.
Why It Matters
AB 942 doesn’t just affect a niche group of homeowners—it affects how we plan, invest, and transition into clean energy. It could have ripple effects across home values, buyer expectations, and the pace of solar adoption.
Whether you’re a homeowner considering a sale, a buyer eyeing a solar-powered property, or a real estate professional navigating this change—being informed is key.
In A Nutshell. . .
Although this bill has not passed yet, California’s energy landscape is changing. AB 942 brings with it a blend of policy, politics, and practical impact. Understanding its nuances now will help you as a homeowners as we work side by side to navigate the complexities ahead—with clarity, confidence, and credibility.
Note: This blog is for informational purposes only and does not constitute legal or financial advice. For specific guidance related to your situation, please consult a licensed professional.