States Ramp Up Solar Policy Activity to Offset Federal Incentive Reductions

The NC Clean Energy Technology Center (NCCETC) released its Q3 2025 edition of The 50 States of Solar, highlighting widespread state-level action on distributed solar policy. The quarterly report tracks regulatory and legislative activity on net metering, distributed solar valuation, interconnection rules, community solar programs, residential rate design, financial incentives, and third-party ownership.

According to the report, 45 states, along with the District of Columbia and Puerto Rico, took some form of distributed solar policy action during the third quarter of 2025. In total, 217 actions were recorded, with the highest volume focused on:

• Net metering (57 actions)
• Residential fixed charge or minimum bill increases (43 actions)
• Community solar initiatives (40 actions)

States with the most activity included Connecticut, Colorado, Minnesota, New York, Arizona, and California.

Key Solar Policy Trends

The NCCETC identified three main trends shaping solar policy this quarter:

1. Transition to Net-Billing

Utilities are increasingly transitioning to net-billing tariffs, moving away from traditional monthly net metering structures.

2. Growth of Community Solar Support Mechanisms

States and utilities are pursuing supportive mechanisms for community solar, including pilot programs and expanded interconnection pathways.

3. State Regulatory Response to Federal Incentive Reductions

Regulators are actively responding to the loss of federal incentives following the passage of HR1 in July 2025.

“After the federal government passed HR1, states are revising programs and guidelines to maximize the use of existing investment and production credits,” said Rebekah de la Mora, senior policy analyst at NCCETC. “Regulators are updating interconnection rules to help projects connect to the grid before federal deadlines, implementing extensions and exceptions for projects under incentive programs, and exploring program expansions to compensate for the reduction in federal credits.”

Notable State Actions in Q3 2025

The report highlights several prominent policy actions:

• The Public Utilities Commission of Nevada adopted new demand charges for Nevada Power customers and implemented a 15-minute netting interval for Sierra Pacific Power.
• PacifiCorp requested approval for a net metering successor tariff in Washington.
• The West Virginia Public Service Commission approved net billing for Appalachian Power and Wheeling Power.
• The Puerto Rico Energy Bureau initiated an investigation into community solar development.
• Colorado Springs Utilities proposed exclusive rates for net-metering customers.

Brian Lips, senior project manager at NCCETC, noted, “States and utilities continue grappling with proper compensation structures for distributed generation. In Q3 2025, multiple utilities proposed and received approval for new net billing tariffs. These intervals range from instantaneous netting to hourly netting, compared to the standard monthly net metering cycle.”

Looking Ahead

The report underscores that states are playing an increasingly important role in maintaining solar deployment momentum, especially as federal incentives decline.

By:

• Updating interconnection rules
• Adjusting rate structures
• Supporting community solar programs

State regulators aim to ensure distributed solar remains financially viable and accessible to homeowners and businesses.

As federal policies shift, NCCETC predicts that state-level initiatives will continue to be a critical driver of distributed solar growth, ensuring that U.S. solar capacity expansion remains on track despite national policy uncertainties.