An apartment building has one roof and dozens of electric meters. Virtual net billing is the rule that lets one solar system serve all of them — and since 2024 the rule has changed. Here is how the credits flow, who comes out ahead, and where the owner’s return actually comes from.
Multifamily is the property type where solar should be easiest and is, in practice, the most misunderstood. A single-family home has one meter, one bill and one decision-maker. A 40-unit building in Chula Vista, Santa Ana or Van Nuys has a common-area meter for the owner, forty tenant meters the owner never sees, and a roof that could power a good share of all of it. The question every owner asks is the right one: if I pay for the system, who gets the savings?
California’s answer is virtual net energy metering — now, for new projects, the Virtual Net Billing Tariff — and the details decide whether a multifamily solar project is a strong owner investment, a tenant amenity, or both. This post explains how it works in SDG&E and Southern California Edison territory, what changed in February 2024, and how storage fits in.
The problem virtual netting solves
On a single-meter building, solar is simple: the array is wired behind the meter, production offsets consumption, and whoever pays that bill sees the savings. A multifamily building is not wired that way. Each unit has its own utility meter and its own account; the owner’s meter covers the hallways, laundry, pool, elevator and parking lighting.
A rooftop system cannot be physically wired to forty meters at once. So under virtual netting, the array connects to the grid through its own generation meter, and the utility divides the production on paper: a percentage to each tenant account and a percentage to the common-area account, in shares the owner sets at enrollment. The panels are on one roof; the credits show up on many bills.
What changed in February 2024
For two decades this ran under the Virtual Net Energy Metering tariff, which credited every allocated kilowatt-hour at the retail rate. When the CPUC replaced net metering with the Net Billing Tariff, it followed with Decision 23-11-068, and from February 15, 2024 new multifamily systems in SDG&E, SCE and PG&E territory enroll under the Virtual Net Billing Tariff (VNBT) instead.
Two things carried over and two things changed.
Carried over: the generation meter, and the owner’s ability to allocate production across tenant and common-area accounts.
Changed, first: exports are no longer worth retail. Under VNBT, electricity credited to an account beyond what that account consumes in the same interval is compensated at the Avoided Cost Calculator value — the same export pricing that governs every other Net Billing customer, and typically a fraction of the retail rate.
Changed, second: tenant and owner accounts are now treated differently.
- Residential (tenant) accounts get 15-minute interval netting: their allocated share of production offsets their own consumption in each 15-minute period at full retail value, and only the surplus beyond that is credited at the avoided-cost rate. They also receive an ACC Plus adder on exports in the investor-owned-utility territories, sized by the CPUC to target roughly a nine-year payback for the project, and must be on an eligible time-of-use rate.
- Nonresidential (common-area) accounts receive their allocated share as a dollar bill credit at the export rate, with no netting against consumption.
That second change is the one that reshapes the owner’s math, and it is where most of the design decisions now sit.
Who pays, and who benefits
The owner pays. The system is the owner’s capital project — or a financed one — and the owner claims the federal incentives: the 30 percent investment tax credit under Section 48E (a solar project that had not begun construction by July 4, 2026 must be placed in service by December 31, 2027 to qualify; storage is not subject to that deadline) and depreciation on the depreciable basis. Multifamily solar is business equipment, and it is treated like it.
Tenants benefit on the bill. Every kilowatt-hour allocated to a tenant that offsets that tenant’s own use in the same interval is worth retail — on SDG&E and SCE residential time-of-use schedules, that is among the most expensive electricity in the country. A well-allocated system can take a meaningful bite out of a tenant’s bill every month, which is a leasing advantage, a retention advantage and, in the affordable segment, a program requirement.
The owner benefits three ways. First, on the common-area meter, though under VNBT that credit is at export value rather than retail — so the strategy is to allocate less production to common area and cover that load a different way (see storage, below). Second, in the building’s value and rent position: solar-served units with lower utility costs lease faster and command a premium, and green building features feed directly into appraisal and lender treatment. Third, in the tax stack, which on a typical project returns roughly half the installed cost in the first year or two for a qualifying owner.
The allocation percentages are the lever. An owner who tilts allocation toward tenant meters captures retail value for the building’s residents; an owner who wants a direct return on the common-area bill pairs a smaller allocation there with a battery.
Where storage fits
Under the original VNEM, a battery on a multifamily building was hard to justify: retail credits made exports as valuable as self-use. Under VNBT it is the opposite. Because common-area exports earn only the avoided-cost rate, the most valuable thing an owner can do with midday production destined for the common-area account is store it and use it in the evening, when the pool pumps, hallway lighting, elevator and EV chargers are running against the 4–9 p.m. peak on SDG&E and SCE schedules.
A June 2025 CPUC resolution (E-5374) clarified that benefiting accounts under VNBT may pair behind-the-meter storage with their virtual credits, which removed the last ambiguity about combining the two. In practice that means a multifamily design in Southern California now looks like this: array on the roof or carport, tenant allocations set for retail netting, and a battery behind the common-area meter carrying the owner’s own load through the peak. The battery also gives the building resilience for elevators, access control and life-safety loads during an outage — which insurers and residents both notice.
The same demand-charge logic we laid out in How Commercial Solar and Battery Storage Cut Your Demand Charges applies to any multifamily common-area account on a demand-metered schedule.
The Southern California specifics
SDG&E and SCE both administer VNBT under the CPUC rules above; the ACC Plus adder differs by utility, and the eligible tenant time-of-use rates differ too, so the allocation model has to be built on the actual tariff for the actual building.
Los Angeles Department of Water and Power is a municipal utility outside the CPUC’s jurisdiction. LADWP runs its own virtual net metering program for multifamily customers under its own rules and rates. If the building is in the City of Los Angeles, the design starts from LADWP’s tariff, not the CPUC decision.
Affordable housing keeps the old tariff. Properties enrolling through the Solar on Multifamily Affordable Housing (SOMAH) program — funded through 2032 — stay on the VNEM 2.0 structure with retail-value crediting, and receive installation incentives on top. For a qualifying deed-restricted property, SOMAH is usually the better program by a wide margin, and the owner should confirm eligibility before anything else is designed.
New construction already requires it. California’s 2022 Energy Code requires solar and battery storage on new high-rise multifamily buildings and most new nonresidential occupancies; low-rise multifamily has carried a solar requirement since 2020. For a new project, the question is not whether to include solar and storage but how to size and allocate it so it does the most good under VNBT.
Prevailing wage applies to larger buildings. Under AB 2143, multifamily solar over 15 kW on buildings of three or more stories that interconnects under the Net Billing Tariff must be built at prevailing wage. Two-story and smaller residential buildings are exempt.
A worked illustration
Take a 48-unit garden-style complex in SDG&E territory with a 150 kW roof-and-carport array and a 100 kWh battery behind the common-area meter.
- Allocate roughly 80 percent of production across the 48 tenant meters. In each 15-minute interval, a tenant’s share offsets their own use at retail; the surplus earns the avoided-cost rate plus the ACC Plus adder.
- Allocate the remaining 20 percent to the common-area meter, and let the battery absorb the midday surplus and discharge it into the 4–9 p.m. window, when the common-area load and the demand charge both peak.
- The owner claims the 30 percent credit on the eligible basis and first-year depreciation on the remainder, recovering roughly half the project cost through the tax stack, then collects the common-area savings, the demand-charge reduction and the rent and value premium over the life of the system.
Every building differs — roof area, unit mix, common-area load, utility, affordability status — and the allocation percentages should be modeled on twelve months of actual interval data, not on a rule of thumb.
Stellar Solar has engineered and installed commercial and multifamily solar and storage across Southern California since 1998 — A+ rated with the BBB and a repeat winner of San Diego’s Best Solar in the Union-Tribune Readers Poll. Call 866.787.6527 for a free multifamily evaluation, or visit stellarsolarcommercial.com and we will model the allocation on your building’s actual meters.
Tax treatment depends on your eligibility and current law. This is not tax advice — confirm your situation with a qualified tax professional.
Sources & further reading
Program rules
- CPUC — Virtual Net Energy Metering and the Virtual Net Billing Tariff
- CPUC — Net Energy Metering / Net Billing Tariff
- CPUC — Prevailing wage for customer-sited renewable facilities (AB 2143)
- California Energy Commission — 2022 Building Energy Efficiency Standards
Incentives & tax
- IRS — Clean Electricity Investment Credit (Section 48E)
- SEIA — Depreciation of solar energy property (MACRS)
Stellar Solar credibility