What Is NEM 3.0?

Net Energy Metering 3.0 (NEM 3.0), officially called the Net Billing Tariff (NBT), is California's updated policy for how solar homeowners are compensated for excess electricity they send to the grid. It went into effect on April 15, 2023, replacing the previous NEM 2.0 policy.

The change was significant: under NEM 2.0, you received near-retail credit for excess solar energy. Under NEM 3.0, those credits dropped by roughly 75%. But don't panic — solar is still very much worth it in California. Here's everything you need to know.

NEM 2.0 vs. NEM 3.0: What Changed?

Under NEM 2.0, when your solar panels produced more electricity than you used, the excess was sent to the grid and you received a credit close to the retail rate — typically $0.30–$0.50 per kWh. This made solar an incredible deal even without a battery.

Under NEM 3.0, export credits are based on the "avoided cost" to the utility, which varies by time of day but averages only $0.05–$0.08 per kWh. That's a massive reduction.

However, electricity you use directly from your panels (self-consumption) still saves you the full retail rate — $0.30–$0.60/kWh depending on your utility and time of use. This is the key to understanding NEM 3.0.

Why Batteries Are Now Essential

Under NEM 3.0, the math is clear: every kilowatt-hour you store and use yourself is worth 5–10x more than exporting it. This is why battery storage has become almost essential for new solar installations in California.

Here's how it works:

• During the day: Your solar panels generate electricity. What you don't use immediately charges your battery
• During peak hours (4–9 PM): Instead of buying expensive electricity from the grid ($0.40–$0.60/kWh), you use your stored solar energy
• The savings: By avoiding peak-rate purchases, you save $0.40–$0.60 per kWh instead of getting $0.05–$0.08 in export credits

With a battery, most California homeowners can achieve 80–90% self-consumption, meaning very little energy is exported at the low NEM 3.0 rates.

NEM 3.0 Financial Impact: Real Numbers

Let's compare the savings for a typical California home with an 8 kW solar system:

Solar Only (no battery):

• System cost: ~$20,000
• Annual savings: ~$1,800–$2,200
• Payback period: 7–9 years

Solar + Battery:

• System cost: ~$32,000
• Annual savings: ~$2,800–$3,500
• Payback period: 7–10 years

The solar + battery system costs more upfront but saves significantly more each year, resulting in much higher lifetime savings. Plus, you get backup power during outages.

Time-of-Use Rates: The Hidden Opportunity

NEM 3.0 works on time-of-use (TOU) pricing, which means electricity rates vary throughout the day:

• Off-peak (midnight–4 PM): Lowest rates, ~$0.20–$0.30/kWh
• Peak (4–9 PM): Highest rates, ~$0.40–$0.60/kWh

This actually creates an opportunity. Your solar panels produce most during mid-day (off-peak), and your battery stores that energy for peak hours. The spread between off-peak solar generation and peak consumption is where your savings come from.

Export Credits by Utility

Here are the approximate NEM 3.0 export credit rates by major California utility:

• SCE (Southern California Edison): $0.04–$0.08/kWh (varies by time of day and month)
• SDG&E (San Diego Gas & Electric): $0.05–$0.10/kWh
• PG&E (Pacific Gas & Electric): $0.03–$0.07/kWh

While these credits are low, they're not zero. Any excess energy you can't store still earns something — it just shouldn't be the primary strategy for savings.

Who Is Grandfathered Under NEM 2.0?

If you installed solar before April 15, 2023, you're likely grandfathered under NEM 2.0 for 20 years from your interconnection date. This means you keep the higher export credits.

If you add a battery to an existing NEM 2.0 system, you typically keep your NEM 2.0 status — but check with your utility to confirm, as rules can vary.

Is Solar Still Worth It Under NEM 3.0?

Absolutely yes. Here's why:

• California electricity rates keep rising 6–8% annually — your savings grow every year
• Battery costs have dropped significantly in the last 3 years and continue falling
• California offers battery rebates through SGIP that can cut costs further
• Solar + battery provides backup power during outages
• Home value increases 4.1% on average with solar
• You're locking in your electricity cost for 25+ years

The investment case is different than NEM 2.0 — batteries are now part of the equation — but the financial returns are still excellent.

Get a NEM 3.0 Optimized System

At Everysun, every system we design is optimized for NEM 3.0. We size your solar and battery to maximize self-consumption and minimize grid exports, ensuring you get the best possible return on your investment.

Get a free consultation — we'll show you exactly how much you'll save under NEM 3.0 with a system designed for your home.