When California rolled out NEM 3.0 in April 2023, many homeowners wondered if going solar was still worth it. Export credits dropped by 75%, and some media outlets declared the "end of solar savings in California."

They were wrong. Nearly three years later, solar with battery storage is saving California homeowners as much or more than NEM 2.0 systems ever did. The strategy just looks different. Instead of overproducing and exporting to the grid, today's smart solar systems focus on self-consumption — using your own solar energy when it's most valuable.

This guide breaks down exactly how NEM 3.0 works in 2026, why batteries changed the equation, and the specific strategies California homeowners can use to maximize their solar savings.

Quick Recap: What Is NEM 3.0?

NEM 3.0 — officially called the Net Billing Tariff (NBT) — replaced NEM 2.0 as California's policy for compensating solar homeowners who send excess electricity to the grid. Here's what changed:

• NEM 2.0 (before April 2023): Excess solar exported to the grid earned near-retail credit — roughly $0.25–$0.50 per kWh depending on your utility
• NEM 3.0 (current): Export credits dropped to approximately $0.04–$0.08 per kWh based on "avoided cost" calculations that vary by time of day and season

The critical point most people miss: the value of self-consumed solar didn't change at all. Every kWh you generate and use in your own home still saves you the full retail rate — $0.30–$0.60/kWh depending on your utility and time of use.

NEM 3.0 only reduced the value of exported solar. If you can use most of what you produce, NEM 3.0 barely affects your savings.

The Self-Consumption Strategy: How Smart Homeowners Are Winning

Under NEM 2.0, system design was simple: install as many panels as possible, export the excess, and earn generous credits. Under NEM 3.0, the winning strategy is fundamentally different.

Maximize What You Use, Minimize What You Export

Here's the math that drives every decision:

• Solar energy you use directly: Worth $0.30–$0.60/kWh (full retail savings)
• Solar energy stored in a battery and used later: Worth $0.30–$0.60/kWh (still full retail savings)
• Solar energy exported to the grid: Worth only $0.04–$0.08/kWh (NEM 3.0 export credit)

The difference between self-consumed and exported solar is 5x to 10x. This makes self-consumption the single most important factor in your solar economics.

What Does Self-Consumption Look Like in Practice?

Without a battery, a typical solar home self-consumes about 30–40% of what their panels produce. The rest is exported during midday hours when the home uses less electricity than the panels generate.

With a properly sized battery, self-consumption jumps to 80–90%. Here's how:

• Morning (6–10 AM): Panels ramp up. Early production powers your home directly. Once consumption is covered, excess begins charging the battery.
• Midday (10 AM–3 PM): Peak solar production. Your home uses what it needs, the battery continues charging. Only if the battery is full does energy get exported.
• Afternoon peak (3–9 PM): Solar production declines, but electricity rates spike. Your battery takes over, powering your home with stored solar energy at rates worth $0.40–$0.60/kWh.
• Night (9 PM–6 AM): Battery continues discharging until empty, then you draw from the grid at lower off-peak rates.

Why Batteries Are the Key to NEM 3.0 Savings

Under NEM 3.0, a battery isn't a luxury — it's an economic necessity. Here's the financial comparison:

Solar Only (No Battery) Under NEM 3.0

• 8 kW system producing ~12,500 kWh/year
• Self-consumption rate: ~35%
• Self-consumed energy saves: ~$1,575/year (4,375 kWh × $0.36 average)
• Exported energy earns: ~$488/year (8,125 kWh × $0.06 average)
• Total annual benefit: ~$2,063
• System cost: ~$21,000
• Payback period: ~10 years

Solar + Battery Under NEM 3.0

• 8 kW system + 13.5 kWh battery producing ~12,500 kWh/year
• Self-consumption rate: ~85%
• Self-consumed energy saves: ~$3,825/year (10,625 kWh × $0.36 average)
• Exported energy earns: ~$113/year (1,875 kWh × $0.06 average)
• Total annual benefit: ~$3,938
• System cost: ~$34,000
• Payback period: ~8.6 years

The battery adds $13,000 to the upfront cost but nearly doubles your annual savings. It also provides backup power during outages — an increasingly valuable feature given California's aging grid infrastructure and wildfire-related power shutoffs.

Time-of-Use Rates: Working the System

NEM 3.0 is built on time-of-use (TOU) rate structures, and understanding these rates is key to maximizing savings.

How TOU Rates Work

Electricity prices vary throughout the day based on grid demand:

• Super off-peak (midnight–6 AM): Lowest rates, ~$0.15–$0.22/kWh
• Off-peak (6 AM–4 PM): Low-moderate rates, ~$0.20–$0.30/kWh — this is when your panels produce the most
• Peak (4–9 PM): Highest rates, ~$0.40–$0.60/kWh — this is when your battery should be discharging

The Arbitrage Opportunity

Your solar panels generate during off-peak hours. Your battery stores that energy and deploys it during peak hours. The spread between off-peak generation cost ($0 — it's your solar) and peak avoidance value ($0.40–$0.60/kWh) is where your savings multiply.

Some smart homeowners go further:

• Run major appliances during solar hours — dishwashers, washing machines, pool pumps, and EV chargers during 9 AM–2 PM
• Pre-cool your home in the afternoon — run AC harder from 2–4 PM (off-peak solar hours) and coast through the 4–9 PM peak
• Program your EV charger — charge from solar during the day or from the grid during super off-peak (midnight–6 AM) when rates are cheapest

System Design Strategies for Maximum NEM 3.0 Savings

How your solar + battery system is designed makes a significant difference in long-term savings:

Right-Size Your Panels

Under NEM 2.0, the advice was "go big." Under NEM 3.0, the advice is "go smart." You want enough panels to cover your annual consumption plus battery charging — but not so many that you're exporting massive amounts at $0.05/kWh.

A good rule of thumb: design for 100–120% of your annual electricity usage, accounting for battery round-trip efficiency losses (~10%).

Right-Size Your Battery

Battery sizing depends on your evening and overnight consumption:

• Average home (20–30 kWh daily usage): A 10–13.5 kWh battery covers most peak-hour needs
• High-usage home (40+ kWh daily): Consider 20–27 kWh of storage (two batteries)
• EV owners: Factor in charging needs — a daily 30-mile commute uses about 10 kWh

Your installer should model your specific usage patterns — hourly, not just monthly — to determine the optimal battery size.

Panel Orientation Matters More Now

Under NEM 2.0, south-facing panels were always preferred because they produce the most total energy. Under NEM 3.0, west-facing panels have gained value because they produce later in the day, aligning more closely with peak rate hours (4–9 PM).

Many installers now recommend a split orientation — some panels facing south for maximum total production and some facing west for better peak-hour production — especially if battery capacity is limited.

California State Incentives Still Available in 2026

While the federal solar landscape has changed, California maintains several programs that can reduce your costs:

SGIP (Self-Generation Incentive Program)

SGIP provides rebates for battery storage systems. The amount varies by utility territory and funding availability, but eligible homeowners can receive $150–$1,000+ per kWh of battery capacity. Homes in high-fire-threat districts or on medical baseline may qualify for enhanced incentives.

Check with your installer or the SGIP website for current availability in your area.

LADWP Solar Incentive Program

Los Angeles residents served by LADWP may qualify for the city's Solar Incentive Program, which provides per-watt rebates on qualifying residential installations. This program has limited funding and is subject to availability.

Property Tax Exemption

California law (Revenue and Taxation Code Section 73) exempts solar energy systems from property tax reassessment. Your home value increases, but your property taxes don't — a significant benefit in a state with high home values.

DAC-SASH and Other Low-Income Programs

Homeowners in disadvantaged communities may qualify for DAC-SASH (Disadvantaged Communities – Single-Family Solar Homes), which provides free or heavily subsidized solar installations.

Real Savings Examples: Before and After NEM 3.0

Let's look at real-world savings scenarios for different California homeowners:

Example 1: SCE Customer in Orange County

• Monthly bill before solar: $320
• System: 8.8 kW solar + 13.5 kWh battery
• Monthly bill after solar: $22
• Monthly savings: $298
• Annual savings: $3,576
• System cost: $33,500
• Payback period: 9.4 years
• 25-year savings: $98,000+ (with rate increases)

Example 2: SDG&E Customer in San Diego

• Monthly bill before solar: $380
• System: 9.5 kW solar + 20 kWh battery
• Monthly bill after solar: $18
• Monthly savings: $362
• Annual savings: $4,344
• System cost: $38,000
• Payback period: 8.7 years
• 25-year savings: $115,000+ (with rate increases)

Example 3: LADWP Customer in Los Angeles

• Monthly bill before solar: $210
• System: 7.5 kW solar + 10 kWh battery
• Monthly bill after solar: $15
• Monthly savings: $195
• Annual savings: $2,340
• System cost: $29,000
• Payback period: 12.4 years
• 25-year savings: $62,000+ (with rate increases)

In every scenario, the homeowner comes out significantly ahead over 25 years — even under NEM 3.0.

Looking Ahead: Why 2026 Is Still a Great Time to Go Solar

Several factors make 2026 a strong year for California homeowners to install solar:

• Electricity rates keep climbing: SCE and SDG&E have announced or implemented rate increases for 2026. Every rate hike increases your solar savings.
• Battery costs continue declining: Battery prices have dropped approximately 30% since NEM 3.0 launched, making solar + battery systems more affordable than ever.
• Grid reliability concerns: PSPS (Public Safety Power Shutoff) events and aging infrastructure make battery backup increasingly valuable.
• Home value appreciation: Solar systems continue to boost home values by an average of 4.1%, according to Zillow.
• Technology improvements: Modern panels produce 20–22.5% efficiency (up from 15–17% a decade ago), meaning fewer panels produce more energy.

Everysun: NEM 3.0 Optimized Solar Systems

At Everysun, every system we design is built for NEM 3.0 from the ground up. We don't just slap panels on your roof — we engineer a complete energy solution:

• Hourly usage analysis — we model your consumption patterns to determine optimal panel-to-battery ratios
• Premium US-made panels — up to 22.5% efficiency, all-black design, 25-year manufacturer warranty
• Right-sized battery storage — whole-home or partial backup options designed to maximize self-consumption
• TOU rate optimization — system programming aligned with your utility's peak and off-peak rates
• 20-year installation warranty — one of the longest in the industry
• Transparent pricing — no hidden dealer fees or surprise costs

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

Frequently Asked Questions

Is solar still worth it under NEM 3.0?

Yes. While export credits are lower, electricity you generate and use yourself (or store in a battery) still saves you the full retail rate — $0.30–$0.60/kWh. With a battery, most homeowners achieve 80–90% self-consumption, making NEM 3.0 export credits a minor factor in overall savings.

How much do solar savings decrease under NEM 3.0 compared to NEM 2.0?

For solar-only systems (no battery), annual savings decreased by roughly 30–40% compared to NEM 2.0. For solar + battery systems, savings are comparable to or better than NEM 2.0 levels, because high self-consumption rates offset the lower export credits.

Do I need a battery under NEM 3.0?

Technically no — solar panels still save money without a battery. But a battery nearly doubles your annual savings under NEM 3.0 by shifting self-consumption from ~35% to ~85%. For most homeowners, the additional investment pays for itself through dramatically higher savings.

Am I grandfathered under NEM 2.0 if I installed solar before April 2023?

Yes. Homeowners who received Permission to Operate (PTO) before April 15, 2023, are grandfathered under NEM 2.0 for 20 years from their interconnection date. Adding a battery to an existing NEM 2.0 system typically preserves your NEM 2.0 status, but check with your utility.

What is the best battery for NEM 3.0 savings?

The best battery depends on your home's energy usage and what you want to achieve. Popular options include 10–13.5 kWh single battery systems for average homes and 20+ kWh configurations for high-usage homes or those wanting whole-home backup. Your installer should recommend a size based on your specific consumption data.

Can I still go solar without a battery and save money?

Yes. Solar-only systems still provide meaningful savings — roughly $1,800–$2,200 per year for a typical California home. The payback period is longer than a solar + battery system (10–12 years vs. 7–9 years), but you still save $50,000–$70,000 over 25 years. You can also add a battery later.