NEM 3.0 Explained: What California's New Net Billing Means for Solar
In April 2023, California transitioned from NEM 2.0 to NEM 3.0 (also called the Net Billing Tariff). This was the biggest change to California solar policy in a decade, and it fundamentally changed the economics of going solar. Here's what you need to know.
What Changed from NEM 2.0 to NEM 3.0
Under NEM 2.0, when your solar panels produced more electricity than you used, you exported the excess to the grid and received a credit at roughly your full retail rate — often $0.30–$0.50/kWh. It was an excellent deal.
Under NEM 3.0, export credits dropped to $0.05–$0.08/kWh on average. That's a 75–80% reduction in the value of exported energy.
How NEM 3.0 Export Rates Work
NEM 3.0 uses "Avoided Cost Calculator" (ACC) values:
- Export rates vary by hour, month, and utility — they're not fixed
- Mid-day exports (when solar produces most) are worth the least
- Evening exports (4–9 PM) are worth more, but your panels aren't producing much then
- ACC adders provide temporary bonus credits for the first 9 years
Why Batteries Are Now Essential
Under NEM 2.0, batteries were a nice-to-have. Under NEM 3.0, they're practically required to maximize savings. Here's why:
- Store instead of export — Instead of sending mid-day solar to the grid for $0.05/kWh, store it in a battery
- Use during peak hours — Use stored energy during 4–9 PM when you'd otherwise pay $0.50+/kWh from the grid
- Net value per kWh stored — You save $0.45–$0.55 per kWh by self-consuming instead of exporting
Is Solar Still Worth It Under NEM 3.0?
Absolutely yes. The economics shifted but didn't disappear:
- Solar + battery systems still payback in 5–7 years for most IOU customers
- 25-year savings still reach $70,000–$100,000+
- The key is system design — right-sizing for self-consumption rather than maximum export
- NEM 3.0 actually makes solar MORE valuable with batteries than NEM 2.0 was with solar alone
See your NEM 3.0 savings estimate or get a free solar + battery quote.