NEM 3.0 Explained: California Net Billing in 2026
California's net billing tariff cut export credits by roughly 75%. Here's how to get a fast payback anyway — and why batteries are now part of the answer.
What changed in April 2023
On April 14, 2023, California's Net Billing Tariff (NBT)— commonly called NEM 3.0 — replaced the previous NEM 2.0 program for new solar customers of PG&E, SCE, and SDG&E. The headline change: the average value paid for energy your panels send to the grid dropped by roughly 75%.
Under NEM 2.0, exported energy was credited at the full retail rate (often $0.30–$0.45 per kWh in California). Under NEM 3.0, exports are credited at avoided cost— typically $0.05–$0.08 per kWhoutside of summer evening peaks, and dramatically higher (sometimes $1–$3+ per kWh) during a few critical peak hours.
The bottom line: the rules now reward energy you use on-site , not energy you export. That is exactly what a battery makes possible.
How net billing actually works
Each month, your utility tracks two things separately: energy youimportedfrom the grid (charged at retail rates) and energy you exportedto the grid (credited at avoided cost). Imports and exports do notnet out kWh-for-kWh the way they did under NEM 2.0 — they net out in dollars.
At the end of your annual true-upperiod, any net credit balance can be cashed out at avoided-cost rates (small) or rolled forward. Most NEM 3.0 customers carry a small monthly balance and pay the non-bypassable charges (~$10–$15/month).
TOU windows and avoided-cost values
Avoided-cost values are highest during California's grid stress hours — typically 4 PM to 9 PMin summer, when solar production is fading and demand is peaking. Energy you export in those hours can be worth 6–20× more than midday exports.
| Time Window | Typical avoided-cost (summer) | Strategy |
|---|---|---|
| 10 AM – 3 PM | $0.05 – $0.08 / kWh | Charge battery, run pool pump, pre-cool home |
| 4 PM – 9 PM | $0.40 – $3.00+ / kWh | Discharge battery — export when valuable |
| 9 PM – 6 AM | $0.04 – $0.07 / kWh | Use stored battery energy to avoid grid imports |
Why batteries became essential
A solar-only system in California now exports most midday production for pennies and then has to buy energy back at retail rates in the evening. A battery flips that math entirely:
- Store cheap midday production. Instead of exporting at $0.06/kWh, you keep that energy.
- Use it during peak. Avoid buying power at $0.45–$0.55/kWh in PG&E E-TOU-C peak windows.
- Export the rest at peak value. Any remaining stored energy can be exported during the highest-value hours.
Payback math: solar-only vs solar + battery
Below is a simplified illustration for an average Bakersfield home using ~12,000 kWh/year on PG&E E-TOU-C with a 7.2 kW system. Your actual numbers will vary; we'll model your specific home in your free estimate.
| Scenario | System cost (after 30% credit) | Year-1 bill savings | Estimated payback |
|---|---|---|---|
| Solar only (NEM 3.0) | ~$15,000 | ~$1,600 | 9–10 years |
| Solar + 13.5 kWh battery | ~$24,000 (after SGIP) | ~$3,200 | 6–8 years |
| Solar + 27 kWh battery (whole-home) | ~$36,000 (after SGIP) | ~$4,000 | 7–9 years |
Illustrative only. Actual results depend on roof orientation, shade, utility rate plan, and SGIP eligibility. Not financial advice.
The self-consumption strategy
Under NEM 3.0, every kWh you consume on-site is worth full retail value (~$0.30–$0.55/kWh), while every kWh you export is worth avoided-cost (~$0.05–$0.08/kWh outside peak). The rational play:
- Size your system to match your annual usage (no oversizing).
- Add a battery sized to cover your evening 4–9 PM load.
- Move flexible loads — EV charging, dishwasher, pool pump — into midday hours.
- Pre-cool your home from 1–4 PM, then ride the battery through peak.
Common NEM 3.0 myths
"Solar isn't worth it anymore."Wrong. Payback is 2–3 years longer than NEM 2.0, but California's high retail rates still produce excellent lifetime savings — typically $40,000–$80,000 over 25 years.
"You're forced to buy a battery."No. Solar-only systems still work and still save money. Batteries simply produce the best ROI under the new rules.
"NEM 3.0 will get worse."The avoided-cost calculator is updated annually, but customers lock in their rate schedule on their PTO date for 9 years (with annual ACC inflation adjustments). The schedule does not retroactively shrink.
Your next steps
Get a NEM 3.0–optimized design built around your actual utility bill, roof, and load profile. Free, no-pressure, no fine print.
- Stack the federal credit + SGIP + property-tax exclusion to lower your all-in cost.
- Choose the right battery brand and size for your home.
- Run our savings calculator for your specific monthly bill.
Quick answers
Keep learning
More resources for California homeowners
Stack the 30% federal credit, SGIP battery rebate, and California's property-tax exclusion to lower the all-in cost of a new solar + battery system.
Everything California homeowners need to size, choose, and finance a solar battery in 2026 — from kWh math to backup loads to brand trade-offs.
Decode every line on your PG&E or SCE bill — and learn exactly what the numbers will look like after your solar system is granted PTO.
What actually happens between signing your proposal and switching your system on. Real timelines, paperwork, and what we handle for you.
Ready to run your numbers?
Get a personalized NEM 3.0 design with battery sizing, payback math, and stacked incentives — at no cost.
Run the savings calculator
See payback, 25-year savings, CO₂ offset, and battery impact for your home.