NEM 3.0 Changed the Rules. Solar + Battery Still Wins.
In April 2023, California cut what utilities pay for exported solar by 75%. The strategy shifted — solar without a battery is less effective, but solar paired with battery storage still delivers strong savings for PG&E, SCE, and SDG&E customers. Here is exactly how it works and what it means for your home in 2026.
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Yes — but the strategy changed. Without battery storage, you export cheap and buy back expensive every evening. With a Powerwall, you keep up to 80% of what you generate and offset rates up to $0.42 per kilowatt-hour in SDG&E territory. Solar plus storage still delivers strong long-term savings.
NEM 3.0 cut what PG&E, SCE, and SDG&E pay for exported solar from roughly $0.30 per kilowatt-hour down to about $0.05 to $0.08. That is a 75 to 80% reduction that took effect for new solar systems after April 14, 2023. Self-consumption — not exporting — is now the strategy that works.
Yes. If your solar was interconnected before April 14, 2023, you are on NEM 2.0 for 20 years. You can add a Tesla Powerwall without losing your grandfathered NEM 2.0 rate. You can also expand production with a non-export system — both options protect your existing agreement completely.
What did NEM 3.0 actually change — and why does it matter for your bill?
NEM 3.0 changed one thing with massive consequences: what the utility pays you for solar power you send to the grid. Under NEM 2.0, you got a credit at full retail rate — like selling power back at the same price you buy it. Under NEM 3.0, you get a fraction of that. The grid is no longer your free battery.
The CPUC's Net Billing Tariff decision (D.22-12-056) set export compensation at "avoided cost" — what it costs the utility to buy power on the wholesale market — rather than the retail rate you pay on your bill. That gap is where the money disappeared. The market has since recovered — because the solution became clear: pair solar with battery storage and keep what you generate instead of exporting it at low rates. Self-consumption is now the only strategy that works. Use our home battery storage guide to see which storage option fits your situation.
| What Changed | NEM 2.0 — Before Apr 14, 2023 | NEM 3.0 — After Apr 14, 2023 |
|---|---|---|
| Export credit rate | ~$0.30–$0.35/kWh (retail rate) | ~$0.05–$0.08/kWh (avoided cost) |
| Self-consumption value | $0.30–$0.35/kWh | $0.35–$0.42/kWh — same or higher |
| Grid as "free battery" | Yes — export and buy back at same rate | No — exports worth far less than buyback |
| Solar-only system ROI | Strong — surplus exports credited at retail | Weakened — surplus exports near worthless |
| Battery storage | Optional — grid handled overnight usage | Essential — captures full retail rate offset |
| Non-export system | Less common — exporting was profitable | Strong option — no export, no rate impact |
| Best strategy | Right-size system, export surplus freely | Maximize self-consumption — storage or non-export |
| Existing NEM 2.0 owners | Grandfathered — 20 years from PTO date | Protected — can add battery or non-export production |
Source: CPUC D.22-12-056. Retail rates based on 2026 PG&E E-TOU-C and SDG&E DR-SES schedules. † Run your battery savings estimate →
Want to see exactly how this affects your bill? Our free California solar calculator runs your actual PG&E, SCE, or SDG&E rate schedule against your usage and shows real savings — not national averages.
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How does NEM 3.0 affect PG&E, SCE, and SDG&E customers differently?
NEM 3.0 applies to all three investor-owned utilities — but your savings potential varies significantly based on your utility's retail rate. The higher your rate, the more every self-consumed kilowatt-hour is worth, and the faster battery storage pays off. SDG&E customers face the highest rates in the continental US and have the most to gain from storage. Source: PG&E E-TOU-C, SCE TOU-D, SDG&E DR-SES — 2026 rate schedules.
PG&E's E-TOU-C rate peaks between 4 and 9 PM — exactly when solar stops producing. Battery storage captures midday solar and discharges during peak hours, offsetting the most expensive power of the day. Waiting costs more each year as rates climb.
Run your PG&E savings estimate →SCE's TOU-D-PRIME rate structure makes evening battery discharge especially valuable. Every kilowatt-hour stored during the day and used at night offsets the most expensive power on your bill — at up to $0.37/kWh.
Run your SCE savings estimate →SDG&E is the highest-rate investor-owned utility in the continental US. Every kilowatt-hour you self-consume saves $0.40 or more. Battery storage pays back faster here than almost anywhere in the country. See all San Diego County solar options →
Run your SDG&E savings estimate →| Utility | Retail Rate (2026) | NEM 3.0 Export Rate | Gap Per kWh | Battery Self-Consumption Value |
|---|---|---|---|---|
| PG&E | $0.33–$0.35 | $0.05–$0.08 | ~$0.27/kWh lost on export | $0.33–$0.35 saved per kWh |
| SCE | $0.33–$0.37 | $0.05–$0.08 | ~$0.28/kWh lost on export | $0.33–$0.37 saved per kWh |
| SDG&E | $0.40–$0.45 | $0.05–$0.08 | ~$0.37/kWh lost on export | $0.40–$0.45 saved per kWh |
| SMUD | ~$0.12–$0.14 | Separate program | Not NEM 3.0 | See SMUD VPP rebate program |
| Pioneer Territory EDH, Loomis, Rocklin, Lincoln, Auburn |
~$0.14–$0.16 | Separate program | Not NEM 3.0 | Confirm terms with your rep |
Sources: PG&E E-TOU-C, SCE TOU-D, SDG&E DR-SES, CPUC D.22-12-056 — 2026 rate schedules. † Run your Powerwall savings estimate →
SMUD and Pioneer territory customers: NEM 3.0 does not apply to you. SMUD has its own solar billing program with a separate battery rebate — up to $5,400 per Powerwall through SMUD's VPP enrollment incentive. Customers in El Dorado Hills, Loomis, Rocklin, Lincoln, and Auburn operate under separate net metering terms — not NEM 3.0. Contact us to confirm your specific program and rates.
Does adding a battery actually fix the NEM 3.0 problem?
NEM 3.0 did not make solar worse. It made self-consumption the only strategy that works. Under NEM 2.0, the grid was your free battery — you exported cheap and bought back at the same price. That arbitrage is gone. The two solutions are battery storage and non-export system design. Here is how both work and who each one is right for.
Without Battery
- Self-consumption: ~30% of what you generate
- Export rate: $0.05–$0.08/kWh — near worthless
- Evening usage: bought back at $0.35–$0.42/kWh
- Peak TOU hours: no coverage after solar shuts down
- Oversizing the system does not fix the export problem
With Battery
- Self-consumption: ~75–85% of what you generate
- Midday solar stored, discharged during 4–9pm peak
- Evening usage: covered by stored solar at $0/kWh
- Full retail offset on the most expensive TOU hours
- Backup power during outages — grid independence
| Scenario | PG&E Monthly Savings | SDG&E Monthly Savings | Self-Consumption |
|---|---|---|---|
| Solar only — NEM 3.0 | $40–$70/mo | $55–$90/mo | ~30% |
| Solar + 1 Powerwall | $90–$150/mo | $130–$200/mo | ~70–80% |
| Solar + 2 Powerwalls | $110–$170/mo | $160–$240/mo | ~80–90% |
Estimates based on average California household usage of 700 to 900 kWh per month at 2026 utility rates. Individual results vary by home size, usage profile, and system design. † Run your Powerwall savings estimate →
Already have solar? You have more options than you think.
If you installed solar before April 14, 2023, you are on NEM 2.0 — and that rate is locked in for 20 years from your Permission to Operate date. The question most existing solar owners are asking is not whether NEM 3.0 affects them. It is what they can do next without touching their agreement.
| Your Situation | NEM Status | Options Available | Recommended Action |
|---|---|---|---|
| Solar before Apr 14, 2023 — need more production | NEM 2.0 — protected 20 yrs | Battery storage or non-export expansion | Add Powerwall or non-export panels — NEM 2.0 untouched |
| Solar before Apr 14, 2023 — no changes needed | NEM 2.0 — protected 20 yrs | Sit tight — your rate is the best available | Do not touch your interconnection agreement |
| Solar after Apr 14, 2023 — on NEM 3.0 | NEM 3.0 — export at avoided cost | Battery storage — maximize self-consumption | Powerwall essential to offset evening peak usage |
| No solar — planning now | Will be NEM 3.0 on interconnect | Solar + battery from day one | Design for self-consumption — storage not optional |
| Selling home with NEM 2.0 solar | NEM 2.0 transfers to buyer* | Disclose and document — it's a selling asset | NEM 2.0 adds real value — buyers inherit the rate |
NEM 3.0 legal status — June 2026: In August 2025, the California Supreme Court unanimously ordered the Court of Appeal to reconsider its earlier ruling upholding NEM 3.0. The Supreme Court did not overturn NEM 3.0 — it remains in effect today and applies to all new solar interconnection applications with PG&E, SCE, and SDG&E. Plan your system on current rules. A favorable ruling could improve future export rates — but waiting for that outcome is not a financial strategy. *AB 942 (2025) as amended: NEM 2.0 contracts survive home sale. Source: CPUC.
Battery-Only Install
Add a Tesla Powerwall to your existing solar system. No change to your panels, inverter, or interconnection agreement. Store what you generate during the day and use it at night — eliminating evening grid purchases at peak rates.
- NEM 2.0 export credits fully preserved
- Self-consumption jumps from ~30% to ~75–80%
- Evening peak usage covered by stored solar
- Backup power during outages
- SMUD customers: up to $5,400 rebate per Powerwall
- No new interconnection application required
Non-Export Expansion + Battery
Usage grown since your original install? Added an EV, HVAC system, or a home addition? We add panels configured with an export limiter — nothing goes to the grid — paired with a Powerwall to store and dispatch what the new panels generate. Your NEM 2.0 agreement stays untouched.
- NEM 2.0 grandfathered status fully protected
- Export limiter prevents any grid injection
- Battery stores new production for evening use
- Right-sized to cover new usage — EV, HVAC, addition
- No new interconnection application required
- Complete solution — more production and storage in one
Not sure which option fits your situation?
Tell us about your existing system and current usage — we will tell you exactly what makes sense.
What are the best ways to finance solar and battery under NEM 3.0?
The federal 25D residential tax credit expired December 31, 2025 — cash and loan buyers no longer have a personal tax incentive. The good news: the commercial 48E Investment Tax Credit runs through 2027 and passes through to you on prepaid leases and PPAs at the full 30% value. No tax liability required. See all options on our California solar financing page.
25D tax credit expired 12/31/25. Cash and loan buyers no longer have a federal residential credit. The 48E commercial ITC remains active through 2027 — it flows through finance companies on prepaid leases and PPAs, delivering the same effective 30% savings without requiring personal tax liability. Confirm your tax situation with a qualified advisor.
Prepaid Lease
Pay once upfront at 30% off — the 48E ITC passes directly through to you via the finance company. You own the system after 5 years. No personal tax filing required. Financed through Credit Human or Wheelhouse Credit Union.
- 30% effective discount via 48E ITC passthrough
- System ownership transfers after 5 years
- No annual tax credit claim required
- Fixed upfront cost — no monthly payment
- Works for solar-only or solar + battery
LightReach PPA
Solar and battery bundled into one fixed monthly payment. LightReach handles monitoring, maintenance, and insurance. The 48E ITC savings are reflected in your rate — no upfront cost, no tax filing.
- $0 down — no upfront cost
- Solar + battery in one monthly payment
- 48E ITC savings reflected in your rate
- LightReach covers maintenance and monitoring
- Transferable if you sell your home
Solar Loan
Finance and own your system outright through GoodLeap or EnFin. $0 down, fixed monthly payments, full ownership from day one. Best for homeowners who want ownership without paying cash upfront. Note: 25D credit expired — confirm any applicable incentives with your tax advisor.
- $0 down — own the system immediately
- Terms from 5 to 25 years
- Full ownership — no lease agreement
- GoodLeap and EnFin available
- Works for solar-only or solar + battery
Cash Purchase
Full ownership, no monthly payment, strongest long-term return. The 25D personal tax credit expired 12/31/25 — cash buyers no longer have a federal incentive. Confirm current state-level incentives and consult your tax advisor before purchasing.
- No monthly payment — lowest lifetime cost
- Full ownership from day one
- Strongest long-term ROI at current utility rates
- 25D federal credit expired 12/31/25
- SMUD rebate still available for battery storage
| Option | Upfront Cost | 48E ITC (30%) | You Own System | Monthly Payment | Best For |
|---|---|---|---|---|---|
| Prepaid Lease | Yes — 30% off via ITC | Yes — passthrough | After 5 years | None | Best value, no tax filing |
| LightReach PPA | $0 down | Yes — in your rate | No — leased | Fixed monthly | $0 down, solar + battery bundled |
| Solar Loan | $0 down | No — expired 12/31/25 | Yes — from day one | Fixed monthly | Ownership without cash outlay |
| Cash | Full price | No — expired 12/31/25 | Yes — immediately | None | Max long-term ROI |
48E ITC available through 2027 for TPO (lease/PPA) products only. 25D residential credit expired 12/31/25 — no longer available for cash or loan purchases. Consult a qualified tax advisor for your specific situation. See all California solar financing options →
NEM 3.0 questions California homeowners are actually asking
No — if your solar was interconnected before April 14, 2023, you are on NEM 2.0 and stay there for 20 years from your Permission to Operate date. NEM 3.0 only applies to systems that went through interconnection after that cutoff. Check your original PTO letter if you are unsure of your date.
The difference is what your utility pays for excess solar you send to the grid. Under NEM 2.0, you received roughly $0.30 to $0.35 per kilowatt-hour — close to the retail rate. Under NEM 3.0, that dropped to about $0.05 to $0.08 — the wholesale avoided-cost rate. That is a 75 to 80 percent reduction in export value according to the CPUC's Net Billing Tariff decision.
Yes — with battery storage. A Powerwall raises self-consumption from roughly 30 percent to 75 to 85 percent, offsetting the full retail rate on most of what you generate. At $0.35 to $0.42 per kilowatt-hour for PG&E and SDG&E customers in 2026, the savings are strong. Solar without battery under NEM 3.0 is significantly weaker — use our free solar calculator to see numbers for your bill.
Yes. California policy allows NEM 2.0 customers to add battery storage without triggering a new interconnection application — your grandfathered rate stays intact. This is one of the most searched questions from existing solar owners and the answer is clearly yes. Use our Powerwall Calculator to estimate your savings before committing.
Yes — with a non-export system. If your usage has grown since your original install due to an EV, new HVAC, or a home addition, we can add panels with an export limiter that prevents any power from going to the grid. Nothing triggers a new interconnection application. The expansion is always paired with battery storage to capture and dispatch the additional production.
Your NEM 2.0 contract transfers to the new owner. Assembly Bill 942, passed in 2025, originally contained language that would have voided NEM 2.0 contracts at home sale — but that provision was removed after solar advocate opposition. A home with NEM 2.0 solar is a genuine selling asset and the new buyer inherits the remaining term of your grandfathered agreement.
No. NEM 3.0 applies only to the three investor-owned utilities — PG&E, SCE, and SDG&E. SMUD is a municipal utility with its own solar billing program. SMUD customers have access to a separate battery incentive — up to $5,400 per Powerwall through the VPP enrollment program. See the SMUD battery rebates page for details.
A single Powerwall raises self-consumption from about 30 percent to 70 to 80 percent for a typical California household. A PG&E customer saving $50 per month with solar only could save $120 to $160 per month with a Powerwall added — at current 2026 rates. SDG&E customers see the largest impact. Run your exact numbers with our Powerwall savings calculator.
Yes — and the legal status is still active. In August 2025, the California Supreme Court unanimously ordered the Court of Appeal to reconsider its earlier decision upholding NEM 3.0. The Supreme Court did not overturn NEM 3.0 — it remains fully in effect today. Plan any system you design or finance on current rules. A favorable ruling could improve future export rates but is not a reason to wait.
The prepaid lease and PPA are the strongest options for most California homeowners right now. The commercial 48E Investment Tax Credit — which replaced the 25D residential credit that expired December 31, 2025 — flows through to you at full 30 percent value via the finance company, with no personal tax liability required. Cash and loan buyers no longer have a federal credit. See all options on our California solar financing page.
Your true-up bill under NEM 3.0 is an annual settlement between what you consumed from the grid and what you exported to it over the year. Because NEM 3.0 export credits are worth far less than the retail rate you pay, most solar-only customers see a meaningful true-up balance at year end. Battery storage reduces exports to near zero — you are offsetting consumption rather than banking credits, which means very little true-up exposure.
No. Customers in El Dorado Hills, Loomis, Rocklin, Lincoln, and Auburn are in Pioneer territory and operate under separate net metering terms — not NEM 3.0. If you are in one of these areas, contact us to confirm your specific program, rates, and what solar options make sense for your utility.
Your bill isn't going down on its own.
PG&E and SDG&E rates have averaged 6% or more in annual increases. Under NEM 3.0, solar and battery is still the strongest hedge against that — if it is designed right. Run your free estimate in 90 seconds.