·
·
NEM 3.0 — California's Net Billing Tariff — took effect April 15, 2023 and changed how utilities pay for exported energy. Credits fell about 75%, from near-retail rates to an hourly "avoided cost." For PG&E, SCE, and SDG&E customers, that shift is why home energy storage now matters more than the panels alone.
What NEM 3.0 actually is
The California Public Utilities Commission approved NEM 3.0 on December 15, 2022 (Decision D.22-12-056), and it took effect April 15, 2023. Its official name is the Net Billing Tariff (CPUC). It applies to customers of the three investor-owned utilities — PG&E, SCE, and SDG&E — while municipal utilities like SMUD and LADWP set their own rules and are not bound by it (CPUC; Enphase).
The core change is what your exported energy is worth. Under the old net metering, a kilowatt-hour you sent to the grid earned close to the retail rate you pay. Under NEM 3.0, exports are credited at "avoided cost" — what the utility would otherwise pay to get that power elsewhere — calculated by the Avoided Cost Calculator (CPUC).
What changed for your bill
Export credit fell roughly 75%: from about $0.30 per kWh under NEM 2.0 (near retail) to an average of about $0.05–$0.08 per kWh under NEM 3.0, while the power you import still costs $0.30–$0.55 per kWh at peak (EnergySage; CPUC).
There are 576 different export rates — one for each combination of month, hour, and weekday/weekend — with the highest values on late-summer evenings (Aurora Solar; EnergySage).
PG&E and SCE residential customers who go solar in the first five years (through April 2028) get an ACC Plus adder, locked for nine years, with a larger adder for CARE/FERA low-income customers; SDG&E is excluded (Enphase; OpenSolar).
Who's on NEM 3.0 (and who's grandfathered)
Your tariff is set by when your interconnection application was submitted, not when the system was installed. Applications completed by April 14, 2023 locked in NEM 2.0 and are grandfathered for 20 years; anything after falls under NEM 3.0 (CPUC; Solar.com). That legacy status follows the system, so a home you buy with grandfathered solar keeps the remaining years.
Why storage now matters more than panels
Because exports are worth so little, the value now comes from using your own energy at peak rather than selling it back. The numbers show the shift:
Payback for solar-only stretched to roughly 8–12 years under NEM 3.0, versus 5–7 years under NEM 2.0; adding storage brings it back to about 7–9 years (EnergySage; Wood Mackenzie).
Storage attachment on new California solar jumped from about 11% in early 2023 to 50–60% by 2024 (Lawrence Berkeley National Laboratory; Wood Mackenzie).
A home energy storage system stores your cheap midday production and powers your home during the expensive evening peak — and it's also what lets you join a Virtual Power Plant for extra earnings.
NEM 2.0 vs NEM 3.0 at a glance
Dimension | NEM 2.0 | NEM 3.0 (Net Billing) |
|---|---|---|
Export credit | Near retail (~$0.30/kWh) | Avoided cost (~$0.05–0.08/kWh avg) |
Change in export value | — | ~75% lower |
Set by | Interconnection app by Apr 14, 2023 | Interconnection app on/after Apr 15, 2023 |
Applies to | PG&E, SCE, SDG&E | PG&E, SCE, SDG&E |
Grandfathering | 20 years | New baseline |
Best strategy | Offset bill via exports | Solar + storage, self-consumption |
What it means if you're deciding now
For an investor-owned-utility customer, solar without storage now exports at a low rate, while storage captures value at peak — which is why most 2026 systems pair the two. SMUD customers are on separate rules entirely. And remember the federal picture changed too: the 30% residential tax credit expired at the end of 2025 for homeowners who buy. California Energy Initiative is a Sacramento-based local energy advisory service — not a contractor or installer — and our assessment is free.
Frequently asked questions
What's the difference between NEM 2.0 and NEM 3.0?
Mainly the export credit. NEM 2.0 paid near retail (~$0.30/kWh); NEM 3.0 pays avoided cost (~$0.05–0.08/kWh average), about 75% lower (EnergySage; CPUC).
Does NEM 3.0 apply to SMUD?
No. SMUD isn't governed by the CPUC and uses its own Solar and Storage Rate. NEM 3.0 applies to PG&E, SCE, and SDG&E.
Is solar still worth it under NEM 3.0?
Often yes, but the math now favors solar paired with storage and high self-consumption; payback runs about 7–9 years with storage (Wood Mackenzie; EnergySage).
Am I grandfathered on NEM 2.0?
If your interconnection application was complete by April 14, 2023, you're on NEM 2.0 for 20 years (CPUC).
Is California Energy Initiative a contractor?
No. CEI is a Sacramento-based local energy advisory service. We help you check eligibility and connect with independent licensed installers, and we're not affiliated with californiaenergyinitiative.org.
California Energy Initiative is a Sacramento-based local energy advisory service. We help homeowners check program eligibility, get a free assessment, and connect with independent licensed installers. We are not a contractor or installer, and we are not affiliated with californiaenergyinitiative.org. Call (888) 288-6988 or visit cainitiative.com.