NEM 3.0 is the nickname for California’s Net Billing Tariff (NBT). The California Public Utilities Commission (CPUC) adopted it on Dec 15, 2022 (Decision 22-12-056). It applies to PG&E, SCE and SDG&E customers who submitted an interconnection application on or after April 15, 2023. The utilities call it the “Solar Billing Plan.” Its main change is that exported solar is no longer credited at the retail rate.
NEM 3.0 vs NEM 2.0
| NEM 2.0 | NEM 3.0 (Net Billing Tariff) | |
|---|---|---|
| Export credit basis | Import (retail) rates | CPUC Avoided Cost Calculator values, usually lower and varying by hour |
| Who’s on it | Applications by April 14, 2023 | Applications from April 15, 2023 |
| Legacy period | 20 years from interconnection | 9 years from permission to operate (PTO) |
| Bill payment | Annual true-up | Monthly bills, credits roll forward to true-up |
Is NEM 3.0 worth it without a battery?
It can be, if you use a large share of your solar during the day. For most homes, exported midday power earns little, so a battery usually improves savings.
How much does NEM 3.0 pay for exported solar?
It varies by hour and month based on the CPUC’s Avoided Cost Calculator. PG&E posts its export rates at pge.com/energyexportcredit.
Should I add panels to my NEM 2.0 system?
Be careful. Adding capacity can affect your legacy status. Ask your utility about its rules for system modifications before expanding.
Does NEM 3.0 change the federal tax credit?
No, those are separate. The federal 25D credit ended for homeowner-owned systems installed after Dec 31, 2025, under federal law. See is the solar tax credit gone in 2026.
Can I avoid NEM 3.0 by going off grid?
Yes, but an off-grid home needs enough battery and generation for the worst winter days, which usually costs far more. See our off-grid solar sizing guide.
Source: CPUC Net Energy Metering and Net Billing page; Tesla Powerwall 3 datasheet; utility Green Button data download pages. Accessed Oct 2026.
The Rules That Matter Most
- Hourly export values: an exported kWh is worth the avoided-cost value for that hour and month. Values are generally low at midday and higher on summer evenings.
- 9-year lock: customers who apply by Dec 31, 2027 get a “locked-in” nine-year schedule of hourly export values, per PG&E’s tariff filing. After that, values follow the current Avoided Cost Calculator.
- Export adder: residential PG&E and SCE customers who apply before the end of 2027 get slightly higher export credits for nine years. SDG&E customers are excluded, according to the CPUC.
- Time-of-use rates: NBT customers take service on an electrification time-of-use rate.
Why Batteries Matter Under NEM 3.0
When midday exports earn little, the best use of a solar kWh is to use it yourself, either right away or later from a battery. A battery charges from midday surplus and discharges during the expensive evening peak, replacing grid power you’d otherwise buy at the full time-of-use rate.
Example math (illustrative rates): shifting 10kWh a day from a $0.08 export credit to offsetting $0.45 peak power is worth about (0.45 − 0.08) × 10 = $3.70 a day, or roughly $1,350 a year before battery losses. Real values depend on your rate plan and the hourly export schedule.
Sizing Changes
- Size solar closer to what you can use yourself rather than 100%+ of yearly kWh.
- Point some panels west if evening production helps.
- Size the battery to your evening peak use, not just for backup.
Is Solar Still Worth It in California?
Often yes, but the case now depends on the battery, the rate plan and the price. The federal 25D credit also ended for systems homeowners own and install after 2025 (IRS), so run the numbers without it.
Who NEM 3.0 Covers and Who It Doesn’t
| Customer | Tariff |
|---|---|
| PG&E, SCE or SDG&E, application on or after April 15, 2023 | Net Billing Tariff (NEM 3.0) |
| Same utilities, application by April 14, 2023 | NEM 2.0, for 20 years from interconnection |
| LADWP, SMUD and other municipal utilities | Their own programs, set locally |
| Off-grid homes | No tariff applies |
If you buy a house that already has solar, the existing interconnection usually stays on its tariff for the rest of the legacy period. Confirm with the utility, and see our selling a house with solar guide.
How a Day Works Under NEM 3.0
Under the Net Billing Tariff, your meter records imports and exports separately. Every exported kWh is credited at the export value for that hour of that month. Every imported kWh is charged at your time-of-use rate. Here’s one summer day for an example home (illustrative rates, not a tariff):
| Time | What happens | Example rate | Effect on bill |
|---|---|---|---|
| 7 a.m. to 10 a.m. | Solar ramps up, home uses most of it | Off-peak import | Small grid use |
| 10 a.m. to 3 p.m. | Large surplus exported | Low midday export value, e.g. $0.03 to $0.05 | Small credit |
| 4 p.m. to 9 p.m. | Solar fades, peak rates apply | Peak import, e.g. $0.45 to $0.60 | Biggest cost |
| 9 p.m. to 7 a.m. | Grid power at night | Off-peak import | Moderate cost |
The 4 p.m. to 9 p.m. window is when California’s investor-owned utilities generally apply their highest time-of-use prices. Check the exact hours on your rate plan.
Worked Example: Solar Only vs Solar Plus Battery
Take a home that uses 12 kWh during the evening peak each day, with a 7 kW array that exports 20 kWh at midday. Using the example rates of $0.05 for midday exports and $0.50 for peak imports:
| Setup | Midday export credit | Peak power bought | Daily net for these hours |
|---|---|---|---|
| Solar only | 20 kWh × $0.05 = $1.00 | 12 kWh × $0.50 = $6.00 | $5.00 cost |
| Solar + 13.5 kWh battery (90% round trip) | 6.7 kWh × $0.05 = $0.34 | 0 kWh | $0.34 credit |
In the battery case, 13.3 kWh of midday solar charges the battery, which delivers about 12 kWh at 90% efficiency and covers the peak. The difference is about $5.34 a day, or roughly $1,950 a year if every day looked like this. Winter days with less solar would save less. Tesla lists the Powerwall 3 at 13.5 kWh usable, which is why that size appears here. For other battery options, see our Powerwall 3 vs Enphase vs FranklinWH comparison.
Step-by-Step: Sizing a System for NEM 3.0
- Download 12 months of hourly or 15-minute usage from your utility’s website. PG&E, SCE and SDG&E offer this through “Green Button” downloads.
- Add up evening-peak use (generally 4 p.m. to 9 p.m.). Average it per day. That’s your starting battery size in usable kWh.
- Size solar to cover daytime use plus battery charging, not 100% of yearly kWh. Exported surplus earns little.
- Run PVWatts with west-facing panels as an option. They shift production toward the afternoon.
- Compare quotes on bill savings, not panel count. Ask each installer to model savings on the Net Billing Tariff with your actual usage file.
Grandfathering and the 9-Year Lock
| Feature | What it means |
|---|---|
| Legacy period | 9 years from permission to operate on the Net Billing Tariff |
| Locked export values | Applicants by Dec 31, 2027 keep a fixed 9-year schedule of hourly values |
| Export adder | Small temporary bonus on export credits for eligible PG&E and SCE residential customers who apply before end of 2027 |
After nine years, export credits follow whatever the Avoided Cost Calculator says at that time. Plan your payback math around the first nine years and treat later years conservatively. For a full payback model, see our solar payback period guide.
How NEM 3.0 Compares With Net Metering Elsewhere
Outside California, many utilities still use net metering or have moved to their own net billing rules. The general difference is explained in net metering vs net billing. The same planning applies under any net billing program: raise self-use, size the battery to evening load, and avoid oversizing.
FAQ
Does NEM 3.0 apply to me if I already have solar?
Not if your application was submitted by April 14, 2023. NEM 2.0 customers can stay on it for 20 years from interconnection.
Is NEM 3.0 statewide?
It covers the three big investor-owned utilities. Municipal utilities like LADWP and SMUD set their own rules.
Where can I see the export rates?
PG&E posts them at pge.com/energyexportcredit, and the other utilities publish their own.
Sources: CPUC, Net Billing Tariff (cpuc.ca.gov/nbt) and Net Energy Metering and Net Billing; PG&E Advice Letter 6848-E-A; IRS Residential Clean Energy Credit. Accessed Oct 2026.
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