NEM 3.0 Explained: How California's Net Billing Tariff Changed Solar Payback

Last updated: May 2026 · Part of our plug-and-play home backup for NEM 3.0.

If you’re looking at solar or a home battery in California, “NEM 3.0” is the rule that decides how much your exported power is worth — and it changed the math a lot.

Short answer

NEM 3.0 (California’s Net Billing Tariff) has applied to new solar since 2023. It pays roughly $0.05/kWh for solar you export, while you still buy power back at up to ~$0.60/kWh at peak. Because exporting now pays so little, the value has shifted to storing and self-using your power — which is exactly why a battery makes the difference under NEM 3.0.

What NEM 3.0 (Net Billing) is

It’s the California Public Utilities Commission’s tariff for how rooftop-solar customers of PG&E, SCE and SDG&E are credited for power sent to the grid. Instead of crediting exports at the retail rate (as NEM 2.0 largely did), Net Billing credits them at hourly avoided-cost values — which are low most of the day. The ~$0.05/kWh figure is an annual blended average; the actual hourly credit swings from near-zero at spring midday to over $0.50/kWh during summer-evening peaks.

One important limit: NEM 3.0 applies only to the three big investor-owned utilities. If a municipal utility serves you — SMUD, LADWP and others — you’re under that utility’s own net-metering rules, which are often more generous. Check who your provider is before assuming NEM 3.0 applies.

What changed vs. NEM 2.0

Under NEM 2.0, a kWh you exported was worth roughly what a kWh you imported cost — so a grid-tied system without a battery still paid back well. Under NEM 3.0, the export value collapsed to around a nickel, while peak import prices climbed. Same panels, same sun — a fraction of the credit.

Why a battery now matters

If exporting pays ~$0.05 and peak power costs ~$0.60, the smart move is to keep your own energy instead of selling it: charge a battery from your solar (or cheap off-peak grid) and run your evening loads from it during the 4–9 PM peak. That price gap is where the savings live now.

Are you grandfathered?

Customers who interconnected under NEM 2.0 generally keep those terms for about 20 years from their interconnection date. Only new systems fall under the Net Billing Tariff — so check your interconnection date before assuming NEM 3.0 applies to you.

How a plug-in battery actually exploits this gap — without an electrician or utility paperwork — is in our plug-and-play home backup guide. See also: how much battery you need for a PSPS outage.