PG&E · NEM 3.0 · Net Billing Tariff
PG&E NEM 3.0:
What Changed and What to Do
NEM 3.0 cut solar export credits by roughly 65% compared to NEM 2.0. If you went solar after April 2023 — or are considering it now — here's exactly what that means for your savings and how battery storage changes the equation.
What Is NEM 3.0?
Net Energy Metering (NEM) is the billing arrangement that determines how PG&E credits you for the excess solar power your system sends to the grid. Under the original NEM 2.0 program, those credits were calculated at near-retail rates — roughly $0.08–$0.10/kWh. That made it financially viable to oversize your solar system and "bank" credits during the day to offset evening usage.
On April 15, 2023, the California Public Utilities Commission (CPUC) replaced NEM 2.0 with the Net Billing Tariff — commonly called NEM 3.0. The key change: export credits dropped to approximately $0.02–$0.05/kWh, varying by time of day. The average is roughly $0.03/kWh — a 65% reduction from NEM 2.0.
The practical effect for homeowners is clear: exporting solar to the grid is now much less valuable than using it directly. A battery stores your midday production so you use it at peak instead of exporting it cheap.
NEM 2.0 vs NEM 3.0: Side by Side
| Factor | NEM 2.0 | NEM 3.0 |
|---|---|---|
| Export credit rate | ~$0.08–$0.10/kWh (near retail) | ~$0.02–$0.05/kWh (avoided cost) |
| Battery needed? | Optional — solar alone works well | Strongly recommended for near-zero bills |
| Best rate plan | E-1 or E-TOU-C | E-TOU-C (with battery) |
| Optimal system strategy | Size to offset 100% of annual usage | Size solar + battery to maximize self-consumption |
| True-up outcome (solar only) | Near-zero or credit balance common | Positive balance (owe PG&E) without battery |
| Payback period (solar only) | 6–8 years typical in Central Valley | 9–12 years without battery |
| Payback period (solar + battery) | 8–11 years | 7–10 years (battery closes the gap) |
| Grandfathering | 20 years from interconnection date | Current program — no grandfathering yet |
How Battery Storage Restores Your Savings
The NEM 3.0 math is straightforward once you understand the spread: you're exporting solar at $0.03/kWh but buying peak power at $0.50–$0.55/kWh. A battery eliminates that spread by storing your midday solar production and discharging it during the 4–9 PM peak window.
A typical 8 kW solar system in Fresno produces about 44 kWh per day in summer. Without a battery, roughly 70% of that is exported at $0.03/kWh. With a battery, you capture 13–14 kWh of that production and use it during peak hours instead — saving $6.50–$7.00 per day compared to buying peak power. Over a full year, that's $1,500–$2,000 in additional savings from the battery alone.
Combined with the solar system's direct offset of daytime usage, a properly sized solar + battery system can reduce most Central Valley households to a $20–$50/month PG&E bill — even under NEM 3.0.
The Optimal NEM 3.0 Strategy
NEM 3.0 FAQ
When did NEM 3.0 take effect in California?
NEM 3.0 (officially called the Net Billing Tariff, or NBT) took effect on April 15, 2023. Any solar system that submitted a complete interconnection application to PG&E after that date is on NEM 3.0. Systems that applied before April 15, 2023 are grandfathered on NEM 2.0 for 20 years from their interconnection date.
How much less do NEM 3.0 customers earn for exported solar?
Under NEM 2.0, export credits were approximately $0.08–$0.10/kWh — close to the retail rate. Under NEM 3.0, export credits are approximately $0.02–$0.05/kWh depending on the time of day. The average is roughly $0.03/kWh — about a 65% reduction. This is why battery storage is so important under NEM 3.0: instead of exporting at $0.03, you store and use that energy when grid power costs $0.50+.
Is solar still worth it under NEM 3.0?
Yes — but the math is different. Under NEM 2.0, a solar-only system could achieve near-zero bills by exporting excess production. Under NEM 3.0, a solar + battery system achieves near-zero bills by maximizing self-consumption. The payback period for solar + battery under NEM 3.0 is typically 7–10 years in the Central Valley — still a strong return given PG&E's 4%+ annual rate increases.
What size battery do I need under NEM 3.0?
For a typical Central Valley home (8–10 kW solar system, 1,200–1,800 sq ft, 2–3 occupants), one Tesla Powerwall 3 (13.5 kWh) or one Franklin aPower 2 (13.6 kWh) is usually sufficient to cover the 4–9 PM peak window. Larger homes or homes with EVs may benefit from two batteries. Our battery sizing calculator can give you a personalized recommendation.
Can I add a battery to my existing NEM 2.0 system without losing my NEM 2.0 status?
Yes — adding battery storage to an existing NEM 2.0 system does not trigger a switch to NEM 3.0, as long as you don't increase your solar system size. You can add a battery to your existing NEM 2.0 system and keep your grandfathered status. This is one of the best investments a NEM 2.0 customer can make right now.
What happens to my NEM 3.0 true-up bill?
NEM 3.0 customers still have an annual true-up settlement, but the structure is different. Because export credits are low, most NEM 3.0 customers without batteries will have a positive true-up balance (meaning they owe PG&E money). With a properly sized battery, most customers can achieve a near-zero or small true-up. See our True-Up Bill Guide for details.
Ready to maximize your NEM 3.0 savings?
We design solar + battery systems specifically for NEM 3.0 — right-sized for your usage and optimized for E-TOU-C peak avoidance.