Guide
California net billing (NEM 3.0): what changed and what it means
Updated
California did not abolish rooftop solar economics, it moved them. Understanding where the value went is the difference between a system that pays and one that quietly does not.
The rule, in the regulator's own words
The California Public Utilities Commission puts it plainly: "Since April 15, 2023, customers applying for interconnection have taken service on the new net billing tariff (NBT) pursuant to D.22-12-056." The commission describes the change as follows: "The NBT's major difference from NEM 2.0 is that under the NBT, compensation for excess generation exported to the electric grid is applied to a customer's bill at a rate reflecting the value of this generation to the grid" (cpuc.ca.gov).
Under the older net energy metering tariffs, the CPUC says, "bill credits are applied to customers' monthly bills at the retail rates (including generation, distribution, and transmission components) that the customers pay for energy consumption". Those tariffs "are closed to new enrollments". So a household that connected in 2019 and a household connecting today are on genuinely different deals, which is why advice from a neighbor who went solar years ago may not apply to you.
What it changes in practice
- Self-consumption is now the prize. A kilowatt-hour you use in your own home avoids a retail rate that averaged 33.25 cents in May 2026 (EIA). A kilowatt-hour you export is credited at grid value, which in the middle of a sunny California afternoon is low, because that is exactly when the grid has the most solar.
- Timing beats volume. Export value under the NBT varies by hour and by season. Evening hours are worth much more than midday ones, which is why storage entered the conversation.
- Oversizing gets punished. Under retail net metering, extra panels banked full-price credit. Under net billing, extra panels mostly produce low-value midday exports.
- The rate plan matters as much as the array. Solar customers sit on time-of-use rates, and the spread between peak and off-peak import prices is part of the economics. Ask which schedule you will be moved to.
Where a battery fits
A battery does not make electricity. It moves it. Under the net billing tariff, storing a midday kilowatt-hour and using it at 7pm converts a low-value export into an avoided high-value import. That is the mechanism, and it is why California quotes in 2026 so often pair panels with storage. Whether it pays for you depends on your evening usage, your tariff and the battery price, so price the panels and the battery as two separate decisions in the calculator.
Storage also does something no spreadsheet captures: it keeps the lights on during a public safety power shutoff. Some households buy it for that alone, and that is a legitimate reason as long as it is not sold to you as a payback argument.
Questions worth asking before you sign
- "Which tariff will I be interconnected under, and which time-of-use rate schedule will I be placed on?"
- "Show me your modeled hourly export credit assumptions, not just an annual savings number."
- "What share of my generation does your model assume I consume on site, and what happens to the savings if that share is ten points lower?"
- "If the quote includes storage, how many kWh are usable, what is the round-trip efficiency, and what is the warranty in cycles as well as years?"
Nothing here is a savings estimate. The tariff terms and export values are set by the CPUC and the utilities and change over time. Read the current CPUC page and ask your utility for the schedule that will apply to your interconnection date.