Guide
NEM 3.0 California: net billing, 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.
Talk to a specialist Your bill, your rate, your quoted price per watt, with storage priced separately.
Email me this result
We will send you these figures and a link back to them. One email, nothing else unless you tick the box.
How this calculator works
- The federal residential clean energy credit (Internal Revenue Code Section 25D) is not applied. Per the IRS page, it "equals 30% of the costs of new, qualified clean energy property" installed "anytime from 2022 through December 31, 2025".
- It also states "the credit is not available for any property placed in service after December 31, 2025" (irs.gov). The page was last reviewed July 4, 2026; we read it again on our updated date. Confirm your own position with a tax professional, not with a salesperson.
- The default electricity rate of 33.25 cents per kWh is the California residential average for May 2026 (EIA, Electric Power Monthly, Table 5.6.A). Californian tariffs are tiered and time-of-use, so your marginal rate at 6pm can be far above that average. It is an input: change it.
- Sizing assumes roughly 1,600 kWh per kW per year for an unshaded south-facing California roof. It is scaled by 0.85 for an east or west roof and 0.7 for a shaded or north-facing one.
- These are working estimates, not a figure from an official source we can cite today. Treat the suggested size as a starting point, and ask your installer for a modeled production figure for your address.
- Price per watt is your input. The $3.30 default is a typical 2026 California quote and moves with roof type, panel and inverter tier, main panel upgrades, permitting jurisdiction and financing. We publish no California market average because no official source we can cite publishes one.
- Battery storage at a default $14,000 installed is a typical 2026 quote for a home battery in the 10-15 kWh class, again an input rather than a published rate.
- Nothing here estimates savings. Since April 15, 2023, new California interconnection applicants take service on the net billing tariff. Exports are credited "at a rate reflecting the value of this generation to the grid", not at retail rates (CPUC). See how net billing works.
- California has no state income tax credit for residential solar. The property tax treatment under Revenue and Taxation Code section 73 is time-limited and is covered in our incentives guide.
CPUC NEM 3.0: 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."
It calls this "The NBT's major difference from NEM 2.0". Exported generation "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". That includes "generation, distribution, and transmission components". Those tariffs "are closed to new enrollments".
So a household that connected in 2019 and one connecting today are on genuinely different deals. 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 turns a low-value export into an avoided high-value import. That 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. 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.