NEM 3.0 in California: Everything You Need to Know (2026 Guide)

What is NEM 3.0?

NEM 3.0 (officially called the Net Billing Tariff) is California's updated net metering policy that took effect in April 2023. It replaced the previous NEM 2.0 program and fundamentally changed how solar customers are compensated for excess energy sent to the grid. Under NEM 2.0, you received full retail credit (~$0.30/kWh) for every kWh exported. Under NEM 3.0, export credits are based on the 'Avoided Cost Calculator' — meaning the value varies by time of day, season, and grid conditions.

How NEM 3.0 Export Credits Work

Under NEM 3.0, the value of your exported solar energy is no longer a simple 1:1 retail credit. Instead, export rates are calculated hourly based on what it would cost the utility to generate that energy from other sources.

• Midday (10 AM - 4 PM): Export credits are lowest (~$0.04-$0.08/kWh) because solar is abundant on the grid
• Late afternoon (4 PM - 9 PM): Export credits are highest (~$0.20-$0.35/kWh) because demand peaks
• Evening/night: No solar production, so you buy from the grid at retail rates
• The average export credit is roughly 75% lower than under NEM 2.0

Why Battery Storage Is Essential Under NEM 3.0

The math is simple: under NEM 3.0, selling your excess solar to the grid at $0.05/kWh and then buying it back at $0.32/kWh is a losing proposition. Battery storage flips the equation. Instead of exporting cheap midday energy, your battery stores it. Then during peak hours (4-9 PM) when electricity costs $0.32-$0.50/kWh, you use your stored solar instead of buying from the grid. This 'self-consumption' strategy saves 3-6x more than exporting under NEM 3.0.

• Without battery: Save ~$0.05/kWh on exported energy
• With battery: Save ~$0.32-$0.50/kWh by self-consuming during peak hours
• Battery ROI under NEM 3.0: 4-6 years (was 8-10 years under NEM 2.0)
• Sunlink includes battery storage with every California system for exactly this reason

NEM 3.0 by Utility: PG&E, SCE, and SDG&E

While the overall NEM 3.0 framework is the same statewide, each utility implements it slightly differently:

• PG&E: Export rates range from $0.05-$0.35/kWh depending on TOU period. E-ELEC rate plan is most common for solar customers.
• SCE (Southern California Edison): Similar structure to PG&E. TOU-D-PRIME is the preferred solar rate plan.
• SDG&E: Highest rate spread between peak and off-peak — making battery storage even more valuable in San Diego.
• LADWP: Operates independently from CPUC — still offers legacy 1:1 net metering (one of the last in California).

How Sunlink Optimizes for NEM 3.0

Sunlink's AI design tool is specifically calibrated for NEM 3.0 economics. When we design your system, we optimize panel placement to maximize production during high-value hours (late afternoon), size your battery to capture and shift the most valuable energy, and model your savings based on your utility's specific NEM 3.0 rate schedule. This means your system produces maximum financial return — not just maximum kWh.