NEM 3.0 explained: what changed for California solar owners
Net Billing Tariff, CPUC Decision D.22-12-056, effective 2023-04-15. Data as of 2026-10-18.
In one paragraph: NEM 3.0 replaced near-retail export credit with hourly avoided-cost values. Every kWh you consume at home still offsets a full retail purchase; every kWh you export earns far less. That single asymmetry is why storage moved from optional to near-essential for new solar customers.
Three key changes
- How exports are valued — hourly Avoided Cost Calculator values instead of the retail rate.
- When they are valued — midday exports, when the grid is saturated with solar, are worth the least; hot summer evenings are worth the most.
- The winning strategy — self-consume and store, rather than oversize and export.
NEM 2.0 vs NEM 3.0
| NEM 2.0 (grandfathered) | NEM 3.0 (new) | |
|---|---|---|
| Export compensation | Near retail | Avoided cost ($0.03–$0.21 per kWh average) |
| Valuation | Mostly flat | Hundreds of hourly prices |
| Best strategy | Oversize panels, bank credits | Self-consume + battery |
| Battery | Optional | Effectively essential |
| Term guaranteed | 20 years | 9 years |
Southern California Edison TOU-D-PRIME time-of-use rates
| Period | Rate | Window |
|---|---|---|
| Summer on-peak (weekdays) | $0.61 | 16:00-21:00, June–September |
| Summer mid-peak (weekends) | $0.39 | 16:00-21:00 weekends |
| Winter mid-peak | $0.45 | 16:00-21:00, October–May |
| Off-peak | $0.26–$0.30 | All other hours (summer / winter) |
| Super off-peak | $0.24 | 8 a.m.–4 p.m., October–May |
| Base services charge | $0.79/day | Fixed cost — not modelled in payback |
Why a battery stopped being optional
$0.61Summer on-peak import, 16:00-21:00 weekdays, June-September weekdays — the highest-rate window on TOU-D-PRIME
$0.06What the same exported kWh earns on average (avoided cost)
A kWh you store and use yourself avoids a purchase at the peak rate. A kWh you export earns the avoided-cost value. The spread between those two numbers — not the subsidy — is what pays for a battery in 2026.
Policy status that affects the math
| Program | Status | Detail |
|---|---|---|
| Residential Clean Energy Credit (25D) | terminated | Homeowner-owned systems placed in service on or before 2025-12-31 |
| Clean Electricity Investment Credit (48E) | active for third party | 30% credit · Third-party-owned (lease/PPA) systems; credit belongs to the system owner, not the homeowner |
| SGIP General Market | closed | $0.15/Wh · General market residential · closed 2025-12-31 |
| SGIP Equity | closed | $0.85/Wh · Income-qualified · closed 2025-12-31 |
| SGIP Equity Resiliency | closed | $1.00/Wh · Income-qualified, high fire threat / PSPS area · closed 2025-12-31 |
| SGIP RSSE (AB 209) | waitlist | $1.10/Wh · Income-qualified only; waitlisted in most territories · deadline 2028-06-30 |
→ Run your own numbers in the calculator · Sources and method
Related reading
| Battery comparison — which capacity fits your evening load | Data |
| Full guide — how to read payback numbers | Article |
| Data & method — every rate with its source and date | Trust |