Solar Under NEM 3.0: Why Battery Storage Is Now Essential
California's NEM 3.0 cut PG&E export credits by roughly 75%. Here's what changed, what it means for your payback, and how to estimate your savings.
New to this? Read our free NEM 3.0 + Battery Buyer's Guide — sizing tips, current incentives, and 10 questions to ask any installer.
Last updated: June 2026
In April 2023, California switched new solar customers from NEM 2.0 to NEM 3.0 (the Net Billing Tariff), as adopted by the California Public Utilities Commission. The headline change: the credit you earn for exporting surplus solar to the grid dropped from near the full retail rate to roughly $0.05–$0.08 per kWh — a cut of about 75%. Selling power back to PG&E is no longer where the savings are.
That doesn't mean solar stopped making sense — it means the design changed. The returns now come from using your own solar power rather than exporting it cheaply. The way you do that is with a battery.
Why a Battery Is Now the Key to Payback
Under NEM 3.0 you're paid little for exported power, but you still pay full retail — and expensive time-of-use peak rates — for grid power in the evening. A battery stores your inexpensive daytime solar production and discharges it during those costly peak hours, so you buy far less from PG&E. That avoided peak-rate purchase is where most NEM 3.0 savings now come from, which is why most of our NEM 3.0 designs include a Tesla Powerwall or FranklinWH battery. As a bonus, the same battery keeps your lights on during PG&E PSPS outages.
NEM 2.0 vs. NEM 3.0 at a Glance
| Factor | NEM 2.0 | NEM 3.0 |
|---|---|---|
| Export credit for surplus solar | Near the full retail rate | ~$0.05–$0.08 per kWh (about 75% lower) |
| Where the savings come from | Exporting surplus power to the grid | Self-consumption of your own solar |
| Role of a battery | Optional | Essential to good payback |
| Typical residential payback | Often 5–7 years | Longer; varies by usage and design |
Estimate Your NEM 3.0 Savings
What's your average monthly electric bill?
Example — a $250/month bill:
Est. annual savings
$2,550/yr
Est. 25-year savings
$63,750
Suggested system size
~7.1–10.0 kW solar + battery
Outage protection
battery backup during PG&E PSPS shutoffs
Ballpark example (assumes a solar+battery system offsetting ~85% of usage, with utility rates held flat — real PG&E rates have historically risen). Enter your own bill above; your exact numbers depend on your roof, usage, and rate plan.
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See Your Exact NEM 3.0 + Battery Numbers
Licensed, bonded & insured Bay Area electricians. Upfront pricing and same-day estimates available.
CA Lic #1143455 · Tesla Certified Installer · Enphase · Bonded & Insured
✓ 25-year equipment warranties · ✓ Our own licensed C-10 crew — no subcontractors · ✓ Upfront, no-pressure pricing
Request a Free Quote ☎ (650) 451-8464What This Means for You
- Right-size the system to your actual usage — oversizing for export no longer pays under NEM 3.0.
- Add storage to capture peak-rate savings and outage protection (Tesla Powerwall, FranklinWH, Enphase IQ).
- Right-size and add storage — with the residential federal tax credit ended after 2025, sizing to your usage and capturing peak-rate savings with a battery are now the biggest levers on payback. (Businesses may still qualify for the federal Investment Tax Credit.)
- One licensed team handles design, the panel upgrade if needed, PG&E interconnection, and battery integration — we're a C-10 electrical contractor, so it's all in-house.
Frequently Asked Questions — NEM 3.0
What is NEM 3.0 (the Net Billing Tariff)?
NEM 3.0 is California's solar billing rule that took effect in April 2023 for the major utilities including PG&E. It replaced NEM 2.0 and cut the credit you earn for exporting surplus solar to the grid by roughly 75% — from near the retail rate down to about $0.05–$0.08 per kWh on average. It applies to new solar interconnections, not to systems already grandfathered under NEM 2.0.
Does solar still make sense under NEM 3.0?
Yes — but the economics now favor using your own solar power instead of selling it back cheaply. Because export credits are low, the best returns come from a system sized to your usage and paired with a battery that stores daytime production for evening use. Solar-only systems still save money, but payback is slower than it was under NEM 2.0.
Why is a battery now essential for good solar payback?
Under NEM 3.0 you're paid little for exported power but still pay full retail (and peak time-of-use rates) for grid power at night. A battery lets you store your cheap daytime solar and use it during expensive evening peak hours instead of buying from PG&E — which is where most of the savings now come from. That's why most of our NEM 3.0 designs include a Tesla Powerwall or FranklinWH battery.
How does NEM 3.0 change the payback period?
Under NEM 2.0, residential payback was often 5–7 years. Under NEM 3.0 — and with the 30% federal residential solar tax credit no longer available after 2025 — payback is longer, which is exactly why right-sizing the system and adding a battery (to capture peak-rate savings) matter so much. A well-designed solar-plus-battery system still pays for itself within its 25-year warranty, and we'll give you exact numbers for your home. Commercial and business installations may still qualify for the federal Investment Tax Credit.
Can I still get NEM 2.0?
No — NEM 2.0 closed to new applicants in April 2023. If you already have a NEM 2.0 system, you keep those terms for your grandfathered period. All new Bay Area solar installations are on NEM 3.0, which is exactly why right-sizing and adding storage matter more than ever.
Does a battery also give me backup power during PG&E outages?
Yes. Beyond the bill savings, a battery (Tesla Powerwall, FranklinWH, or Enphase IQ) keeps your home powered during PG&E Public Safety Power Shutoffs (PSPS) and outages — a major benefit on top of the NEM 3.0 economics. We design the backup around your essential loads or whole-home needs.
Request Your Free Quote
Licensed, bonded & insured Bay Area electricians. Upfront pricing and same-day estimates available.
CA Lic #1143455 · Tesla Certified Installer · Enphase · Bonded & Insured
✓ 25-year equipment warranties · ✓ Our own licensed C-10 crew — no subcontractors · ✓ Upfront, no-pressure pricing
Request a Free Quote ☎ (650) 451-8464