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.
In April 2023, California switched new solar customers from NEM 2.0 to NEM 3.0 (the Net Billing Tariff). 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.
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- 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).
- Stack the 30% federal tax credit (available through 2032) to shorten payback to roughly 6–9 years.
- 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, payback was often 5–7 years. Under NEM 3.0, a well-designed solar-plus-battery system in the Bay Area typically pays for itself in about 6–9 years, helped by the 30% federal tax credit and PG&E's high and rising rates. Solar without a battery generally takes longer to break even now.
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 Gold · Bonded & Insured
Request a Free Quote ☎ (650) 451-8464