What is NEM 3.0 in California?

NEM 3.0 (Net Energy Metering 3.0) is California's current solar export policy, in effect since April 15, 2023. It replaced NEM 2.0 and reduced the export credit rate from the full retail rate (~25–35¢/kWh) to an "avoided cost" rate of roughly 2–5¢/kWh. Electricity you self-consume still saves at the full retail rate.

Is solar still worth it in California under NEM 3.0?

Yes, for most homeowners — but the economics have changed. Self-consumption is now much more valuable than exports. An 8 kW system sized for ~80% self-consumption still pays back in 5–7 years in California given 30¢+/kWh rates. Battery storage significantly improves the economics by capturing afternoon surplus for evening use.

What export rate does NEM 3.0 pay?

NEM 3.0 pays "avoided cost" rates that vary by hour and season, averaging roughly 2–5¢/kWh — compared to the 25–35¢/kWh retail rate under NEM 2.0. Peak export hours (late afternoon) pay more. PG&E, SCE, and SDG&E each publish their NEM 3.0 export rate schedules.

Should I add battery storage with NEM 3.0?

Battery storage is strongly worth considering under NEM 3.0. Instead of exporting surplus solar at 2–5¢/kWh, a battery stores it for evening use — where it's worth 30¢+/kWh (the rate you'd otherwise pay). A 13.5 kWh battery typically adds $10,000–$15,000 to system cost but qualifies for the 30% ITC. California's SGIP rebate can offset another $2,000–$13,500.

Can I still get NEM 2.0 in California?

No — NEM 2.0 is closed to new applicants as of April 2023. Customers already on NEM 2.0 keep those rates for 20 years from their interconnection date. If you installed solar before April 2023, check your utility account to confirm which tariff you're on.

California Solar After NEM 3.0: Still Worth It in 2026?

Factor	NEM 2.0	NEM 3.0 (now)
Export credit rate	Retail rate (~25–35¢/kWh)	Avoided cost (~2–5¢/kWh)
Self-consumption value	Full retail rate	Full retail rate (unchanged)
Battery impact	Limited benefit	Major benefit — captures surplus
Typical 8 kW payback (LA)	5–6 years	6–8 years
Best system strategy	Maximize production	Maximize self-consumption

Why the export rate drop isn't the whole story

The headlines after NEM 3.0 focused on the export rate collapse — and fair enough, going from 28¢/kWh to 3¢/kWh for surplus electricity is a significant change. But export credits were never the primary driver of solar economics in California. Self-consumption was, and self-consumption value didn't change at all.

Every kWh your panels produce that you consume directly still saves you the full retail rate — and California's retail rates are among the highest in the country. PG&E residential rates hit 35–48¢/kWh for mid and high tiers in 2026. SDG&E customers pay even more. Each kWh you self-consume is worth roughly 10× what you'd earn exporting it under NEM 3.0.

The math that matters: a well-sized system in Los Angeles, where we track 1,621 kWh/kWp annual yield and 30¢/kWh average rates, still delivers an 8 kW system payback under 6 years when sized for self-consumption.

The NEM 3.0 system sizing strategy

Under NEM 2.0, bigger was better — more panels meant more exports, all credited at the retail rate. Under NEM 3.0, oversizing your system is actively counterproductive. Surplus electricity exported at 3¢/kWh barely moves the needle.

The right approach now is to size your system to cover roughly 80–90% of your annual consumption, with an eye toward your daily usage patterns. If you're home during the day — remote worker, retired, kids at home — your self-consumption ratio is naturally higher and the economics improve.

For most California homes drawing 500–700 kWh/month, a 6–8 kW system is the right size under NEM 3.0. Larger systems made sense under NEM 2.0. They often don't now.

Where battery storage changes the equation

The NEM 3.0 battery case

Instead of exporting surplus solar at 3¢/kWh, a battery stores it for evening use — where it offsets electricity you'd otherwise buy at 35–48¢/kWh. That's a 10–15× improvement in the value of each stored kWh.

A 13.5 kWh battery (Tesla Powerwall 3, Enphase IQ 10, etc.) adds roughly $10,000–$14,000 to a solar installation, but now qualifies for the 30% federal ITC — reducing the net cost to $7,000–$9,800. California's SGIP rebate can knock off another $2,000–$13,500 depending on utility and income tier.

Solar + storage under NEM 3.0 typically pays back in 7–10 years in California — longer than solar alone under NEM 2.0, but with the added benefit of backup power, grid independence during outages, and protection from time-of-use rate spikes.

Real numbers for California's biggest solar cities

Our PVGIS data for California cities shows where solar performs best. The state's yield advantage is real — inland cities like Sacramento and Fresno outperform coastal San Francisco by 15–20%:

City	Yield (kWh/kWp)	Rate (¢/kWh)	Payback*
Los Angeles	1,622	30.3¢	~5.8 yrs
San Diego	1,643	30.3¢	~5.7 yrs
Sacramento	1,710	30.3¢	~5.5 yrs
San Francisco	1,401	30.3¢	~6.7 yrs
Fresno	1,752	30.3¢	~5.3 yrs

*8 kW system, NEM 3.0 self-consumption model, after 30% federal ITC. Source: PVGIS + EIA.

The bottom line

NEM 3.0 made California solar less forgiving — you need to size it right and ideally add storage to maximize value. But the fundamentals remain strong: California still has some of the highest electricity rates in the US, excellent sun, and a 30% federal tax credit that doesn't care what your export tariff is.

The homeowners who struggle under NEM 3.0 are those who expected to spin their meter backward aggressively and essentially zero out their bill. That model is gone. The homeowners who do well are those who right-size their system, shift loads to daytime (dishwasher, laundry, EV charging), and add battery storage if their usage profile supports it.

For a complete picture of your city's numbers, see our California solar data page or use the solar calculator.