What Is NEM 3.0 and Why Was It Introduced?
NEM 3.0 is the third version of California’s net metering policy, created by the California Public Utilities Commission (CPUC). The previous version, NEM 2.0, allowed homeowners to earn near retail rates for excess solar power exported to the grid. That setup made solar adoption financially attractive and helped fuel rapid growth across the state.
With NEM 3.0, the CPUC has shifted to an “avoided cost” model. This means utility companies will pay new solar customers based on the value their energy provides to the grid at the time it’s delivered—not at a flat, near-retail rate. On average, that translates into about a 75% drop in export compensation for most homeowners.
The state’s rationale? Encouraging solar customers to store and use more of their energy onsite, especially during peak demand times when the grid is under stress. While the change aims to improve long-term grid stability, it has altered the economics of going solar for new customers in a major way.
Key Differences Under NEM 3.0
Export Rate Reductions
Under NEM 3.0, the value of exported solar energy has been reduced dramatically. In many cases, the new export rates are only a quarter of what homeowners earned under NEM 2.0. Instead of banking near-retail credits, you’re now getting compensated based on when and how much your energy is worth to the utility.
Mandatory Time-of-Use (TOU) Plans
New solar customers are now required to enroll in time-of-use rate plans, which means electricity prices vary throughout the day. Power is most expensive in the late afternoon and evening when demand peaks. This creates both a challenge and an opportunity—one that can be leveraged with smart energy storage.
Push Toward Energy Storage
NEM 3.0 is designed to incentivize solar-plus-storage systems. With a battery, homeowners can store excess energy generated during the day and use it later when grid prices spike. This not only improves payback periods but also provides energy independence and protection from outages.
What Does This Mean for California Homeowners?
For new solar customers, the payback period under NEM 3.0 is longer—on average, between 8 and 12 years compared to 5 to 7 under NEM 2.0. But the long-term benefits of solar still hold strong. With the right setup and habits, you can continue to slash your electric bill and reduce your dependence on the utility.
Existing solar customers are not affected by NEM 3.0 if their systems were installed and approved before April 15, 2023. They’ll remain under NEM 2.0 for up to 20 years from their original installation date.
How to Maximize Your Savings Under NEM 3.0
1. Add Battery Storage to Your Solar System
Battery storage is the single most effective way to offset the lower export rates of NEM 3.0. By storing excess energy and using it during high-rate periods, you increase your energy independence and reduce grid reliance. Systems like Tesla Powerwall and Enphase IQ Battery are great options for integrating storage into your solar system.
2. Shift Energy Usage to Solar-Peak Hours
The more you can align your household energy use with your solar production, the better. Running appliances like dishwashers, laundry machines, and EV chargers during midday hours helps you consume more of your own solar power—and avoid buying expensive grid electricity in the evening.
3. Monitor and Manage Your Usage
Use an energy monitoring platform like the one offered by Complete Solar Solutions to keep tabs on your system performance and energy usage patterns. These insights help you fine-tune your daily habits, spot inefficiencies, and stay on top of any potential issues with your solar system.
4. Size Your System Strategically
With export rates lower than before, it may not make financial sense to oversize your system. A reputable installer will assess your home’s usage and help you design a system that prioritizes self-consumption and storage over pure export volume.
5. Take Advantage of Federal Incentives
The federal solar Investment Tax Credit (ITC) is still available and offers a 30% tax credit on the cost of your solar system and battery storage. This helps offset the reduced benefits of net metering and improves your overall return on investment.
Why Complete Solar Solutions Is Your Ideal Partner Post-NEM 3.0
Navigating NEM 3.0 requires more than just installing panels—it takes strategy, support, and real-time oversight. That’s where Complete Solar Solutions comes in. We not only help design systems that are built for today’s energy landscape, but we also offer top-tier monitoring and support services that help homeowners stay on track.
Our monitoring platform consolidates data across major systems like Enphase, SolarEdge, and Tesla so you always know how your system is performing. If something breaks or underperforms, we’re there to help you troubleshoot and get it resolved quickly—ensuring your solar investment keeps working for you.
Solar Still Makes Sense—If Done Right
Yes, NEM 3.0 has changed the solar game in California, but it hasn’t eliminated the benefits of going solar. With a smart, well-designed system and the right tools in place, homeowners can still enjoy long-term savings, energy independence, and a lighter environmental footprint.
The key? Work with the right partner, plan your system thoughtfully, and focus on consuming more of the energy you generate. Solar is still worth it—you just need a new playbook for a new era.
- California New Net Metering Policies
- 2022 Electric Rates Report
- An installer’s guide to unlocking the full potential of California’s new net billing tariff (NEM 3.0)
- Decision revising net energy metering tariff and sub-tariffs
- Net Energy Metering
- California’s New Solar Program
- CALSSA Statement on CPUC’s Revised Proposed Decision on Solar Net Metering — CA Solar & Storage Association
- Proposed decision revising net energy metering tariff and subtarrifs
