California “NEM 3.0” is the common name for the Net Billing Tariff used by the state's major investor-owned utilities, which call it the Solar Billing Plan. Since April 15, 2023, most new eligible customer-generation applications in PG&E, Southern California Edison, and San Diego Gas & Electric territories have entered this tariff rather than NEM 2.0.
The central change is that onsite solar still avoids applicable retail imports, but exported electricity receives a separate time-varying Energy Export Credit generally based on the value to the grid rather than ordinary retail net metering.
Who is covered?
The CPUC Net Billing Tariff applies to customers of the large investor-owned utilities under the approved rules. Publicly owned utilities such as LADWP, SMUD, and many municipal providers have their own policies. Smaller investor-owned utilities may also use separate tariffs.
Do not assume a California address means NEM 3.0. Identify the electric provider and current tariff.
Legacy NEM 1.0 and NEM 2.0 customers can have different terms. System modification, transfer, or tariff election may affect legacy treatment.
Solar serves the home first
Electricity produced and consumed behind the meter avoids buying that amount from the utility during the same interval. This direct self-consumption is often the most valuable use of solar under net billing.
Surplus sent to the grid receives an export credit. Imports later in the day are billed under the customer's time-of-use rate rather than canceled one-for-one by the earlier export.
Annual production equal to annual consumption therefore does not imply a zero energy charge.
Energy Export Credits
Export compensation varies by hour, day, month, and utility according to the approved avoided-cost framework. Most midday exports receive less than the retail import price, while some high-value late-summer evening hours can be much higher.
The exact schedule is complex and updated. Use the utility's current calculator, rate information, and proposal analysis rather than one average export number.
A salesperson should not multiply all annual exports by a rare high credit.
Required time-of-use rates
CPUC guidance identifies specific electrification time-of-use rates for Net Billing Tariff customers of the three major utilities. These rates generally have lower off-peak prices and higher on-peak prices.
Rate names and prices can change through regulatory proceedings. Confirm the tariff currently required or available when applying.
The household consumption schedule becomes a major part of solar economics.
Why batteries receive more attention
A battery can store low-value midday surplus and discharge during expensive import periods or selected high-value export hours, subject to settings and tariff rules.
Storage is not automatically profitable. Include installed cost, losses, degradation, backup reserve, incentives, warranty, and operating behavior.
A battery may also provide outage support if the system includes suitable backup equipment. Bill management and resilience are separate values.
Export Compensation Adder
The CPUC states that eligible residential PG&E and SCE customers applying before the end of 2027 can receive an export compensation adder for nine years. SDG&E customers are excluded from that adder under the CPUC framework, and customers required to install solar under building code are not eligible.
Eligibility and current values should be confirmed with the utility at application. Do not treat the adder as a permanent feature for future projects.
Nine-year legacy period
The CPUC describes a nine-year legacy period for the original customer who causes a facility to be interconnected under the Net Billing Tariff. Customers who voluntarily move from a prior NEM tariff to net billing do not receive that same legacy treatment.
Home sale, customer identity, system changes, and tariff terms deserve review before assuming the period transfers unchanged.
Monthly billing and annual true-up
Under the Solar Billing Plan, charges are generally due monthly. Excess solar bill credits can roll forward until annual true-up.
At true-up, net surplus compensation uses a different calculation for annual excess after applicable credits. The true-up is not a retail-price cashout for every unused solar kilowatt-hour.
Read the utility bill guide and compare the first full year against the proposal.
NEM 2.0 versus Net Billing Tariff
NEM 2.0 generally credits eligible exports under retail-rate netting subject to non-bypassable charges, time-of-use requirements, and true-up rules. It is closed to new standard enrollments.
The Net Billing Tariff separates import and export value more strongly. This reduces the benefit of oversized midday export and increases the relevance of consumption timing and storage.
Existing NEM 2.0 customers should not switch based solely on a generic battery promotion. Model remaining legacy value and the exact transition terms.
System sizing under net billing
Design should use interval consumption and hourly production. Consider:
- Current and planned electricity use.
- Daytime self-consumption.
- Time-of-use peak periods.
- Export-credit schedule.
- Battery size and reserve.
- EV and heat-pump loads.
- Roof orientation.
- Expected curtailment or export limits.
An east-west or west-weighted layout may improve timing on some homes, but roof and production tradeoffs must be modeled.
Consumer protection
Covered providers must present the CPUC California Solar Consumer Protection Guide and obtain required customer acknowledgments for applicable interconnection submissions.
The CPUC warns against claims of free solar, guaranteed elimination of bills, or government-required urgency. Review cash price, financing, equipment, production, export assumptions, battery controls, and cancellation terms.
Verify contractor licensing and the utility application independently.
A California proposal checklist
Ask for:
- Utility and exact Solar Billing Plan rate.
- Hourly production and consumption model.
- Direct self-consumption percentage.
- Export credit assumptions by period.
- Battery dispatch and backup reserve.
- Monthly fixed and non-bypassable charges.
- Export Compensation Adder eligibility.
- Nine-year legacy treatment.
- Annual true-up assumptions.
- Scenario without a battery and with alternative sizes.
Use current utility data
NEM 3.0 is a shorthand, not a fixed export price. Rates, avoided-cost values, consumer protections, and related programs can change.
Check the CPUC and serving utility immediately before publishing, contract, and interconnection. Continue through US Time-of-Use Rates and Solar Savings and US Solar Batteries and Backup Power.