California solar billing
NEM 3.0 explained in plain English
California changed how solar homes get paid for the power they send to the grid. In 2026 the courts made it final. These are the billing rules, start to finish.
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NEM 3.0 is California's billing plan for new rooftop solar on SCE, SDG&E and PG&E, and it pays far less for the power you send to the grid than the old plan did. Officially called the Net Billing Tariff, it credits exports at hourly values that average about 4.6¢ per kWh on SCE and 3.7¢ on SDG&E (installer estimates), while grid power still costs 34¢ to 46¢ on average. It's final: an appeals court upheld it in March 2026 and the California Supreme Court declined review in June 2026 (pv magazine USA).
The old deal, in one paragraph
Under net metering (NEM 1.0 and NEM 2.0), a solar home that sent power to the grid at noon earned credit close to the retail rate, and could use that credit at night. The grid acted like a free battery. You could oversize your panels a little, export all afternoon and still come out well ahead. That's the deal most solar ads were built on, and it's why older neighbors may describe savings you can't copy today.
What NEM 3.0 changed
The Net Billing Tariff keeps two things the same and changes one big one. You still pay your normal rate for grid power. The solar you use the moment it's made still saves you the full rate. What changed is the export credit: instead of near retail, it's an hourly value set for each month, and for most of the year it's a few cents.
- Exports earn about 4.6¢ on SCE and about 3.7¢ on SDG&E on average for 2025 and 2026 applicants. Those averages come from installer analysis, not the utilities' own tariff sheets.
- Your export values lock in for nine years. SCE says they are locked “based on the year you began using solar with SCE” (SCE). A new set of values applies to 2027 applicants (NRG Clean Power).
- It applies to new solar customers of the investor-owned utilities the CPUC regulates. In Southern California, that means SCE and SDG&E.
- SCE, NEM 2.0near retail~34.4¢
- SCE, NEM 3.0avg export (est.)~4.6¢
- SDG&E, NEM 2.0near retail~46.4¢
- SDG&E, NEM 3.0avg export (est.)~3.7¢
How it got settled in 2026
Solar advocates challenged the CPUC's decision in court. On March 9, 2026, a California Court of Appeal upheld the current net billing mechanism (pv magazine). In June 2026, the California Supreme Court declined to hear the case (pv magazine USA). For homeowners, that ends the “wait and see if it gets overturned” option. NEM 3.0 is the plan you'll be on if you add solar on SCE or SDG&E.
What this means for system design
Under the old plan, an exported kWh was worth nearly as much as one you used. Under NEM 3.0 it's worth a few cents, so the billing rules reward using your solar as it's made, or storing it for later. That shift is why most new SCE and SDG&E proposals include a battery. Sizing, cost, payback and the SGIP rebate are covered in our battery guide.
| Topic | NEM 2.0 (older systems) | NEM 3.0 (new systems) |
|---|---|---|
| Export credit | Close to the retail rate | Hourly values, about 4.6¢ (SCE) and 3.7¢ (SDG&E) on average |
| Grid power | Your normal rate | Your normal rate |
| Battery role | Mostly backup | Core of the savings |
| Best design | Cover your annual use | Cover your use as it happens, store the rest |
| Status | Closed to new customers | Final after 2026 court rulings |
What NEM 3.0 doesn't touch
LADWP customers
LADWP is run by the City of Los Angeles and isn't regulated by the CPUC, so NEM 3.0 doesn't apply. It runs its own net metering program, which nets exports against use each billing period (LADWP NEM guidelines). See LADWP solar.
Existing NEM 2.0 customers
If you already have solar on NEM 2.0, you've generally stayed on it. AB 942, introduced in 2025, would have moved NEM customers to the current tariff when they sell their home. The Senate Energy committee stripped that part out in July 2025 (Senate committee analysis), and the bill's last action was in a Senate committee on August 29, 2025 (bill history). It never became law. Adding panels or a battery to an older system can still affect your plan, so ask your utility first.
Questions to ask an installer about NEM 3.0
- Which export values did you assume, and for which application year?
- How much of my solar do you expect me to use directly, store, and export?
- Did you build the estimate from my hourly usage data?
- Which time-of-use plan should I be on after the system goes live?
- How will the battery be set: for savings, for backup, or a mix?
A good installer will answer all five without hesitating. If someone tells you NEM 3.0 doesn't matter, or promises your electric bill will disappear, read our page on claims to walk away from.