Solar

NEM 3.0 (Net Billing Tariff) California's solar export rule that pays avoided-cost rates instead of full retail credit

Alex Rivera By Alex Rivera, Senior Solar Editor · Updated 2026-06-09
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NEM 3.0, formally the Net Billing Tariff, is California's solar compensation rule that took effect in April 2023 and values electricity your panels export to the grid at lower 'avoided cost' rates rather than full retail value. This change cut export credits by roughly 75% compared with NEM 2.0, meaning you earn far less for the surplus power you send back. The tariff applies to California's major investor-owned utilities. Because exports are worth so little, storing your own solar energy in a battery and using it later typically delivers more value than selling it back to the grid. As a result, NEM 3.0 has made home batteries a far more important part of the economics for new California solar customers, shifting the focus from net metering toward self-consumption and storage.
Also Known As
Net Billing Tariff NBT NEM 3 California solar net billing
Used in Context
  1. A homeowner getting solar quotes after April 2023 learns their system falls under NEM 3.0, so the installer recommends adding a battery to offset the reduced export credits.
  2. A California utility customer reviewing their bill notices exported solar is now credited at avoided-cost rates instead of the retail rate they expected under the old rules.
  3. Dreamy Leads connects a California shopper with installers who explain how NEM 3.0 changes the payback math compared with NEM 2.0 systems.
Related Terms
Solar Net Metering The utility billing policy that credits solar owners for surplus electricity sent to the grid Solar Solar Battery Storage A home battery that banks excess solar power for nighttime, outages, or pricey peak hours Solar Avoided Cost The wholesale value a utility saves by not generating or buying power elsewhere Solar Photovoltaic (PV) System A solar electric setup that turns sunlight into usable electricity
Frequently Asked Questions

How much less do you earn under NEM 3.0?

Under NEM 3.0, your exported solar is credited at lower avoided-cost rates instead of full retail, cutting export credits by roughly 75% compared with NEM 2.0. The exact value varies by utility, time of day, and season, so your actual savings depend on your usage and system design.

Do I need a battery with NEM 3.0?

A battery isn't required, but NEM 3.0 makes one far more valuable. Because exported power earns much less, storing your solar energy to use later instead of selling it back to the grid typically improves the economics. Whether it pays off depends on your usage, rates, and system size.

Does NEM 3.0 apply to my utility?

NEM 3.0, the Net Billing Tariff, applies to California's major investor-owned utilities and took effect in April 2023. If you're served by one of those utilities and went solar after that date, you're generally on NEM 3.0. Rules can differ for other providers, so confirm with your specific utility.

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