California net billing (NEM 3.0): what it means for batteries

The rules for how utilities credit solar changed in 2023. Here is the plain-English version, and why storage became a bigger part of the conversation.

What changed

For years, California solar customers were on net energy metering (NEM), which credited power sent back to the grid at close to the retail rate. For customers of the large investor-owned utilities — including Southern California Edison (SCE), PG&E and SDG&E — new solar applications submitted after April 14, 2023 are on the successor program, commonly called NEM 3.0 or the Net Billing Tariff. Systems that were already interconnected under the older rules are generally grandfathered for 20 years from their interconnection date.

The core idea

Under net billing, the value of solar you use yourself is still what you'd otherwise pay the utility. But the credit for power you export is set by time of day and is generally much lower than the retail rate — with the highest credits in the evening hours when the grid is most stressed.

Why that makes batteries more valuable

Solar produces the most at midday, but many homes use the most power in the evening. Without storage, that midday surplus gets exported at a lower value and you buy power back at higher evening prices. A battery captures the surplus and lets you use it after sunset — so more of your own production is worth the full retail rate. That's why installers now talk about storage as part of the design instead of an add-on.

Who benefits most from a battery

• Households that use most of their electricity in the evening.
• Homes that want backup power during outages or utility power shutoffs.
• Homeowners on time-of-use rate plans with a big gap between peak and off-peak prices.

If you're home during the day and use most of your solar as it's produced, the case for a battery is weaker — and solar alone may be the better value. We'll tell you which one you are.

How we help you decide

We model your actual bills and rate plan with and without storage and show you both. See Tesla Powerwall and Enphase IQ Battery for the systems we install, or start with solar.

Utility rules and rates change. This is a general explanation, not tax, legal or financial advice; confirm current program details with your utility.

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