NEM 3.0 explained: why California solar now comes with a battery

If you looked at solar before 2023 and are looking again now, the economics are different, and the reason is a tariff change usually called NEM 3.0. Its official name is the Net Billing Tariff, and it applies to new solar customers of PG&E, Southern California Edison and SDG&E who interconnected on or after April 15, 2023.

What changed

Under the old net metering rules, a kilowatt-hour you exported in the afternoon was credited at roughly the retail price you paid to import one at night. The grid worked like a free battery.

Under the Net Billing Tariff, exports are credited at an avoided-cost value that varies by hour and month. In the middle of a sunny day, when California already has more solar than it can use, that value is low. In the early evening, when the sun is down and demand peaks, it is high. Imports are still billed at the retail time-of-use rate.

The practical result: power you push to the grid at noon is worth much less than it used to be, and power you pull from the grid at 7 pm costs as much as ever.

Why a battery closes the gap

A battery changes when your solar is used, not how much is produced. Midday surplus charges the battery instead of being exported for a small credit. In the evening the house runs on stored solar instead of buying from the grid at the peak rate. On a clear day a well-sized system can cover most of the evening peak this way.

That is why the designs we produce for new solar in California almost always pair panels with a Tesla Powerwall 3. The solar designer places panels on your actual roof using satellite roof data, sizes the array to your bill, and lets you add or remove battery units to see how the price changes. If you only want storage, the battery designer starts there.

What it means for the numbers

We do not promise a savings figure, and you should be wary of anyone who does. What your system is worth depends on your rate plan, how much you use in the evening, your roof's orientation, and how the tariff's hourly values move over the years. The designer shows the system price as an estimate before any incentives, and the written proposal from the installer is where the numbers are confirmed.

Things that are still true

• Solar still produces the energy. The tariff only changed what exports are worth.
• A battery also gives you backup during outages and shutoffs. See what happens during a PSPS shutoff.
• The federal residential credit that used to offset part of the cost ended for systems placed in service after 2025. See the federal solar credit ended after 2025.

If you want a design on your own roof, start here. It takes a bill and an address, and a Revio advisor follows up only if you ask.