NEM 3.0 Explained: What It Means for Your Solar Export Credits

Since April 2023, new solar customers earn dramatically less for the power they send back to the grid. Here's what NEM 3.0 actually changed, whether your older rate is protected, and why it makes battery storage worth a second look.

Solar Review · Serving San Diego & Southern California · Updated July 2026

Net Energy Metering (NEM) is the billing arrangement that determines how much credit you get for solar power your system sends back to the grid instead of using at home. California has gone through three versions — NEM 1.0, NEM 2.0, and now NEM 3.0 — and the differences between them matter a lot more than most homeowners realize.

What actually changed under NEM 3.0?

NEM 3.0 took effect in April 2023 and cut the export credit rate by roughly 75% compared to NEM 2.0. Under the old rules, sending excess solar power to the grid was credited at close to the retail electricity rate. Under NEM 3.0, that same exported power is worth a fraction of that — closer to wholesale value.

In practical terms: a system sized the old way, to produce a surplus during the day and "bank" credit against evening usage, doesn't pencil out the same way anymore. The financial logic of solar shifted from exporting your surplus to using or storing it yourself.

Is my system grandfathered onto the old rules?

If your system was interconnected before the April 2023 cutoff, you're typically grandfathered onto your original NEM 1.0 or NEM 2.0 tariff for a protection period tied to your interconnection date. That older, more favorable export rate keeps applying during that window — it's one of the more valuable things about an existing solar system, and worth protecting.

This is one more reason a system with a failing inverter or dead panel string is worth fixing rather than walking away from: replacing it with a brand-new system means losing the grandfathered NEM rate and starting over under NEM 3.0. A repair or retrofit on your existing system keeps your original interconnection — and your original rate — intact.

Why NEM 3.0 makes battery storage more attractive

With export credits worth so much less, the math on storing your own solar power instead of selling it back has flipped. A battery lets you use the solar power you generate during the day to cover expensive evening peak-rate hours instead of buying it back from the utility at close to 45¢/kWh (see our SDG&E rate breakdown). For NEM 3.0 customers especially, a battery is often what makes a system's economics work again.

San Diego Community Power (SDCP) customers may also qualify for battery rebates through the state's Self-Generation Incentive Program — see our battery storage & SGIP rebate guide for details.

Frequently asked questions

What is NEM 3.0?

California's current net metering policy, in effect since April 2023, which cut solar export credits by roughly 75% compared to the previous NEM 2.0 rules.

Is my NEM 1.0 or 2.0 rate still protected?

If your system was interconnected before April 2023, you're typically grandfathered onto your original tariff for a protection period tied to that date.

Should I add a battery because of NEM 3.0?

For most NEM 3.0 customers, yes — using or storing your solar power is worth far more than exporting it under the new export-credit rates.