NEM 3.0 (Net Energy Metering 3.0) is California's current solar compensation program that took effect in April 2023. It replaced NEM 2.0 and reduced export credits by approximately 75%, making self-consumption of solar energy more important than ever.

Is solar still worth it under NEM 3.0?

Yes. Solar still pays back in 5-8 years for most California homeowners. The 30% federal tax credit, high electricity rates, and 25+ year system life make solar a strong investment. The key is maximizing self-consumption by using electricity during solar hours.

What is the difference between NEM 2.0 and NEM 3.0?

NEM 2.0 credited excess solar at full retail rates (roughly 1:1). NEM 3.0 uses "avoided cost" rates that are approximately 75% lower and vary by time of day. NEM 2.0 customers are grandfathered for 20 years from their interconnection date.

How do I maximize savings under NEM 3.0?

Shift usage to solar hours (10 AM-4 PM): charge EVs, run pool pumps, do laundry during the day. Right-size your system to 80-100% of annual usage. Consider more panels over batteries—they typically pay back faster under NEM 3.0.

Does NEM 3.0 apply to SCE, PG&E, and SDG&E?

Yes. All three major California utilities—Southern California Edison (SCE), Pacific Gas & Electric (PG&E), and San Diego Gas & Electric (SDG&E)—follow NEM 3.0. Export rates and time-of-use structures vary slightly by utility.

NEM 3.0 Explained: California Solar Guide 2026

What Is NEM 3.0? California's New Solar Rules Explained

If you're considering solar installation in California in 2026, you need to understand NEM 3.0. The state's Net Energy Metering 3.0 program took effect in April 2023 and fundamentally changed how solar customers are compensated for the excess energy they send to the grid. Here's everything you need to know about California NEM 3.0 and why solar is still a smart investment.

NEM 2.0 vs NEM 3.0: The Key Differences

California has had three generations of net metering. Understanding the transition helps you make informed decisions:

NEM 2.0 (Grandfathered Until 2043)

Applied to applications submitted before April 14, 2023
Export credits at full retail rate (roughly 1:1)
20-year grandfathering from interconnection date
Time-of-use rates apply but credits are generous

NEM 3.0 (Current Program)

Applies to all new applications after April 15, 2023
Export compensation reduced by approximately 75%
Export rates vary dramatically by time of day
Self-consumption is now critical—use what you produce
Battery storage economics improved but not always necessary

How NEM 3.0 Export Rates Work

Under NEM 3.0, you're no longer credited at retail rates for excess solar. Instead, you receive "avoided cost" rates that reflect what the utility would pay for power at that moment. These rates vary by:

Time of day: Peak hours (4-9 PM) have higher export values than midday
Season: Summer rates differ from winter
Weekday vs weekend: Different rate structures apply

For Southern California Edison (SCE) customers in Anaheim, Irvine, and Riverside, typical export rates under NEM 3.0 range from $0.02 to $0.15 per kWh—compared to $0.25-$0.50 under NEM 2.0. That's why self-consumption (using your solar power directly) matters more than ever.

NEM 3.0 Strategies: Maximize Your Solar Savings

Solar still makes financial sense under NEM 3.0—you just need to optimize differently. Here are the proven strategies:

1. Shift Your Usage to Solar Hours

The single most impactful change: use electricity when your panels are producing. Run your pool pump, charge your EV, do laundry, and run the dishwasher during 10 AM–4 PM. Every kWh you use directly saves you the full retail rate ($0.25-$0.50) instead of exporting at $0.05-$0.10.

2. Right-Size Your System

Under NEM 2.0, oversizing was common. Under NEM 3.0, aim for 80-100% of annual usage. Excess production has diminishing returns. Use our solar calculator to estimate the right system size for your home.

3. Consider an EV (If You Don't Have One)

Electric vehicles are the perfect "battery" for solar—they consume large amounts of daytime electricity. Charging your Tesla or other EV during solar hours uses your production directly. Learn more in our EV vs gas cost comparison.

4. More Panels vs Batteries

For most homeowners, more panels beat batteries under NEM 3.0. Battery payback is typically 10+ years; additional panels pay back in 3-4 years. Shift your usage patterns first before considering storage.

NEM 3.0 Payback: Is Solar Still Worth It?

Yes. Even with 75% lower export rates, solar pays back in 5-8 years for most California homeowners. Here's why:

30% federal tax credit reduces your upfront cost significantly
High electricity rates ($0.30-$0.50/kWh peak) make every self-consumed kWh valuable
Rising rates—California electricity costs increase 4-6% annually
25+ year system life—decades of savings after payback

Learn about the 30% federal tax credit and how it affects your solar investment.

NEM 3.0 by Utility: SCE, PG&E, and SDG&E

All three major California utilities follow NEM 3.0, but the specifics vary:

Southern California Edison (SCE)

Serves Orange County, Riverside County, and much of Southern California. SCE's NEM 3.0 export rates peak in the late afternoon/evening (4-9 PM). See our SCE net metering guide for details. Solar Topper handles SCE interconnection for Anaheim, Irvine, Riverside, and all SCE territories.

Pacific Gas & Electric (PG&E)

Northern California's largest utility. Similar NEM 3.0 structure with time-of-use export rates.

San Diego Gas & Electric (SDG&E)

Serves San Diego County. Highest electricity rates in the nation make solar especially valuable.

When to Go Solar Under NEM 3.0

The best time to go solar was yesterday. The second best time is now. Every month you wait:

Electricity rates increase
You pay more to the utility
The 30% tax credit remains (through 2032) but incentives can change

Ready to see your numbers? Get a free solar quote from Solar Topper. We'll design a system optimized for NEM 3.0, show you exactly how to maximize self-consumption, and handle all permits and SCE interconnection. Serving Anaheim, Irvine, Riverside, and throughout Orange County.