NEM 3.0 Explained: Why Your Solar Export Credit Dropped So Much
If you connected your system after April 2023, your exports earn far less than they did under the old rules. This is how the new rate is set and why midday power is worth so little.
Under the old NEM 2.0 rules, exported solar electricity was credited at close to the retail rate, roughly 25 to 30 cents/kWh. NEM 3.0 (the Net Billing Tariff) applies to anyone who interconnected on or after April 15, 2023. It pays a variable rate based on what the grid saves by not generating that power, typically 2 to 10 cents/kWh blended across a year.
The mechanism: Avoided Cost Calculator, not a flat rate
NEM 3.0 doesn't use one number. Each utility (PG&E, SCE, SDG&E) runs an Avoided Cost Calculator (ACC) that estimates, for every hour of every month, what it would have cost the utility to generate or buy that electricity elsewhere. Most solar exports happen in the middle of the day, when the grid has the least need for extra power and the ACC value is lowest.
A kWh exported at 1pm might be worth a fraction of a cent under this model. A kWh exported at 7pm during peak demand could be worth several times more.
So the drop is not a flat percentage cut. The credit used to be one number tied to the retail rate. Now it changes by the hour, and the hours when panels produce the most are the hours with the lowest rates.
Why most new systems now include a battery
Under NEM 2.0 there was little financial reason to add a battery. You exported at close to the retail rate and drew power back later at a similar rate, so storing it gained you almost nothing.
Under NEM 3.0, the evening peak rate is much higher than the midday rate. Storing your solar and using it at night, or exporting it during the evening peak, is worth far more than exporting it at midday.
That is a large part of why the share of new California solar installs that include a battery rose sharply after NEM 3.0 took effect.
NEM 3.0 also includes a temporary "ACC Plus" adder, an extra per-kWh bonus on top of the base export rate for the first 9 years. It goes to customers on a low-income rate (CARE/FERA) and to customers who pair solar with a qualifying battery.
Where SGIP fits in
Separately from NEM 3.0's export rate, the Self-Generation Incentive Program (SGIP) has paid an upfront per-kWh rebate toward the battery itself, but its general market budget ($150 per kWh) is now closed. Income-qualified households can still apply to the equity budget at $1,100 per kWh, mostly from a waitlist; see SGIP battery rebate explained.
Run your own numbers
The ACC rate varies by utility, season and hour, so no single export rate applies to everyone. Our NEM 3.0 Export Rate Calculator shows the current blended range. The SGIP Battery Rebate Calculator shows your battery incentive tier, and the California Solar Savings Calculator puts the whole system together.
Frequently Asked Questions
What is NEM 3.0?
NEM 3.0, officially the Net Billing Tariff, is the current framework for compensating homeowners for solar electricity they export to the grid in PG&E, SCE, and SDG&E territory, for anyone who interconnected on or after April 15, 2023. It replaced the older NEM 2.0 framework.
Why did my export rate drop so much under NEM 3.0?
NEM 2.0 credited exports at close to the retail electricity rate, roughly 25-30 cents/kWh. NEM 3.0 uses each utility's Avoided Cost Calculator, which values exported electricity at what it saves the grid in that hour and season. Most solar exports happen at midday, when the grid needs power least, so the blended rate over a year is typically 2-10 cents/kWh.
Does a home battery make NEM 3.0 worthwhile again?
For many households, yes. A battery stores midday solar so you can use it or export it during the evening peak, when the Avoided Cost Calculator rate is highest, in place of exporting it for a few cents at midday. NEM 3.0 also adds a temporary "ACC Plus" bonus to the base export rate for qualifying customers with a battery.
This article is for general information only. Avoided Cost Calculator rates vary by utility and change over time. Confirm your export rate with your utility's ACC lookup tool before deciding on a system size.