NEM 3.0: Do You Need a Battery with Solar in California?
California's NEM 3.0 rules changed the math on home solar. The panels work the same; what changed is how much you're paid for the power you don't use.
Under NEM 3.0, solar you send to the grid earns much less than the power you buy: often a few cents per kWh, versus 30–45¢ or more to buy it. So savings now come from using your solar yourself. A battery helps by storing midday solar for the evening; whether it pays off depends on its price and how much power you use after sunset.
What NEM 3.0 is
NEM 3.0 is the common name for California's Net Billing Tariff. It applies to new solar customers of PG&E, SCE and SDG&E who applied to connect after April 14, 2023.
- Exports are credited at “avoided cost” values that change by hour and month. Most hours pay just a few cents per kWh; some late-summer evening hours pay much more.
- You're placed on a time-of-use rate, where power costs the most in the evening peak (typically 4–9 pm), exactly when solar stops producing.
- Older customers keep their rules. Homes on NEM 1.0 or 2.0 keep their original terms for 20 years from when they connected.
Outside California, every state and utility has its own rules, and many are moving in the same direction. Check how your utility credits exports before trusting any savings estimate.
Why it matters
1,000 kWh of solar exported at about 5¢ earns roughly $50 in credits.
The same 1,000 kWh used at home instead of buying power at 35¢ saves $350.
Under the old rules, both were worth about the same. Now every kWh you use yourself is worth several times more than one you export.
Do you need a battery?
A battery charges from your panels in the middle of the day and powers your home through the evening peak. Whether it's worth it comes down to three things:
- The price. A typical home battery around 13.5 kWh commonly costs $12,000–$18,000 installed. Like panels, batteries no longer qualify for the 30% homeowner tax credit if installed after December 31, 2025.
- Your evening use. The more power you use from late afternoon into the night (cooking, laundry, air conditioning, EV charging), the more a battery saves.
- Backup power. If outages are a concern, backup has value beyond the bill savings. California's SGIP program has offered battery incentives for some customers; check what's currently available.
Without a battery, solar can still pay off under NEM 3.0. It just needs to be sized carefully, and the savings are smaller.
How to size solar under NEM 3.0
- Aim for about 100% of your annual use, or a little less. Extra production mostly gets exported at low values.
- Be wary of systems above about 120% of your usage unless you're planning for an EV or heat pump soon.
- Size a battery to your evening use, not your whole day. For full backup of one day, divide daily use by about 0.85 (the usable share of a battery): a home using 30 kWh a day would need about 35 kWh, more than most people buy. Most choose to back up essential circuits instead.
What to check in your quote
- Does the savings estimate use NEM 3.0 export values, or old one-for-one net metering?
- What rate plan does it assume, and does it match the one you'll be on?
- Is the battery priced separately, so you can see the cost of each part?
- How does the system size compare with your last 12 months of usage?
Red flags
- Savings calculated with NEM 2.0-style one-for-one credits for a new system.
- A system far larger than your usage, sold as “more savings.”
- A battery subtracted by 30% for a tax credit that has ended.
- No mention of time-of-use rates or evening usage at all.