If you've researched solar in California, you've run into "NEM 3.0" — officially the Net Billing Tariff. It changed how homeowners are credited for the solar power they send to the grid, and it's worth understanding before you go solar. Here's the plain-English version.
What changed
Under the older net-metering programs, you earned near full retail credit for extra power you exported to the grid. NEM 3.0, which applies to customers of the big investor-owned utilities (PG&E, SCE, and SDG&E), pays a lower "avoided cost" rate for exports — and that rate varies by time of day and season. In short: sending surplus power to the grid is worth less than it used to be.
What it means for your savings
Solar still saves you money — often a lot. But the biggest savings now come from using your own solar power directly rather than exporting it for a small credit. That makes system design and how you use energy more important than ever.
Why batteries matter under NEM 3.0
This is the key takeaway: a home battery lets you store your midday solar production and use it in the expensive evening hours instead of selling it back cheaply. Under NEM 3.0, solar-plus-storage is what delivers the strongest, most predictable savings for most California homes.
Does it apply to you?
NEM 3.0 applies to the investor-owned utilities. If you're served by a municipal utility — like LADWP here in Los Angeles — you're under that utility's own net-metering rules, which are different. It's one of the first things we check, because it changes the math for your specific address.
Paxton Energy designs systems around the exact rules and rates that apply to your utility, so your proposal reflects what you'll really earn and save. Start with a free assessment.