NEM 3.0 Explained for El Dorado County Homeowners

By Mark O’Connor · Independent Energy Consultant · CA HIS #164591 SP · May 6, 2026

This page walks through what NEM 3.0 actually changed, what NEM 2.0 grandfathering means if you already have solar, the math behind “why batteries became essential”, and the real numbers for an El Dorado County homeowner deciding now.

What NEM 3.0 Changed

NEM (Net Energy Metering) is California’s framework for how utilities credit homeowners for solar electricity exported to the grid. NEM 3.0 was implemented by the CPUC in April 2023, replacing NEM 2.0 for new solar interconnections.

The headline change is the export rate. Three quick comparisons:

Three concrete things changed for a typical California homeowner installing solar today versus before April 2023:

1. You get paid less for excess solar. If you export 6,000 kWh in a year, NEM 2.0 paid roughly $1,800 (at retail). NEM 3.0 pays roughly $400 (at avoided cost). That’s a $1,400 annual difference for the same export pattern.
2. Self-consumed solar is worth more than exported solar. Under NEM 2.0, it didn’t matter much whether you used solar yourself or exported it — the math came out the same. Under NEM 3.0, every kWh you use yourself is worth ~4x what an exported kWh is worth.
3. Batteries went from optional to essential. A battery lets you store midday solar (low export value) and use it during peak hours (4-9pm, high retail value). The battery captures the difference between low export rates and high import rates — which is the entire game under NEM 3.0.

Why Batteries Became Essential

Here’s the math in concrete terms. Imagine an El Dorado County home producing 12,000 kWh of solar per year:

Under NEM 2.0 with no battery

Solar produces during the day. Some is used immediately by the home; the rest is exported to PG&E. Evening usage (when solar isn’t producing) pulls from the grid. Net metering means daytime exports cancel out evening imports at retail rate. Bill: roughly $0/year (depending on consumption pattern). Battery isn’t needed for the math.

Under NEM 3.0 with no battery

Same solar production, same usage pattern. But now: daytime exports earn $0.05/kWh; evening imports cost $0.45/kWh during peak hours. The math doesn’t cancel anymore. Bill: $1,500-2,500/year for that same household, with solar. The system still produces the same electricity, but the homeowner is paying PG&E’s peak rates with grid power and getting tiny export credits for daytime solar that’s not consumed in real-time.

Under NEM 3.0 with a battery

Solar produces during the day. The battery charges from solar (storing what would have been exported at $0.05). In the evening (4-9pm peak), the home pulls from the battery instead of PG&E. The home avoids paying $0.45/kWh for grid power during peak hours. The battery effectively converts $0.05 export value into $0.45 self-consumption value. Bill: back near $0/year — sometimes BETTER than NEM 2.0 because batteries also cover PSPS outages.

NEM 2.0 Grandfathering: What It Means If You Already Have Solar

If your solar system was interconnected before April 14, 2023, you’re grandfathered into NEM 2.0 for 20 years from your original PTO date. A system that received PTO in 2018 keeps NEM 2.0 through 2038.

That’s a substantial financial asset. The difference between NEM 2.0 and NEM 3.0 export economics for a typical 8 kW system can be $1,500-2,500 per year. Over the remaining grandfathered period, that’s often $20,000-$45,000 in present-value terms — an asset that survives at the home (in some cases) when you sell.

The trap: adding to existing solar can re-permit you to NEM 3.0

This is where careful planning matters. If you have NEM 2.0 solar and want to add a battery or expand the system, the wrong add-on type can transition the entire system to NEM 3.0 — losing the grandfathering on your existing array.

Two main paths for adding to existing solar:

1. NEM3 Battery Add-On — adds a battery (and sometimes additional panels) under a new interconnection that re-permits the whole site to NEM 3.0. The existing array loses NEM 2.0 grandfathering. Sunrun’s NEM3 Battery Add-On product (typically requires 2 batteries + 7 panels minimum) follows this pattern. Used when the customer is OK losing NEM 2.0 because the upgrade economics still work.
2. Boost-style Non-Export Add-On — adds a non-export battery (Sunrun’s Boost is the named product for existing Sunrun customers) that doesn’t change the existing inverter or interconnection. The existing system stays on NEM 2.0. Used when preserving NEM 2.0 grandfathering matters more than maximum battery capability.

Which is right depends on the customer’s specific NEM 2 economics, future load growth (EV, heat pump, additional electrification), and whether re-permitting’s costs are offset by other benefits. Always confirm the add-on type and NEM tier impact before signing — getting this wrong can cost 18+ years of NEM 2.0 export value.

The Decision Framework Under NEM 3.0

If you don’t have solar yet and you’re considering it

Solar still pencils for most El Dorado County homes paying $250+/month to PG&E. The system needs to be sized for self-consumption (not maximum offset) and paired with a battery. The federal 30% tax credit applies if your system is placed in service by December 31, 2025 under OBBBA — missing that deadline removes a meaningful chunk of the math. If your bill is under $150/month, NEM 3.0 economics typically don’t support a system that pays for itself within a reasonable timeframe.

If you already have solar and you’re considering a battery add-on

Calculate the NEM 2.0 grandfathering value before deciding. For most NEM 2.0 customers, the Boost-style non-export add-on is the cleaner play because it preserves grandfathering. For NEM 2.0 customers with growing loads (new EV, all-electric remodel), the math can shift toward the NEM3 add-on if the load growth justifies the larger system. Get audited specifically for the comparison.

If you have solar but no battery

Under NEM 3.0, batteries are how you capture the value of your solar. Without a battery, you’re exporting at 25% of retail and importing at 100% — bleeding money to PG&E during peak hours every evening. If your system was installed under NEM 2.0, the bleed is smaller because you’re still on retail-rate net metering, but battery economics still meaningfully improve PSPS resilience and EV-charging optimization.

If solar isn’t a fit at all

For homes with smaller bills, heavy shade, or short remaining ownership horizons, the NEM 3.0 math may not work. Three real levers California homeowners can pull walks through the alternatives: rate plan optimization, load shifting, and which appliances quietly inflate bills. Solar is one option, not the only one.

Frequently Asked Questions

NEM 3.0 is California’s current net energy metering tariff structure for residential solar customers, implemented by the CPUC in April 2023. It replaced NEM 2.0 for new solar interconnections after that date. Under NEM 3.0, the rate utilities pay homeowners for excess solar electricity exported to the grid is significantly lower than under NEM 2.0 — roughly 25% of retail rates instead of 1:1 retail.

NEM 3.0 took effect April 14, 2023. Solar systems with interconnection applications submitted on or before April 13, 2023 fall under NEM 2.0; applications after that date fall under NEM 3.0.

Three big changes: (1) the export rate dropped from retail (~$0.30/kWh) to Avoided Cost Calculator rates (~$0.05-0.08/kWh average). (2) Self-consumed solar is now worth ~4x exported solar. (3) Batteries went from optional to essential because they let you time-shift midday solar into expensive peak hours.

Yes for most California homes paying $250+/month to PG&E, but the design changed. You size for self-consumption and add a battery to time-shift solar production into expensive peak hours. The math still works — sometimes better than NEM 2.0 — because batteries reduce grid dependency during PSPS events and capture peak-hour value pure NEM 2.0 systems couldn’t access. Smaller bills (under $150/month) often don’t pencil under NEM 3.0.

It depends on the add-on type. Adding a battery that requires re-permitting transitions the entire system to NEM 3.0, losing grandfathering. Adding a non-export battery (like Sunrun’s Boost or AC-coupled storage that doesn’t change the existing inverter) generally preserves NEM 2.0. Always confirm with your installer before signing — the wrong add-on can cost you 18 years of NEM 2.0 export economics.

Under NEM 3.0, the export rate varies by hour, season, and day-type, based on the CPUC’s Avoided Cost Calculator. Average export rates are roughly $0.05-0.08/kWh — about 25% of typical retail rates. The highest export rates occur during peak hours (4-9pm summer evenings); the lowest during midday spring when solar is abundant.

NEM 2.0 customers retain their tariff structure for 20 years from the original Permission to Operate (PTO) date. A system interconnected in 2018 keeps NEM 2.0 through 2038. The grandfathering survives changes of homeownership in some cases — making NEM 2.0 a real resale-value asset for homes that have it.