What the net metering changes mean for your solar investment and why battery storage matters more than ever.
NEM 3.0 — California's third version of net energy metering — went into effect in April 2023 and changed the economics of residential solar in a real way. If you've gotten quotes from solar companies in the last year, you've probably heard conflicting things about whether solar still makes sense. The short answer is yes, it does, but the math is different now.
What Is Net Metering?
Net metering is how utilities credit you for the solar electricity you produce but don't use. Your system sends extra power to the grid during the day, the utility credits you, and you pull from the grid (using those credits) at night. Under previous rules (NEM 2.0), that credit was roughly equal to the retail rate you paid for electricity — so a kWh exported earned almost the same value as a kWh consumed.
What Changed with NEM 3.0?
Under NEM 3.0 — officially called the Net Billing Tariff — export credits dropped roughly 75% on average. Instead of getting full retail value, you get "avoided cost" pricing, which varies by hour, season, and grid conditions. The credit is highest during late-afternoon and evening hours (when grid demand peaks) and lowest during midday (when solar production is highest).
The key insight
Under NEM 3.0, the energy you self-consume is worth far more than the energy you export. A battery lets you store cheap midday production and use it during expensive evening hours — turning low-value exports into high-value self-consumption.
Does Solar Still Pay Off?
Yes — but the payback is longer for solar-only systems, and shorter for solar + battery. Pre-NEM 3.0, solar-only systems in San Diego typically paid back in 4 to 6 years. Post-NEM 3.0, solar-only is closer to 8 to 10 years. Solar + battery, sized correctly, is back in the 6 to 8 year range and continues producing value for the next 17+ years.
Why Battery Storage Is Now the Default Recommendation
- Captures daytime solar production for evening use, when grid power is most expensive
- Provides backup during SDG&E outages and Public Safety Power Shutoffs
- Eligible for the federal tax credit (26%) and California's SGIP rebate
- Significantly improves the financial return on your solar investment under NEM 3.0
What Size Battery Do You Need?
For most San Diego homes, a single Tesla Powerwall 3 (13.5 kWh usable) is enough to cover evening loads and provide whole-home backup for the most-used circuits. Larger homes with electric vehicles, pools, or heavy AC use may need two units. Your installer should size the battery based on your actual SDG&E usage data, not generic assumptions.
Grandfathering: If You Installed Before April 2023
If your system was interconnected before April 14, 2023, you're locked into NEM 2.0 rates for 20 years from your interconnection date. That's a significant benefit — protect it. Don't expand your system, change the address on the account, or replace the inverter in a way that triggers a re-interconnection.
Bottom Line
NEM 3.0 isn't the end of residential solar in California — it's a shift toward solar + storage as the default configuration. If you're getting quotes today, make sure your installer models savings under NEM 3.0 specifically (not generic NEM 2.0 numbers), and ask them to show you the difference between solar-only and solar + battery payback for your specific usage profile.