California’s Net Energy Metering 3.0 (NEM 3.0) took effect in April 2023, fundamentally changing how solar owners are compensated for excess energy. Whether you’re a new solar customer or considering an installation, understanding these changes is essential for maximizing your investment.
The Shift from Retail to Avoided Cost
Under NEM 2.0, solar owners received near-retail rates for energy exported to the grid. NEM 3.0 changes this to an “avoided cost” model, where export credits are based on what the utility would have paid to generate that energy elsewhere.
The bottom line: Export credits dropped from roughly 25-30 cents/kWh to an average of 7.5 cents/kWh. This is a significant shift that changes the economics of solar ownership.
What This Means for You
New Solar Customers (post-April 2023): Your export credits are tied to the Avoided Cost Calculator, varying by time of day and season. Mid-day exports are worth less, while evening exports during peak demand are worth more.
Existing NEM 1.0 and 2.0 Customers: Your current rates are grandfathered for 20 years from your interconnection date. However, if you make significant system changes, you may be moved to NEM 3.0.
The Battery Opportunity
NEM 3.0 makes battery storage more valuable than ever. Instead of exporting cheap mid-day energy, you can:
- Store excess production during peak solar hours
- Discharge during expensive evening peak periods (4-9 PM)
- Avoid high retail rates during Time-of-Use peak windows
- Export stored energy when avoided cost rates are highest
How Soladex Helps
This is precisely why the Solar Power Index exists. The SPI factors in NEM 3.0 rate structures, time-of-use schedules, and your battery capacity to tell you exactly when to store, consume, or export. No spreadsheets, no rate schedule lookups — just a clear daily recommendation.
Key Takeaways
- Export credits are now based on avoided cost, not retail rates
- Time-of-use optimization is more important than ever
- Battery storage has become nearly essential for new installations
- Existing NEM 1.0/2.0 customers are protected for 20 years
- Tools like the SPI can automate the complex decision-making NEM 3.0 requires
