Net Energy Metering (NEM 3.0) and Battery Storage - What You Need to Know

Net Energy Metering (NEM) is a billing mechanism that credits solar system owners for electricity they export to the grid. Anytime the solar system produces more energy than the home is consumes in that moment, that energy is exported back to the grid.

On the NEM program, you receive credits on your utility bill for that exported energy. These credits can offset the cost of power you import from the grid at other times, such as during the night or cloudy days.  

NEM 3.0 is California’s third major revision to its net energy metering billing policy. It went into effect on April 14-15, 2023 replacing NEM 2.0 for new solar interconnections.

Under previous NEM 1.0 and NEM 2.0, solar customers received one for one credits at retail electricity rates for excess energy sent to the grid.

NEM 3.0 shifts to a net billing tariff-export credits are now based on the utility’s avoided cost, i.e what it would take to procure or generate that power, not the retail rate.

🔐Key Differences

• Export Rate Drop: Solar Export Credits are roughly 75% lower than before.

• Time-Of-USE (TOU) Rates: New Peak/Off-Peak Pricing encourages shifting consumption to off-peak hours.

• Battery Storage: NEM 3.0 is structured to encourage battery adoption and ease reliance on the grid

🔋Why Battery Storage is Key

• Strategic Use of Exports: Batteries let you store midday solar and export it during periods with higher cost value - boosting self consumption and export value.

• Backup Resilience: Systems with backup capabilities provide power during outages and add value beyond economics.

• Grid Optimization: You are your own power bank. Instead of pulling from the grid at peak demand times, the energy you need is already stored at your house. The excess is stored to be sent back to the grid when its going to be receiving the highest value.

🔌What This Means for You

• Solar Only Systems now offset less of your utility bill versus 3.0 without battery storage.

• Add a Battery to increase bill offset

• Timing Usage Matters: Run appliances or charge EV’s mid day to take advantage of low TOU rates.

• Grandfathering is still possible: If you’re pre-approved under NEM 2.0. You can add battery storage later and stay on those terms.

⚡️Takeaways

• Despite Slower ROI: solar plus storage is still a strong investment when compared to increasing and fluctuating electricity rates that continue to climb.]

• NEM 3.0 reduces exports for solar only systems but it’s intentionally structured to reward battery adoption. If you’re going solar in California now, pairing panels with storage isn’t just beneficial-it’s essential for maximizing savings, optimizing TOU rates, and increasing resilience against outages.

  ‼️ Before You Go Solar:

  1. Understand Your Utility Plan

  2. Size the Right Battery for Your Needs

  3. Take Advantage of Incentives ⏰⚡️

💲 You can STILL receive a solid financial return under NEM 3.0.