NEM 2.0 vs NEM 3.0 in California: What Changed
If you went solar before April 2023, you’re probably on NEM 2.0. New eligible residential applications submitted on or after April 15, 2023 in SCE, PG&E and SDG&E territory generally take service on NEM 3.0 — the Net Billing Tariff (NBT). The headline change is what the grid pays you for exported solar: NEM 2.0 credited it near the retail rate, while the NBT pays a lower, time-varying value. That change is a major reason batteries became more important under the NBT.
Get a free estimate
- NEM 3.0 (the Net Billing Tariff) applies to new IOU applications submitted on/after April 15, 2023.
- Export value changed: NEM 2.0 credited exports near the retail rate; the NBT pays an hourly avoided-cost value that’s usually lower and time-varying.
- Under the NBT, imports and exports are priced separately (not a kWh bank), and batteries matter more.
- NEM 2.0 customers are grandfathered ~20 years from interconnection; the NBT legacy period is ~9 years.
Which one are you on?
It comes down to when your interconnection application was submitted and your utility — not just when the panels were switched on. Roughly: an eligible residential application submitted before April 15, 2023 in SCE, PG&E or SDG&E territory is generally on NEM 2.0; on or after that date, generally the NBT. LADWP and other municipal utilities are separate and run their own schedules. The reliable way to know is the tariff name printed on your utility bill — confirm it there.
NEM 2.0 vs NEM 3.0, side by side
Flip between the two tariffs to see exactly what changed. These apply to the investor-owned utilities (SCE, PG&E, SDG&E); LADWP is municipal and runs its own schedule.
Compare the two tariffs
Toggle NEM 2.0 or the Net Billing Tariff.
Summary of CPUC tariff terms; details vary by utility and rate plan. Confirm your own tariff on your utility account.
The core difference: exported solar
Under NEM 2.0, the electricity you exported was credited through volumetric netting at close to the retail rate (minus non-bypassable charges) — so a bigger array that exported midday power was rewarded. Under the Net Billing Tariff, exports earn an hourly avoided-cost value instead: usually well below retail, though a few late-summer evening hours can be worth more. Crucially, imports and exports are now valued separately — it’s not a kilowatt-for-kilowatt bank. See NEM 3.0 explained.
| NEM 2.0 | NEM 3.0 (NBT) | |
|---|---|---|
| New enrollment | Closed | Current large-IOU tariff |
| Export value | Retail-rate netting (minus charges) | Hourly avoided-cost value (usually lower) |
| Imports & exports | Netting framework | Valued separately |
| Battery value | Helpful | Often more important |
| Billing | Annual true-up structure | Charges due monthly; credits roll to true-up |
| Legacy period | ~20 years from interconnection | ~9 years for original NBT customer |
Source: CPUC — Net Energy Metering & Net Billing. Applies to SCE, PG&E, SDG&E; LADWP is municipal with its own schedule.
Lower export value flipped the math toward storage
When exports were credited close to the retail rate, exporting midday solar and buying it back at night roughly washed out. Under the NBT, exporting midday solar and importing electricity later often produces less bill value than using or storing that solar on-site with a battery. The result depends on the hour, rate plan, load profile and battery cost. It’s no surprise that after the NBT, battery attachment on new systems jumped from about 10% to 60% (Berkeley Lab). See do you need a battery under NEM 3.0.
Am I grandfathered — and can I lose it?
NEM 2.0 customers keep their tariff for about 20 years from their interconnection date. That protection can be affected if you significantly expand the system, so if you’re adding capacity, confirm how it affects your grandfathering before you commit. See NEM 2.0 grandfathering.
What this means for an LA homeowner
On NEM 2.0? Protect it
Your retail-rate export terms are valuable. Before expanding, check the grandfathering impact — don’t accidentally push yourself onto the NBT.
On the NBT? Design around self-use
Size solar to your usage and add storage to shift power into the evening. Exporting solely for bill credit is generally less attractive than it was under NEM 2.0.
LADWP is its own world
None of the NBT applies to LADWP customers — it runs its own solar schedule. See LADWP net metering.
Sources & methodology
Primary sources: CPUC — Net Energy Metering and Net Billing · CPUC — California Solar Consumer Protection Guide · LBNL — One Year In: Tracking the Impacts of NEM 3.0. Tariff terms and dates are current as of publication — confirm your own tariff on your utility account, and check the CPUC page for the latest rules.
Frequently asked
What is the difference between NEM 2.0 and NEM 3.0?
The biggest difference is what the grid pays for exported solar. NEM 2.0 credited exports near the retail rate; NEM 3.0 — the Net Billing Tariff — pays an hourly avoided-cost value that’s usually lower and time-varying. Under the NBT, imports and exports are priced separately (not a kWh bank), which often makes batteries more valuable for self-consumption and load shifting.
When did NEM 3.0 take effect?
The Net Billing Tariff applies to new eligible residential applications submitted on or after April 15, 2023 in the territories of SCE, PG&E and SDG&E (the CPUC approved it in December 2022). Applications submitted before that date are generally on NEM 2.0.
How do I know which tariff I'm on?
It depends on when your interconnection application was submitted and your utility, not just when the system switched on. The reliable way to confirm is the tariff name printed on your utility bill or account. As a rule of thumb, an SCE/PG&E/SDG&E application before April 15, 2023 is generally NEM 2.0; on or after, generally the NBT. LADWP is separate.
Am I grandfathered on NEM 2.0?
NEM 2.0 customers generally keep their tariff for about 20 years from their interconnection date. Significantly expanding the system can affect that, so confirm the impact before adding capacity. The NBT’s own legacy period is about 9 years for the original eligible customer. See NEM 2.0 grandfathering.
Does NEM 3.0 apply to LADWP?
No. NEM 3.0 (the Net Billing Tariff) is a CPUC tariff for the investor-owned utilities — SCE, PG&E and SDG&E. LADWP is a municipal utility and runs its own solar rate schedule, so its export credits and rules differ. Confirm the current LADWP schedule directly.
Related reading
Design for the tariff you're actually on
Whether you're protecting NEM 2.0 or optimizing under the NBT, get a system and storage plan built for your specific tariff from a licensed local installer.
Get a free estimatePrepared by Cali Energy, August 2026. This article is for general educational purposes only and is not legal, tax, financial, engineering, or utility advice. Rates, incentives, codes, permit requirements, equipment specifications, prices, and program terms may change; figures and timelines are estimates, not guarantees. Confirm current requirements with the applicable utility, AHJ, program administrator, manufacturer, or a licensed professional. See our Content Disclaimer. Cali Energy · 19201 Parthenia St Unit E, Northridge, CA 91324 · CSLB #1032379 (B, C-10, C-39)