What NEM 3.0 Did to California Solar: The Data
When California’s Net Billing Tariff (NEM 3.0) took effect in April 2023, the headlines said rooftop solar was dying. The data tells a sharper story: installs held up at first, then thinned — but the product changed. Battery attachment on new systems jumped from about 10% to 60% (Berkeley Lab), systems got smaller, and the market consolidated. Solar didn’t end; it became solar-plus-battery.
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- Battery attachment on new systems jumped from ~10% to ~60% (LBNL) — later toward ~70% (CPUC).
- Average solar-plus-storage system size fell 17%; real prices rose 17% amid shortages.
- The market consolidated: top-5 installers went from 40% to 51% share.
- The “sales down 66–83%” headlines and the “installs roughly flat” data both reflect one thing — the pre-deadline rush of 2023.
The nuance the headlines missed
Two true-sounding claims circulated after April 2023: industry group CALSSA, in its November 2023 State of the Industry report, estimated new sales fell 66–83% and that roughly 17,000 solar jobs (about 22% of the state workforce) would be lost, while Berkeley Lab found first-year installations roughly equal to the prior year. Both are right — and both describe the same distortion. A huge rush of homeowners submitted applications under the old NEM 2.0 rules before the April deadline, creating a backlog that kept installers busy through 2023 even as new sales collapsed. After the summer-2023 spike worked through, installs began a steady decline. When you read year-over-year solar numbers for California, remember that 2023 baseline is inflated.
The numbers: before and after NEM 3.0
| Metric | Before (NEM 2.0) | After (NEM 3.0) |
|---|---|---|
| Battery attachment on new systems | ~10% | ~60% (→~70%) |
| Average solar-plus-storage size | baseline | −17% |
| Median real installed cost | baseline | +17% |
| Top-5 installer market share | 40% | 51% |
Source: LBNL — One Year In: Tracking the Impacts of NEM 3.0; battery attachment ~70% by end-2024 per CPUC. Data vintage: LBNL first-year post-NBT figures (through mid-2024), supplemented by CPUC data through the end of 2024.
See the shift: before vs after NEM 3.0
Flip between the two eras to see how the typical new California residential system changed after the Net Billing Tariff took effect in April 2023. The figures are from Berkeley Lab’s one-year study.
The typical new CA solar system
Toggle the era.
Source: LBNL “One Year In: Tracking the Impacts of NEM 3.0.” “Before” values describe the legacy NEM 1.0/2.0 market; changes are first-year figures. Battery attachment later rose toward ~70% (CPUC, end-2024).
Why the battery, not the panel, is now the story
NEM 3.0 cut the credit for electricity you export to the grid to a low, time-varying value — far below the retail rate you pay to import. That single change made self-consumption the goal: instead of exporting cheap midday power and buying it back expensive at night, you store your own solar and use it in the evening. A battery is what makes that possible, which is why attachment sextupled. We cover the decision itself in do you need a battery under NEM 3.0.
NEM 3.0 changed the product, not the value
Rooftop solar in California didn’t stop making sense — the winning configuration changed. The data shows a market that adapted: smaller solar arrays paired with storage, sold by fewer, larger companies. For a buyer, that means the old “biggest array that fits” instinct is often wrong now; sizing solar and storage together is the new skill.
What this means for an LA homeowner
Model self-consumption, not just offset
Under NEM 3.0 the question isn’t “how much do I generate” but “how much of my own solar do I use.” A battery raises that number — and the export credit is low enough that it often matters.
Fewer installers, so vet carefully
Consolidation means less local choice. Surviving isn’t the same as good — verify license, scope and warranty. See how to choose an installer.
LADWP plays by different rules
NEM 3.0 is a CPUC tariff for SCE, PG&E and SDG&E. LADWP is municipal with its own solar rate schedules — the battery math can differ. See LADWP net metering.
Frequently asked
Did NEM 3.0 kill rooftop solar in California?
No — it changed the product. Berkeley Lab found first-year installations were roughly equal to the prior year, then declined, while battery attachment jumped from ~10% to ~60%. Industry groups reported new sales down 66–83%, but that partly reflects the pre-deadline rush that inflated 2023. Solar became solar-plus-battery rather than disappearing.
How much did battery attachment change?
A lot. On new California residential systems, storage attachment rose from about 10% to 60% after NEM 3.0 took effect in April 2023 (LBNL), and CPUC figures put it near 70% by the end of 2024. Lower export credits made storing your own solar far more valuable than exporting it.
Why did systems get smaller and pricier?
LBNL found the average solar-plus-storage system shrank about 17% while real installed costs rose about 17% — driven by a surge in storage demand and shortages of batteries and trained installers. Design also shifted toward self-consumption rather than maximum offset.
What does the top-5 installer share of 51% mean?
The market consolidated. The largest five installers grew from 40% to 51% of the market as they absorbed the downturn and worked through the backlog, while many smaller companies struggled. For homeowners it means fewer local choices — so vetting license, scope and warranty matters more.
Does NEM 3.0 apply to LADWP customers?
No. NEM 3.0 (the Net Billing Tariff) is a CPUC rule for the investor-owned utilities — SCE, PG&E and SDG&E. LADWP is a municipal utility that runs its own solar rate schedules, so its export credits and battery economics can differ. Confirm the current LADWP schedule.
Related reading
Design for the NEM 3.0 era
Get a system sized for self-consumption — solar and storage together — from a licensed local installer, with the numbers itemized.
Get a free estimatePrepared by Cali Energy, July 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)