NEM 3.0 Explained for People Who Already Have Solar (Are You Grandfathered?)

If you’re a California solar owner and your savings took a noticeable dip after spring 2023, there’s a strong chance you’re feeling the ripple effects of the single biggest change to hit residential solar in years: the move to NEM 3.0. It’s the reason a lot of California homeowners watched their solar credits shrink — and the reason a lot of people are now asking, with some anxiety, whether it applies to them.

This article is written specifically for people who already own solar — not for shoppers deciding whether to buy. Almost every other NEM 3.0 explainer is aimed at new buyers. Yours is a different question, and it has a clear answer.

Quick Answer Box: Are You Grandfathered?

Are you grandfathered into the old (better) rules?

If your system was approved before April 15, 2023 → YES. You’re on NEM 2.0, locked in for 20 years.

If your system was approved on or after April 15, 2023 → NO. You’re on NEM 3.0 (the Net Billing Tariff).

“Approved” means the date your utility issued your Permission to Operate (PTO). More on how to check this below.

That’s the headline. Now let’s unpack what it actually means for your bill and your wallet.

First, What Is Net Metering?

In plain English: your solar panels generate electricity during the day. Your home uses some of it in real time. Whatever you don’t use in the moment flows out to the utility grid — and the utility gives you a credit for it. Later, when your panels aren’t producing (at night, say), you pull power back from the grid and your credits offset the cost.

That credit system is called net energy metering, or NEM. The whole question of NEM 1.0 versus 2.0 versus 3.0 comes down to one thing: how much the utility pays you for the power you send to the grid. That’s it. The panels work the same either way. What changes is the price tag on your exports.

The Timeline: NEM 1.0 → 2.0 → 3.0

California has gone through three versions of net metering:

• NEM 1.0 — the original, most generous program. The earliest solar adopters.
• NEM 2.0 — the next version, still quite favorable, with export credits worth roughly the full retail rate of electricity.
• NEM 3.0 — officially called the Net Billing Tariff (NBT), which took effect on April 15, 2023 for new applicants. This is the version that cut export rates sharply.

The cutoff date is everything. April 15, 2023 is the line in the sand that determines which set of rules governs your system — possibly for the next two decades.

The Grandfathering Question (The One That Matters Most)

This is the section you came for, so let’s be precise.

If your Permission to Operate (PTO) was issued before April 15, 2023:
You are on NEM 2.0, and you are grandfathered for 20 years from your PTO date. That means the favorable export rates you signed up for stay in place for two full decades. NEM 3.0 does not retroactively apply to you. You keep the better deal.

If your PTO was issued on or after April 15, 2023:
You are on NEM 3.0 (the Net Billing Tariff). The new, lower export rates apply to your system.

How to Check Which One You’re On

You don’t have to guess. There are two reliable ways to find out:

1. Find your PTO letter. When your system was approved, your utility — PG&E, SCE, or SDG&E — sent you a Permission to Operate notice. It has a date on it. That date is the one that matters. Check your email (search “Permission to Operate” or “PTO”) and your paper files from the installation.

2. Call your utility and ask directly. Phone your utility’s solar or net metering line and ask: “What net metering tariff am I on?” They can look up your account and tell you whether you’re on NEM 2.0 or NEM 3.0. This is the simplest path if you can’t find the paperwork.

If you got solar installed in 2022 or earlier, you’re almost certainly grandfathered. If you went solar in mid-2023 or later, you’re likely on NEM 3.0. The spring of 2023 is the gray zone where the exact PTO date really counts.

What Actually Changed Under NEM 3.0

If you’re on NEM 3.0, here’s what’s different — and what isn’t.

Export rates dropped by roughly 75 percent. Under NEM 2.0, exporting power to the grid earned you something close to $0.30 per kWh. Under NEM 3.0, that same exported kilowatt-hour is worth closer to $0.08 per kWh on average. Your panels send out the exact same electricity — you just get paid far less for it.

Your production didn’t change. Your compensation did. This is the crucial point, and it’s why your panels aren’t broken even though your savings shrank. (If you’re worried your output has genuinely dropped on top of the rate change, our guide [LINK: Why Are My Solar Panels Producing Less Than Expected?] helps you tell the two apart.)

Time-of-use timing now matters much more. Under NEM 3.0, the value of your exported power varies by the hour. Exporting at midday — exactly when solar production peaks and everyone else’s panels are also flooding the grid — earns the least. Meanwhile, pulling power from the grid during the evening peak (roughly 4–9 p.m., when the sun is down and demand is high) costs the most. So sending cheap power out at noon and buying expensive power back at 7 p.m. is the worst-case pattern — and it’s the default pattern for a solar-only home.

How NEM 3.0 Changes the Battery Math

Here’s where things get interesting, and where there’s genuine opportunity even under the new rules.

Under NEM 2.0, a home battery had only modest financial value. Grid exports paid so well that there wasn’t a huge benefit to storing your own power instead of selling it.

Under NEM 3.0, that calculation flips. Because midday exports are now worth so little (~$0.08) while evening grid power is so expensive, a battery becomes a way to store your cheap midday solar and spend it during the pricey evening peak instead of buying from the utility. You’re essentially arbitraging your own electricity — keeping the power you’d otherwise have nearly given away, and using it when it’s most valuable.

The result: NEM 3.0 significantly increases the return on investment for battery storage. For many NEM 3.0 owners, a battery is what makes the system financially competitive with the old NEM 2.0 deal. We dig into the full cost-benefit picture in [LINK: Is a Home Battery Worth It If You Already Have Solar?].

EcoFlow DELTA Pro — For NEM 3.0 owners, a home battery like the EcoFlow DELTA Pro is worth running the numbers on — it lets you capture midday solar and use it during expensive evening peak hours instead of exporting it for pennies.

If You’re on NEM 3.0 — What to Actually Do

You’re not powerless here. There are concrete steps that make NEM 3.0 work better for you:

Shift your big electricity loads to midday. Run the dishwasher, do the laundry, and charge the EV when the sun is high and your panels are producing. Why? Because using your own solar power directly is worth the full retail rate you’d otherwise pay the utility — far more than the ~$0.08 you’d get for exporting it. Every kilowatt-hour you consume yourself instead of exporting is a win.

Seriously evaluate a battery. Given the new math above, storage is no longer a luxury for most NEM 3.0 households — it’s often the key to restoring meaningful savings. Run the numbers for your specific usage before deciding.

Don’t panic. This is important. NEM 3.0 reduced the value of exports, but your solar system still offsets the power you use directly, and it still saves you money — just less on the export side than the old program did. The sky isn’t falling. You simply have a stronger incentive now to use what you generate rather than send it to the grid.

What About the Other States?

NEM 3.0 is a California program, but California isn’t alone. Net metering rules are set state by state (and sometimes utility by utility), and several other states have been trimming their own export rates as solar adoption grows. The specifics vary widely — some states remain generous, others have made changes similar to California’s.

If you’re outside California, the principle is the same: find out which net metering rules apply to your system and whether you’re grandfathered under an older, better version. Check your state’s Public Utilities Commission (PUC) website, or simply call your utility and ask what net metering tariff you’re on. The questions are identical; only the dates and rates differ.

The Bottom Line

If your California solar savings dropped after April 2023, NEM 3.0 is the likely reason — but the first thing to determine is whether it even applies to you. If your PTO predates April 15, 2023, you’re grandfathered on NEM 2.0 for 20 years and NEM 3.0 doesn’t touch you. If you’re on NEM 3.0, your panels are still working fine; you’re just being paid less for exports. The smart moves are to use more of your solar directly, shift big loads to midday, and run the numbers on a battery — which is now worth far more than it used to be.

get a free inspection quote — If you’re on NEM 3.0 and want a professional assessment of whether a battery makes sense for your specific system and usage, get a free quote from a certified installer.

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Last reviewed: June 2026 | solarschoice.com is an independent site — we are not affiliated with any solar installer or utility.