For most of the two decades that California led US rooftop solar, exporting a kilowatt-hour and not buying a kilowatt-hour were the same transaction. Net energy metering credited exports at the retail rate. A unit sent to the grid at noon cancelled a unit drawn from it at eight in the evening, and the meter did the accounting.
The Net Billing Tariff, which almost everyone calls NEM 3.0, ended that equivalence.
What changed, precisely
The California Public Utilities Commission adopted the Net Billing Tariff in Decision 22-12-056 on 15 December 2022. It took effect on 15 April 2023 for new residential solar customers of the three large investor-owned utilities: Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric.
Under it, electricity you import is still billed at your retail rate. Electricity you export is compensated at the value in the Avoided Cost Calculator, a CPUC model of what the grid actually avoids spending when your power arrives. Those are different numbers, and the gap between them is the whole story.
Export is priced by the hour, 576 ways
The Avoided Cost Calculator does not produce one export rate. It produces a value for every combination of month, hour of the day, and weekday or weekend. Twelve months, twenty-four hours, two day types gives 576 separate export prices in a year, and they are published in advance.
The shape of that set is what matters to a solar owner. Avoided cost is high when the grid is strained and expensive to serve, which in California means the late-afternoon and early-evening ramp after solar output falls away. It is low when the grid is awash in cheap power, which means the middle of a sunny day in spring, when the state has more solar generation than load.
An unstored rooftop array exports almost exclusively in the second window. It is producing its maximum at precisely the hours the model values least, and producing nothing during the hours the model values most.
Summaries commonly put the average drop in export compensation at around 75% against the retail-rate credit that preceded it. Treat that as an order of magnitude rather than a figure to plan with. The real number depends on your utility, your rate schedule, the month, and the hours your exports actually land in, and all of those are knowable for your own case from the published tables.
Why a battery changes the arithmetic here and not everywhere
A battery earns its money in two ways under this tariff, and the second one is specific to it.
- 1Self-consumption. Every unit you store at midday and use in the evening is a unit you do not buy at the retail rate. This is the same mechanism that makes storage worth considering anywhere, and it is covered in why a unit you use is worth more than a unit you export.
- 2Export arbitrage. Storing at midday, when the avoided cost value is low, and exporting into the late-afternoon peak, when it is high, converts a cheap export hour into an expensive one. Under retail-rate net metering that trade was worth nothing, because every hour paid the same.
The second mechanism is why California solar quotes changed shape so abruptly after April 2023, and why a battery attached to a new Californian array is a different financial proposition from a battery attached to a British one. In Great Britain the Smart Export Guarantee is usually a flat rate, so there is no export peak to aim at and storage earns its keep through self-consumption alone.
What to check before believing any NEM 3.0 payback figure
| Question | Why it moves the answer |
|---|---|
| Which utility, and which rate schedule? | Import price and the avoided cost values both differ between PG&E, SCE and SDG&E |
| Was the system interconnected before 15 April 2023? | Earlier systems remain on their prior tariff for its legacy term rather than moving to net billing |
| Does the quote model hourly export, or one blended rate? | A single blended export rate cannot represent 576 values and will usually flatter the result |
| Does it include a battery, and is the battery dispatched to the evening peak? | A battery modelled only for self-consumption leaves the export arbitrage out of the answer |
| Which year of the Avoided Cost Calculator was used? | The tables are reissued; an old vintage produces a number that no longer applies |
A quote that cannot answer the third and fifth questions is not modelling this tariff. It is applying an average to it.
The honest limit of this page
This guide describes how the tariff is structured. It does not publish the export values themselves, because they are hourly, they are revised, and a cent figure written into a sentence here would be stale without any reader being able to tell. The CPUC publishes the Avoided Cost Calculator and the decision that established the tariff, and those are where the numbers should come from.
Our calculator does not cover California. It is built for Great Britain and the Smart Export Guarantee, and running a Californian household through it would produce a confident figure calculated under the wrong rules.
CPUC Decision 22-12-056, adopted 15 December 2022, established the Net Billing Tariff; it took effect for new customers of PG&E, SCE and SDG&E on 15 April 2023. Export compensation is set by the CPUC Avoided Cost Calculator. Checked 2026. Source