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California changed their solar policy on April 13, 2023 to what is now known as NEM 3.0. Here you can find answers about what the major changes are and how they affect you as a solar customer.

Solar Negotiators has prided ourselves on our ability to confidently deliver honest solutions to homeowners for the past 15 years. Because we know Valley homeowners rely on us for answers, we made sure to stay ahead of the game and come prepared.

What’s changed?

To help meet California’s aggressive renewable energy goals—the state has updated their solar policy to better support the use of battery storage.

Reduced compensation for solar production

The rate at which solar owners are reimbursed for the excess electricity they supply to the grid is the most significant change between NEM 2.0 and NEM 3.0. Under most net metering rules, solar customers receive credit for the total retail value of each kWh of electricity they export. With NEM 2.0, this was a one-to-one trade, meaning each kWh you export (push onto the grid) counterbalances a kWh you import.

Under the new rules of NEM 3.0, the credit value of solar has been decreased by roughly 80%, from 24 cents/kWh to 5 cents/kWh.

Introduction of the avoided cost calculator

The value of solar exports are no longer determined by retail prices under NEM 3.0. The Avoided Cost Calculator is used to determine export prices, which change hourly depending on Time of Use rates.

No new solar taxes

One new positive change to this revised NEM 3.0 proposal is that there will be no new solar taxes. Previously, it was anticipated that these taxes would raise solar owners’ utility rates by about $60 per month.

Do I need a battery?

Under NEM 3.0 rules, 100% solar production offset no longer helps homeowners achieve energy savings. The coupling of solar and battery storage is needed because of the reduced rates for solar production. It is not possible to capture all available solar production without battery storage.


Solar savings are still very possible under NEM 3.0 rules. With the right balance of solar and battery storage, payback timelines can be as short as 10 years (up from 7.5 years on average under NEM 2.0 rules).

The solution: store and save.

Without battery storage, solar customers will experience diminishing returns on the solar production they send to the grid during the peak months of sunlight (June, July, August). A solar system must be properly sized and balanced with storage to ensure excess power in Spring and high-production months doesn’t escape to the grid at disconnected values.

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