California NEM 3.0 in 2026: Is Solar Still Worth It?

Solar can still make sense in California under NEM 3.0, but the project must be designed around the customer’s actual electricity use rather than the old assumption that the grid is a one-for-one battery. In 2026, the strongest proposals explain when solar power is used in the home, when it is exported, how export credits are calculated, and whether battery storage changes the result.

What NEM 3.0 actually changed

The CPUC calls the current program the Net Billing Tariff. It generally applies to new residential solar customers of PG&E, SCE and SDG&E whose interconnection applications were submitted on or after April 15, 2023. Existing eligible NEM customers were not automatically moved to the new tariff and may retain their prior tariff for the applicable legacy period.

Under the Net Billing Tariff, solar used immediately in the home offsets electricity that would otherwise be purchased from the utility. Excess electricity exported to the grid receives a credit based on its value to the grid at that hour. Those export credits are normally lower than the retail price of electricity.

Why self-consumption matters

A kilowatt-hour of solar used onsite can avoid buying a retail-priced kilowatt-hour. A kilowatt-hour exported at midday may receive a much smaller credit. That difference changes how systems should be sized and modeled.

Households with daytime air conditioning, pool equipment, remote work, electric water heating or EV charging may naturally consume more solar as it is produced. Other homes may benefit from shifting flexible loads into solar hours. A battery can store some daytime production for evening use, but its purchase price, efficiency and degradation must be included.

What a battery can and cannot fix

A well-modeled battery can reduce evening grid purchases and sometimes discharge during valuable export hours. It may also provide backup power when paired with appropriate transfer equipment. But adding a battery does not rescue every overpriced solar deal.

Ask for these outputs:

• monthly household consumption before and after proposed efficiency upgrades;
• monthly solar production with documented shading and orientation assumptions;
• onsite solar use versus grid exports;
• battery charging source, usable capacity and dispatch schedule;
• energy purchased from the grid by rate period;
• the export-credit table or tariff vintage used in the calculation;
• a scenario without incentive assumptions that have not been confirmed.

Early-adopter export bonuses

The investor-owned utilities describe temporary Energy Export Bonus Credits for eligible residential customers who enroll during the first years of the Solar Billing Plan. For example, SCE says qualifying customers who enroll before 2028 may receive an added export credit, with higher amounts for income-qualified customers. The bonus depends on the utility, enrollment year and eligibility. It should never be represented as a permanent retail-rate credit.

The federal homeowner credit is no longer a 2026 assumption

The former Residential Clean Energy Credit expired for homeowner property placed in service after December 31, 2025 under current federal law. This makes cash price, financing markup and state or utility incentives even more important. It also makes a lease or PPA comparison more complicated because business-owned systems may be priced around different tax benefits.

Convert Green does not provide tax advice. Ask a qualified tax professional about your own facts and insist that the contractor identify every incentive included in the proposal.

When solar may still be a strong fit

• Your roof has good solar exposure and does not need near-term replacement.
• Your electric use is high enough that direct solar consumption has meaningful value.
• You expect long ownership and compare the cash price before financing.
• The proposal uses your utility, current tariff and interval usage.
• A battery is sized for measurable rate or resilience goals rather than added as a generic upgrade.
• You have verified incentives instead of treating them as guaranteed.

When to slow down

• The salesperson only discusses monthly payment.
• The savings model treats every exported kilowatt-hour like retail-rate energy.
• The contract assumes the former 30% homeowner credit for a 2026 installation.
• Roof replacement, panel upgrades or backup equipment are excluded from the quoted price.
• The battery’s backup loads and runtime are not specified.
• The production guarantee is weaker than the sales forecast.

Use our 2026 solar cost guide, ownership comparison and net metering explainer before reviewing a proposal.

Official sources

• CPUC Net Energy Metering and Net Billing
• CPUC NEM Revisit proceeding
• California Solar Consumer Protection Guide
• SCE Solar Billing Plan
• IRS Publication 523, 2025 edition

Featured photo: Drew Dau via Unsplash.