Claire WhitakerBy Claire Whitaker

Updated November 2026

PG&E net metering 2.0 is the billing structure California utilities use for most homes that interconnected after the original program closed to new applicants. Net Metering 1.0 (often called NEM 1.0) still applies to customers who were grandfathered in before the transition. If you already have a system, your interconnection date largely decides which program you are on. If you are planning a new installation, the choice is usually made for you by when your permission to operate is granted, though system size, battery plans and your evening usage pattern will determine whether the result feels fair. Read on for a side-by-side breakdown.

Both programs credit your solar exports against your utility bill, but they value those exports very differently. Under the older structure, exported power generally offset retail energy charges one-for-one over a monthly or annual true-up period. Under the newer structure, exports are valued at time-varying rates that are generally lower during solar hours and higher during evening peak hours. That shift changes the economics of system size, battery storage and when you run your appliances.

Quick Comparison Table

Criteria PG&E Net Metering 2.0 (NEM 2.0) PG&E Net Metering 1.0 (NEM 1.0)
Eligibility New interconnections under the later program rules Grandfathered systems interconnected under the original program
How exports are valued Time-of-use based export credits Retail-rate credit for exported energy
Best time to use power Evening and early morning, outside solar peak hours Any time, since credits are roughly equal
Battery storage value High, because stored solar can shift exports to peak hours Lower, since daytime exports already earn full retail value
System sizing approach Often sized closer to your annual usage with some headroom Often oversized, because surplus credits roll forward
Bill predictability Fixed monthly charge and time-of-use energy rates to plan around More predictable once credits offset usage
Rollover of surplus credits Monetary or kWh credits, depending on the rate schedule kWh credits roll forward, typically with annual cash-out for leftovers

Export Credit Value: Which Program Pays More Per kWh?

For most homeowners, the export credit is the single biggest difference between the two programs. Under NEM 1.0, every kilowatt-hour you send to the grid is generally credited at close to the retail rate. That means a kWh you export at 2 p.m. can offset a kWh you draw at 8 p.m. at nearly the same value. The math is simple, and it rewards oversized arrays.

Under NEM 2.0, the export value depends on when the energy leaves your roof. Midday exports are generally credited at lower rates because the grid is flooded with solar at that hour. Evening exports, when the grid is stressed, are credited at higher rates. The gap between those values is what drives the rest of the comparison.

Winner: NEM 1.0 for raw export value per kWh, since every exported kilowatt-hour is credited at close to retail. NEM 2.0 can still work well if your usage is concentrated in the hours you can cover with stored energy.

Battery Storage and Load Shifting

Battery storage becomes much more useful under NEM 2.0. A battery lets you capture midday solar, hold it, and discharge it during the evening peak when exports or self-consumption are worth more. Homeowners often pair a battery with a time-of-use plan so the stored energy offsets the highest-cost hours.

Under NEM 1.0, storage has a weaker financial case. Because daytime exports already earn near-retail credit, there is little reason to hold energy back unless you want backup power during outages. Storage still provides resilience, but the bill savings are smaller.

Winner: NEM 2.0 for homeowners who want a battery and can shift their use into evening hours. NEM 1.0 is the better match if your main goal is backup power rather than bill optimization. Consult a licensed electrician or solar installer before sizing a battery, since panel, inverter and battery compatibility matters.

System Sizing and Oversizing Strategy

Under NEM 1.0, many homeowners intentionally installed larger arrays. Excess production during the day builds up credits that carry forward, and those credits can offset winter or nighttime usage. Some customers in the program have reported building large credit balances over the summer, which then covered cooler months.

Under NEM 2.0, oversizing is less attractive. Because the export rate is lower and surplus credits may be handled differently, the usual approach is to size the system closer to your expected annual consumption, often with modest headroom for future load like an electric vehicle or heat pump.

Winner: NEM 1.0 for homeowners who want to maximize credit accumulation, since oversizing was the intended strategy. For new installs under NEM 2.0, right-sizing is the better approach. If you are unsure, a utility bill analysis from your installer can show how your past 12 months of usage maps to production.

Bill Predictability and Rate Structure

NEM 1.0 tends to produce a bill that is easier to forecast once your credits cover most usage. Since exports and imports are valued similarly, the monthly net amount often tracks your overall consumption. Many homeowners find this simpler to read when they review their statements.

NEM 2.0 pairs solar with time-of-use rates, so the same kilowatt-hour can cost very different amounts depending on the hour. That is powerful if you adjust your habits, such as running the dishwasher at midday or charging an EV overnight. It is less predictable if you rarely think about timing.

Winner: NEM 1.0 for simplicity and easier bill forecasting. NEM 2.0 wins for homeowners willing to manage usage by time of day.

Which Should You Choose?

  • Choose NEM 1.0 if you are already grandfathered in and your system is sized to generate more than you use, because your credits are worth close to retail.
  • Choose NEM 2.0 if you are installing new and plan to add a battery, since stored solar can offset expensive evening hours.
  • Choose NEM 2.0 if your household is home during the day and can shift laundry, dishwashing and EV charging to midday.
  • Choose NEM 1.0 if you run most appliances in the evening and do not want to manage usage around time-of-use rates.
  • Choose a battery-plus-NEM 2.0 setup if backup power during outages matters as much as bill savings.
  • Stay on NEM 1.0 without changes if you are grandfathered, since switching programs may not be an option and the existing credit structure is generally favorable.

Before deciding, review your past 12 months of bills, note your peak usage hours, and ask your installer to model both scenarios. For background on how credits accumulate, see Solar PV Net Metering Explained: How It Works and Credits Your Bill and Solar Net Metering Requirements: What You Need to Qualify (Step-by-Step). If you want to understand the value of exporting power, What Is the Benefit of Net Metering for Home Solar Owners? gives a useful overview.

Both programs rely on a few core components. A monitoring device helps you track how much you export and import each hour, which matters most under NEM 2.0.

Confirm with your installer and utility that any hardware you buy is approved for interconnection.

FAQ

Can I switch from NEM 1.0 to NEM 2.0?

Generally no. Customers who were grandfathered under the original program usually remain on it, and changing programs is typically limited by when your system was interconnected. Check with PG&E directly, since rules can be updated.

Do I need a battery to make NEM 2.0 work well?

No, but a battery makes it much more effective. Without storage, you rely on managing when you use electricity. With storage, you can hold midday production for evening use, which is where the export rate differences matter most.

Does net metering 2.0 include a monthly fee?

Your bill may include fixed monthly charges that apply regardless of solar production. Review your rate schedule and bill statement to see the exact structure, since these components vary by rate plan.

What happens to extra credits I build up?

Under NEM 1.0, surplus kilowatt-hour credits generally roll forward and may be paid out at the end of the year. Under NEM 2.0, surplus treatment depends on the specific rate structure, so confirm with PG&E how your credits are handled.

Should I hire a professional to compare both options?

Yes, it is a good idea. A licensed solar installer or energy consultant can run your 12-month usage data through both programs and show you the likely result. Solar contracts and interconnection paperwork are also easier to handle with a professional involved.

Conclusion

PG&E net metering 2.0 favors homeowners who can shift usage, add storage or install a right-sized system. NEM 1.0 remains the more generous structure for exports, but it is available only to grandfathered customers. Your interconnection date, your household schedule and your interest in batteries will decide which option works better for you. Gather your bills, model both scenarios with a qualified installer, and choose the setup that matches how your home actually uses power.

Claire Whitaker

About Claire Whitaker

Claire Whitaker is part of our editorial team and reviews and edits our home solar guides, checking product details against manufacturer specifications and owner feedback.