Claire WhitakerBy Claire Whitaker

Updated November 2026

Is net metering going away in California? Not in the sense that rooftop solar customers lose all bill credits, but the rules have shifted in ways that matter a lot for your payback period. California moved most new customers from the older full-retail credit model to net billing, with export credits set at a lower, time-varying rate. If you already have solar under an older contract, you may be grandfathered. If you are planning a new system, the value of each kilowatt-hour you send to the grid is now much smaller, and the design of your system matters more than it used to.

Quick Comparison: NEM 2.0, NEM 3.0 and Net Billing

Most homeowners asking this question are really trying to figure out which billing structure applies to them and whether it is worth installing solar now. The three terms you will see most often are NEM 1.0/2.0 (the legacy net metering rules), NEM 3.0 (the current default for new interconnections, which uses net billing with export credits tied to time of day), and the broader term “net billing” itself. The table below compares them on the criteria that drive a real decision.

Criteria NEM 1.0/2.0 (legacy net metering) NEM 3.0 (net billing, current default)
Who it applies to Customers interconnected under older rules, generally before the April 2023 transition Most new residential interconnections in investor-owned utility territories
Export credit value Generally retail rate, with bill credits for exported energy Avoided cost-based export rate, substantially lower than retail and varying by hour
Time-of-day sensitivity Low: exports offset usage at the same rate across the day High: exports during peak evening hours are worth the most, midday exports the least
Battery storage relevance Helpful but optional for bill savings Often central to maximizing savings by shifting exports to the evening
System sizing approach Often sized to offset most or all annual usage Often sized to self-consume daytime production, with lower export reliance
Payback predictability Relatively straightforward to estimate More dependent on rate schedule, load profile and storage
Best fit Homeowners who already hold grandfathered contracts New installers and homeowners willing to optimize for self-consumption

Which Option Wins on Export Credit Value?

Winner: NEM 1.0/2.0. Under legacy net metering, exported kilowatt-hours were credited at or near the retail rate, which made every unit of excess generation valuable. Under NEM 3.0, the export rate is set well below retail and changes throughout the day. Utilities designed it this way to reflect what they pay for power at different times, so an afternoon export earns much less than an evening export. If you have a grandfathered NEM 2.0 contract, keep it. Transferring a system or making major changes can sometimes trigger a move to the new rules, so check with your utility before altering your equipment.

Which Option Wins on Time-of-Day Flexibility?

Winner: NEM 3.0 for homeowners who can shift their usage. This sounds backward, but the time-based structure rewards households that align their consumption with the right hours. A home that runs the dishwasher, EV charger and laundry in the middle of the day uses its own solar directly, which is worth more than exporting. A home that wants to cover evening usage with stored energy can use a battery to move power into the high-value window. NEM 1.0/2.0 gave you less reason to think about timing at all, which was simpler but left money on the table for households with flexible loads.

Before you commit to a design, pull at least 12 months of interval data from your utility portal. Look at your hourly load curve and identify the hours when you consume the most. Those hours tell you whether a battery or a larger array makes sense.

Which Option Wins on Battery Integration?

Winner: NEM 3.0, because storage is central to the economics. Under legacy net metering, a battery mainly provided backup power and modest savings from time-of-use rates. Under net billing, a battery lets you capture solar energy at midday, store it, and discharge it during the expensive evening peak instead of exporting it cheaply. Many installers size batteries specifically for that evening window. Battery payback depends heavily on your rate plan, your evening usage and whether your utility offers a time-of-use schedule with a meaningful peak spread. Consult a licensed electrician or qualified installer before adding storage, since battery systems involve high-current wiring and fire-safety requirements.

Which Option Wins on System Sizing?

Winner: NEM 1.0/2.0 for simple annual offset; NEM 3.0 for right-sized self-consumption. Legacy net metering made it easy to oversize a system, since surplus generation earned near-retail credits that could roll over. Net billing discourages oversizing because extra exports are cheap. A practical approach under NEM 3.0 is to size the array to cover daytime loads and perhaps a portion of the evening, then add storage if the math supports it. Some homeowners do the rough sizing math like this:

  1. Divide your annual kWh use by the expected annual production per installed kW in your area (get this from a tool like NREL’s PVWatts, which is free).
  2. Compare that number to your daytime load. If your daytime use is well below total production, a smaller array with storage may outperform a large one.
  3. Ask two or three licensed installers to model both scenarios using your interval data.

For the mechanics of how credits accumulate and roll over, see Solar Net Metering California: A Step-by-Step Guide for Homeowners and Net Metering in California: How It Works and What Homeowners Need to Know.

Which Option Wins on Predictability and Paperwork?

Winner: NEM 1.0/2.0, if you can keep it. Legacy contracts are stable and easy to model. NEM 3.0 requires more analysis because rates, export values and time windows are specific to your utility. The policy environment has also been contested, so the rules that apply to you can depend on your interconnection date and your utility’s tariff schedule. Keep copies of your interconnection agreement and any rate-plan elections. For utility-specific details, read Southern California Edison Net Metering: Step-by-Step Guide for Homeowners if you are in SCE territory, and Net Energy Metering in California vs Net Billing: Which Should You Choose? for a side-by-side on the billing mechanics.

Which Option Wins on Overall Payback?

Winner: depends on your load shape and whether you already hold a legacy contract. A grandfathered NEM 2.0 customer almost always has the better economics, since export credits are worth more. A new customer under NEM 3.0 can still achieve a sound payback if the system is sized for self-consumption, the home uses power midday, and storage is added where the rate spread justifies it. A new customer with heavy evening usage and no battery will see the weakest returns, so this is the group most likely to decide that solar does not pencil out without changes to their habits or equipment. Your installer and a utility bill analysis should give you the real number, not a generic estimate.

Which Should You Choose?

  • Choose to keep or preserve a legacy net metering contract if you already have one. Do not make major system changes without confirming how they affect your billing status.
  • Choose a NEM 3.0 system sized for self-consumption if you are a new customer whose home uses significant power during the day, such as someone who works from home or runs equipment midday.
  • Choose NEM 3.0 with a battery if your evening usage is high and your utility’s peak export rate is meaningfully above its midday rate.
  • Wait and model carefully if you have low daytime usage, no plans to add storage, and only a modest roof. In that case, the payback may be marginal, and efficiency upgrades or load shifting may be a better first step.
  • Get a second opinion before signing any contract that promises a specific savings number. Ask the installer to show the time-of-use rate assumptions behind it.

Equipment Options by Approach

The products below are commonly used in each approach. Verify compatibility with your inverter and utility before buying.

Listing a product here is not an endorsement of its fit for your roof or utility. Your installer should size and certify the equipment.

FAQ

Is net metering officially ended in California?

No. California still offers net metering in a sense, but most new residential customers in investor-owned utility territories are on net billing (often called NEM 3.0). Customers who interconnected under earlier rules generally keep their original terms, though changes to equipment or ownership can affect that status.

Will my existing solar system lose its net metering credits?

Usually not, provided the system stays in its original configuration and the account stays in good standing. Adding capacity, changing the interconnection, or transferring the system may trigger review under current rules. Ask your utility before making changes.

Does a battery make sense under net billing?

Often yes, if your evening usage is high and the peak-to-midday export rate spread is large. The economics depend on your rate plan and load profile, so request a bill analysis from a qualified installer before deciding.

How do I find out which billing plan I am on?

Check your utility account and interconnection agreement, or call customer service and ask for your net metering or net billing tariff and your interconnection date. This determines which export credit rules apply to you.

Should I still install solar if net billing is in effect?

It can still make sense, especially for homes with strong daytime usage or a plan to add storage. Solar with no battery and low daytime use may have a longer payback, so model your own numbers. Consult a licensed installer and, if needed, a financial advisor before committing.

Conclusion

Is net metering going away in California? In practical terms, the old full-retail export credit has been replaced for most new customers by net billing, which pays less for exported power and rewards systems built around self-consumption and storage. Legacy contracts remain the strongest option for those who hold them, and new customers can still find solid returns if they size thoughtfully and understand their utility’s rate structure. Start with your own interval data, get two or three written proposals that show the assumptions, and treat any promised savings figure as something to verify.

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.