By Claire WhitakerUpdated November 2026
PG&E net metering rates come down to two main options for most California homeowners: the older NEM 2.0 tariff, which credits exported power at close to the full retail rate, and the newer NEM 3.0 (also called net billing), which pays much lower export rates tied to the time of day. If your system was installed before April 15, 2023, NEM 2.0 usually wins on pure bill math. If you are a new customer, NEM 3.0 is the only option for standard residential interconnection, so the real question becomes how to size your system and whether a battery makes sense.
This comparison walks through both tariffs side by side, then breaks down the criteria that matter most: export credit value, time-of-use sensitivity, battery economics, interconnection rules and long-term bill predictability. Rates change, so confirm current figures in your PG&E account and the CPUC tariff documents before making a decision.
NEM 2.0 vs NEM 3.0 at a Glance
| Criterion | NEM 2.0 (Legacy) | NEM 3.0 (Net Billing) |
|---|---|---|
| Eligibility | Systems interconnected before April 15, 2023 | New interconnections on or after April 15, 2023 |
| Export credit basis | Close to full retail energy rate, 1:1 kWh offset | Avoided Cost Calculator (ACC) export rate, time-varying |
| Time-of-use sensitivity | Low: exports offset imports at similar value | High: midday exports earn the least, evening exports earn the most |
| Battery value | Modest: less need to store exports | Strong: storing solar for evening peak hours is often the key savings lever |
| Sizing strategy | Often oversized to cover annual usage | Usually sized closer to daytime load, with batteries for self-consumption |
| Bill predictability | Stable and easier to estimate | More variable, depends on hourly export and import patterns |
| Best for | Existing NEM 2.0 customers who keep their system | New customers willing to optimize usage and storage |
Export Credit Value: Which Tariff Pays More?
Winner: NEM 2.0. Under the legacy tariff, every kilowatt-hour your panels push to the grid is credited against a kilowatt-hour you draw later, and that credit is valued close to the full retail energy rate. For a household that generates more than it uses over a billing cycle, NEM 2.0 has historically produced the largest net credits. Owners often report that this is the single biggest reason to protect a grandfathered interconnection.
NEM 3.0 changes the arithmetic. Exports are valued at the Avoided Cost Calculator rate, which is set by the California Public Utilities Commission and varies by hour. Midday exports, when solar output is highest and the grid has plenty of supply, typically earn the lowest values. Early evening exports, when demand peaks, earn the highest. The practical result is that a NEM 3.0 system exporting heavily at noon will see far less financial benefit than the same system did under NEM 2.0.
If you are weighing whether to keep or upgrade an existing system, a helpful starting point is the explanation in Xcel Energy Solar Net Metering: How It Works and How to Get Credited, which shows how export credits are structured under a different utility’s program. The logic is similar: the more your exports are valued, the more sizing choices pay off.
Time-of-Use Sensitivity: Which Tariff Rewards Smart Scheduling?
Winner: NEM 3.0, for homeowners willing to manage their load. Time-of-use pricing is the defining feature of NEM 3.0. Under this structure, shifting heavy loads such as dishwashers, clothes dryers, electric vehicle charging and pool pumps away from midday and toward the evening can noticeably reduce your bill. Owners of NEM 3.0 systems frequently report that scheduling appliances is more effective than any single equipment upgrade.
NEM 2.0 customers gain less from scheduling because exports and imports are credited at similar value. Your main lever is total annual production versus total annual consumption. That makes NEM 2.0 forgiving for households with unpredictable schedules, while NEM 3.0 rewards anyone who is organized about electricity use.
Be aware that PG&E’s time-of-use periods, including peak hours, are set by the tariff and can be adjusted over time. Check the current schedule before automating appliance timers.
Battery Economics: Which Tariff Makes Storage Worthwhile?
Winner: NEM 3.0. A battery stores midday solar and releases it during the evening peak, when your import cost is highest and your export value would have been highest as well. Under NEM 3.0, this shifting is where most of the financial return comes from. Under NEM 2.0, a battery is more often a backup and resilience choice, because the credit system already rewards sending power to the grid.
Battery sizing matters. Most residential NEM 3.0 owners pair a battery with a system sized to cover daytime load plus the energy needed to charge the battery for evening use. A battery that is too small will leave evening demand on the grid, while an oversized one may sit partly unused. Calculating your typical evening kilowatt-hour consumption is the best starting point.
For a broader look at how net metering limits and interconnection rules interact with storage, see What Is Net Metering Cap? A Homeowner's Guide to Limits (2026), which explains why system size constraints matter when you add a battery.
Interconnection and Sizing Rules: Which Tariff Is Easier to Get?
Winner: NEM 2.0, but only if you already have it. NEM 2.0 is closed to new residential interconnections in PG&E territory, so this criterion really only applies to existing systems. Existing NEM 2.0 customers can typically add capacity under limited rules, though changes that increase system size may move the account to NEM 3.0 for the added portion. Confirm the exact treatment with PG&E before expanding a grandfathered system.
New customers interconnect under NEM 3.0 with a process that involves a PG&E application, inspection and permission to operate. Sizing is generally guided by your historical usage and roof constraints, with the goal of matching daytime production to your load and planned battery capacity rather than maximizing annual exports.
Owners of systems in other states sometimes find the rules more predictable. For comparison, Green Mountain Power Net Metering Rates: How Your Credit Works shows how a different utility structures its credit, which can help you see how much California’s approach differs.
Bill Predictability: Which Tariff Is Easier to Forecast?
Winner: NEM 2.0. Because the credit ratio is close to one-to-one and fairly stable, NEM 2.0 bills are easier to estimate month by month. You can compare your annual production estimate against your annual usage and get a reasonable sense of your net position. NEM 3.0 bills depend on the hour-by-hour pattern of exports and imports, so two households with identical annual totals can end up with very different bills.
If predictability matters more to you than optimization, NEM 2.0 still has the edge. If you can monitor your usage through PG&E’s app or a home energy monitor and adjust behavior, NEM 3.0 gives you more control over the outcome.
Long-Term Value: Which Tariff Holds Up Over Time?
Winner: NEM 2.0 for existing owners; NEM 3.0 for new owners pairing solar with storage. The legacy tariff retains value because export credits are favorable, but it cannot be recreated for new customers. The newer tariff is designed around batteries and load management, which means its long-term value depends on how well you adapt. Owners who buy a battery sized to their evening load and schedule flexible appliances generally report better outcomes than those who install panels alone.
Remember that equipment ages. Panels lose a small amount of output each year, and battery capacity fades with cycling. Factor those declines into any multi-year estimate, and compare against actual monthly bills rather than projections alone.
Which Should You Choose?
- Choose NEM 2.0 if you already have a system interconnected before April 15, 2023, you produce more energy than you use, and you want stable, predictable credits.
- Choose NEM 3.0 if you are a new customer and can shift appliance use to off-peak hours.
- Choose NEM 3.0 with a battery if your household uses significant power in the evening and you want to avoid peak import rates.
- Choose NEM 2.0 and avoid major changes if your system is already grandfathered and generating well, since expansion may move you to the newer tariff.
- Choose NEM 3.0 with modest sizing if your daytime load is high and you plan to use most of your solar on-site rather than exporting it.
- Consider a consultation first if you are unsure whether an upgrade will trigger a tariff change, since the decision affects your long-term savings.
Equipment to Consider
Both tariffs reward well-matched hardware. For NEM 3.0 owners, a battery paired with a hybrid inverter is the usual configuration. Product options include the Tesla Powerwall 3 and the Enphase IQ Battery 5P, both of which are widely installed in California. Confirm compatibility with your inverter and the PG&E interconnection requirements before purchasing.
NEM 2.0 owners who want to add monitoring can use a revenue-grade meter or home energy monitoring system to track exports and imports against PG&E’s billing data. Product examples include the Emporia Vue 3 and the Sense Home Energy Monitor, both sold through Amazon US.
FAQ
Can I switch from NEM 3.0 back to NEM 2.0?
No. NEM 2.0 closed to new residential interconnections in PG&E territory. Once you are on NEM 3.0, the tariff generally stays in effect for that system, so plan your sizing and battery choices with that in mind.
Does adding a battery to a NEM 2.0 system change my tariff?
It can. Adding storage to a grandfathered system may require PG&E review, and some changes can affect how your exports are credited. Ask PG&E in writing how an added battery will be treated before installing it.
How do I know which time-of-use periods apply to me?
Your PG&E rate schedule lists the current peak, partial-peak and off-peak windows. Check your account or the published tariff, since these periods can be updated.
Is a battery always worth it under NEM 3.0?
Not always. The value depends on your evening usage, the price difference between peak and off-peak periods, and the battery’s cost and lifespan. Running the numbers against your last twelve months of PG&E bills is the most reliable way to decide.
Should I consult a professional before making changes?
Yes. Because net metering rules, interconnection requirements and tariff eligibility can change, consult a licensed solar installer or energy advisor familiar with PG&E before expanding or replacing a system. Electrical work should be performed by a qualified professional.
Conclusion
For PG&E customers, the choice between NEM 2.0 and NEM 3.0 is largely made for you by when your system was interconnected. If you hold a grandfathered NEM 2.0 agreement, protect it and be cautious about changes that could trigger a transition. If you are a new customer, NEM 3.0 is the path, and your success depends on sizing solar to your daytime load, adding a battery where evening usage is high, and scheduling flexible appliances. Verify current export rates and time-of-use periods with PG&E before committing.
Related reading
- NV Energy Net Metering Rates (2026): Which Is Better for Your Home?
- LADWP Net Metering Rates (2026): Which Is Better for Your Home?
- IESCO Net Metering Rates: What Your Credit Is Worth
- Xcel Energy Net Metering (2026): Which Is Better for Your Home?
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.
