Is Solar Still Worth It in California Under NEM 3.0? (The Honest Truth)

Batteries Make the Utility Pay You Instead of You Paying Them — Here's How the Script Flips

Let's cut through the noise.

Since California's Public Utilities Commission replaced NEM 2.0 with the new Net Billing tariff (commonly called NEM 3.0) in April 2023, the solar industry has been buzzing with debate: Is solar still worth it in California? Did the CPUC just pull the rug out from under homeowners?
The honest answer: solar alone is a weaker proposition under NEM 3.0. Solar paired with a battery is a stronger proposition than it's ever been. Here's why — and what it means for your electric bill.

What Changed Under NEM 3.0

Under the old NEM 2.0 rules, homeowners who sent excess solar power back to the grid received a credit roughly equal to the retail rate of electricity. During a sunny afternoon, your solar panels might push 10 kWh to the grid, and SCE or PG&E would credit you around $4–5 for it. Under NEM 3.0, that same 10 kWh sent to the grid during a sunny afternoon might earn you less than $1. The "avoided cost" rate — what the utility says it would have paid for that power on the wholesale market — is dramatically lower than retail.
The CPUC framed this as a fairness correction. Critics called it a utility-friendly windfall. The reality is somewhere in the middle, but the impact on straight solar-only systems is undeniable: payback periods for solar without storage got longer.

So Why Is Solar Still Worth It?

Because the answer to NEM 3.0 isn't to export power to the grid. It's to stop exporting power to the grid. That's where batteries come in.
A Tesla Powerwall, or comparable battery storage system, captures the excess power your solar panels generate during the day and stores it for use in the evening — exactly when California's time-of-use electricity rates are at their peak. Under SCE's current TOU-D-PRIME rate, electricity used between 4 PM and 9 PM can cost $0.55 to $0.65 per kWh or more. That's the most expensive power you buy. A battery that lets you avoid buying even 10 kWh of peak-hour power every evening saves you $5–6.50 per day — or $150–200 per month — just from peak hour avoidance alone. Add your reduced daytime consumption (covered by solar), and a well-designed solar-plus-battery system can cut a typical Southern California homeowner's bill by 60–80%.

The Script Flips: Making the Utility Work for You

Here's the part most people don't fully grasp: under NEM 3.0, the smart battery strategy doesn't just save you money. It turns the utility's own rate structure into your advantage. The utility charges the most for power when demand is highest (evenings). Your battery, charged by free solar power during the day, supplies your home during those expensive hours. You buy almost nothing from the grid at peak rates. If you do need grid power, it's during off-peak hours when rates are much lower and here's the kicker: if your battery is still full at certain times, NEM 3.0 actually offers enhanced export rates during specific "super off-peak" and "peak" windows. A well-programmed battery system can be set to export at precisely these windows — meaning the utility pays you more for your excess power while you continue to save on your daily consumption. You're no longer a passive ratepayer. You're an active participant in the grid — and you're winning.

The TPO Model: Getting In Without Buying Equipment

One of the most significant developments since NEM 3.0 went into effect is the expansion of third-party ownership (TPO) programs in California. Under a TPO structure, a program partner installs, owns, and maintains the solar panels and battery system on your home. You pay a fixed monthly service fee — often significantly lower than your current electric bill — and you keep all the bill credits and energy savings. There's no equipment to buy. No loan to take out. No 25-year lease with escalator clauses buried in the fine print.
For qualifying homeowners, this is the most accessible and lowest-risk path to going solar under NEM 3.0. The program partners benefit from utility incentives and tax credits. You benefit from lower bills and backup power.

Who Benefits Most from Solar + Battery Under NEM 3.0?

The homeowners who see the biggest returns under the new structure tend to share a few characteristics:

- High electricity usage (bills over $150/month)

- Most of their consumption in the evening (after 4 PM)

- Homes in areas prone to outages (Ventura County, fire-adjacent zones, rural areas)

- Interest in protecting against future rate increases

If that sounds like you, NEM 3.0 is not a deterrent. It's a roadmap. The new structure was specifically designed to reward storage — and if you have storage, you're exactly who the policy was designed to benefit.

What About Payback Period?

The payback period for a solar-only system extended under NEM 3.0 — that's true. But the payback period for a solar-plus-battery system through a TPO program is essentially immediate. You start saving from day one because your monthly program fee is lower than what you were paying the utility. For purchased or financed systems, payback periods vary based on system size, usage, and financing terms. But with utility rates continuing to rise and battery costs declining year over year, the economics of solar-plus-battery in California are more favorable than most people realize — even under NEM 3.0.

The My Home & Solar Solutions Perspective

We work with California homeowners every day who ask us this exact question: Is solar still worth it?
Our answer is always the same: it depends on how you go solar. Batteries are no longer optional for California homeowners who want to maximize savings under the new rules. And for qualifying households, TPO programs make solar-plus-battery accessible without the financial risk of a purchase or traditional lease.
We evaluate each home individually — roof condition, utility bill history, usage patterns, shading, and available programs — before making any recommendation. Our goal isn't to sell you something. It's to help you make a smart decision.

Find out if your home qualifies for a solar-plus-battery program: https://myhomesolution.org/california_public_utility_commissions

The script has flipped on who benefits from California's energy market. Make sure it's flipping in your favor.