If you installed solar in California before April 14, 2023, you are on NEM 2.0. If you install in 2026 or any time after, you are on NEM 3.0 (officially the Net Billing Tariff, or NBT).
The two tariffs work very differently. This is the side-by-side breakdown — what changed, who is grandfathered, and what it means for the design of your system.
The Short Version
Under NEM 2.0, exported solar was credited at retail rate (roughly $0.30-$0.50/kWh in California). Under NEM 3.0, exported solar is credited at the Avoided Cost Calculator (ACC) rate (roughly $0.05-$0.08/kWh most hours). That ~75% reduction in export value is the central change. Everything else about NEM 3.0 flows from it.
Side-By-Side: NEM 2.0 vs NEM 3.0
| Feature | NEM 2.0 | NEM 3.0 (Net Billing Tariff) |
|---|---|---|
| Effective date | July 2017 through April 14, 2023 (closed to new) | April 14, 2023 onward |
| Export credit | Retail rate ($0.30-$0.50/kWh) | Avoided Cost Calculator ($0.05-$0.08/kWh typical) |
| Non-bypassable charges (NBCs) | ~$0.025/kWh on imports | Same — ~$0.025/kWh |
| True-up reconciliation | Annual | Annual |
| Time-of-use rates required? | Yes (E-TOU-C, E-TOU-D, EV2-A) | Yes |
| Battery economics | Nice-to-have (backup) | Often essential for payback math |
| Grandfathering window | 20 years from interconnection date | 9 years from interconnection date |
| Typical solar-only payback (Fresno) | 6-9 years | 8-12 years |
| Typical solar + battery payback (Fresno) | 5-8 years | 7-10 years |
Who Is Grandfathered Into NEM 2.0?
If your solar interconnection application was submitted to PG&E (or SCE / SDG&E) on or before April 14, 2023 and was subsequently approved, you are grandfathered into NEM 2.0 for 20 years from your interconnection date.
This is a big deal. NEM 2.0 customers continue to receive retail-rate credit for grid exports — meaning the system they installed under the old rules continues to perform under the old rules for the next two decades.
Can I Add a Battery to NEM 2.0 Without Losing It?
Usually yes. PG&E allows storage-only additions to existing NEM 2.0 systems without flipping the customer to NEM 3.0, provided:
- The original PV nameplate does not increase by more than 10%
- The battery is added without significant solar oversizing
- The interconnection is filed correctly as a "storage-only addition"
This is one of the highest-value moves available to a Northwest Fresno or Woodward Park homeowner with existing 2018-2022-era solar: keep the NEM 2.0 retail-rate export credits AND add a battery for backup and SGIP rebate. We do this often.
What About Expanding NEM 2.0 Solar?
If you add MORE solar panels (above the 10% increase threshold) to a NEM 2.0 system, you typically lose grandfathering. The expanded portion of the system would fall under NEM 3.0 rules. Sometimes — depending on the relative sizes — the math still works. We model both scenarios.
NEM 3.0: The Avoided Cost Calculator (ACC) Explained
NEM 3.0 credits exports at the Avoided Cost Calculator rate. This is a calculated rate that varies by:
- Hour of the day
- Day of the year
- Climate zone
- PG&E vs SCE vs SDG&E
For PG&E Fresno territory, the rate looks roughly like this:
- Most off-peak hours (midnight - 4 PM): $0.05-$0.07/kWh
- Mid-peak (4 PM - 6 PM and 9 PM - midnight): $0.06-$0.10/kWh
- Peak (6 PM - 9 PM summer): $0.30-$0.50/kWh (briefly approaches retail rate in mid-summer)
The peak window is where battery storage shines. A Powerwall charged off your solar during the day discharges during 6-9 PM peak to capture the high-ACC rate (or, equivalently, the high retail rate you would otherwise pay).
What NEM 3.0 Means for System Design
Under NEM 2.0, the optimal solar system was sized for ANNUAL net production close to your annual usage. Exports during the day were worth the same as imports at night. Battery was optional.
Under NEM 3.0, the optimal solar system is sized for DAYTIME SELF-CONSUMPTION plus enough excess to recharge a battery. Exports are worth a fraction of imports. Battery is nearly always part of the design.
Practical implications for Fresno:
- Smaller solar arrays (because oversizing for exports no longer pays)
- Larger battery capacity (because shifting load to evening peak is where the value is)
- EV charging timed to midday (when your own solar is overproducing)
- Heat pump water heaters or pool pumps that can run midday (same logic)
The Grandfathering Window: 20 Years (NEM 2.0) vs 9 Years (NEM 3.0)
NEM 2.0 grandfathered customers retain their tariff treatment for 20 years from interconnection. After year 20, the customer rolls to whatever then-current rules apply.
NEM 3.0 customers retain their tariff treatment for 9 years from interconnection. After year 9, the customer rolls to whatever then-current rules apply. Then 5-year increments after that.
The shorter grandfathering window is one of the under-discussed features of NEM 3.0. It is not the end of the world — even a worst-case "rolls to NEM 4.0" scenario in year 10 still leaves 15+ years of useful system life — but it changes the long-term planning calculus.
NEM 3.0 vs NEM 2.0: Should I Have Installed Earlier?
If you waited past April 14, 2023, you are not on NEM 2.0 — and there is no going back. The grandfathering window has closed.
The good news: NEM 3.0 still works. Solar plus battery payback in Fresno under NEM 3.0 is typically 7-10 years, with 15+ years of effectively free electricity after that. The economics are slightly less generous than NEM 2.0 was, but they are still strong — and they are better than any other capital deployment most Fresno homeowners have access to.
What to Do Now
If you have NEM 2.0:
- Protect it. Do not let a re-roof or panel expansion accidentally flip you to NEM 3.0.
- Consider adding battery as a "storage-only addition" to preserve grandfathering while capturing PSPS protection + SGIP rebate.
If you are installing fresh under NEM 3.0:
- Design for self-consumption, not exports.
- Include battery from day one.
- Capture the SGIP rebate.
- Time EV charging and heavy loads to midday solar production.
Either way: model your specific case before signing anything. Get an honest design call here.