NEM 3.0 — formally the California “net billing” tariff, in effect for new SDG&E solar applications since April 2023 — pays you an avoided-cost rate for every kilowatt-hour your system exports, which averages far below the retail rate you pay to import power in the evening. The practical consequence: a San Diego solar system now earns its keep by powering your own home directly and storing the surplus in a battery, not by selling midday power back to the grid.
What actually changed from NEM 2.0 to NEM 3.0?
Under NEM 2.0, an exported kilowatt-hour offset your bill at close to the retail rate — solar was a near one-for-one trade with the grid. Under net billing, exports are credited at California’s avoided-cost calculator values, which vary hourly and average roughly a quarter of retail. Imports, meanwhile, are billed at SDG&E’s time-of-use rates, which peak between 4 and 9 p.m. — exactly when solar production is fading. Homeowners who locked in NEM 2.0 keep that treatment for 20 years from their interconnection date; the rules discussed here apply to new systems.
Why does a battery change the NEM 3.0 math so much?
Because the spread between what SDG&E pays you at noon and what it charges you at 7 p.m. is the whole game. A battery captures your surplus at midday value and spends it against peak retail pricing in the evening — every single day, not just during outages. The one-sentence version: under net billing, the most valuable place to send a solar kilowatt-hour is into your own battery. This is why our solar battery storage consultations now start from your SDG&E usage profile rather than from roof size, and why our guide to how battery backup works is the natural companion to this article.
Is solar still worth it in San Diego under NEM 3.0?
For most homeowners, yes — with design discipline. San Diego pairs some of the highest electric rates in the continental U.S. with some of its best sun (the county averages 260+ sunny days). What changed is the shape of a good system: right-sized to your actual consumption, oriented for late-afternoon production where the roof allows (west-facing panels earn more under net billing than the old south-only rule of thumb), and paired with storage sized to your evening load. Oversized export-heavy arrays — the classic NEM 2.0 design — are the failure mode to avoid now. Hans Energy Systems (CA LIC #967367, designing San Diego systems since 2003) models both configurations in every solar consultation so you see the payback difference before you sign anything.
How do I read my SDG&E bill after going solar?
Expect two moving parts: monthly bills that net your imports against export credits at their respective rates, and an annual true-up of any remaining balance. Watch the hourly export credits — they spike during grid-stress hours, which is another edge batteries exploit by discharging when credits are richest. If the terminology (avoided cost, true-up, TOU windows) is new, keep this page bookmarked and bring your last two SDG&E bills to a consultation; real usage data beats any online estimate.
Frequently asked questions
Am I grandfathered if I already have solar?
If your system interconnected under NEM 1.0 or 2.0, you keep that tariff for 20 years from interconnection. Significantly expanding the system can affect that status — check before adding panels.
Does adding a battery to an old NEM 2.0 system break grandfathering?
Adding storage to an existing NEM 2.0 system generally does not break grandfathering. It’s one of the most popular upgrades we install.
Should my panels face west now?
Where the roof allows, west and southwest orientations produce later into the afternoon, when both retail rates and export credits are highest. South is still excellent; the point is that west is no longer a compromise.
What size battery do I need?
Enough to cover your 4–9 p.m. usage — for most county homes that’s one battery (10–13.5 kWh), two if you’re running AC hard or want longer outage coverage. See our battery comparison.
Are there still incentives for solar and batteries?
Battery rebates through SGIP remain available with priority for medical-baseline and high-fire-threat customers; federal residential credits changed at the end of 2025, so verify current status before counting on them. Our incentives guide tracks what’s live.
Understand the tariff — now run your numbers. Compare storage hardware in Powerwall vs. Enphase for San Diego homes, or bring us two SDG&E bills and get a modeled payback: book a free solar consultation or call (619) 654-0055.
