Why Battery Storage is Essential with PG&E’s Net Billing Tariff (NEM 3.0)

When first established, Net Energy Metering (NEM) was a game changer for California residents interested in making the switch to solar energy. NEM enabled homeowners to earn credits for the excess solar energy they feed into the grid. A significant shift took effect on April 15, 2023. The California Public Utilities Commission (CPUC) implemented PG&E’s new Net Billing Tariff (NBT), often referred to as NEM 3.0.  Instead of crediting residents at the full retail rate, PG&E’s new solar billing plan will provide credits based on how valuable it is to not use electricity during a certain hour. They are calling this the “avoided cost rate.” For new solar customers, this will translate to a 75% reduction in compensation rates compared to the rates under NEM 2.0. However, one of the initiatives of the Net Billing Tariff is to incentivize the addition of energy storage with solar, by allowing for greater savings opportunities when the two are paired. In this article, we’ll evaluate how the solar billing changes have impacted California residents and explore the role home battery storage will play in this evolving landscape for homeowners.

Understanding the Net Billing Tariff 

Solar billing plans are designed to help homeowners understand their energy consumption and the costs associated with their solar power system. These plans detail how much energy is consumed, produced, and sent back to the grid. The key component here is the kilowatt hours (kWh), which measures energy consumption.

In the United States, various solar incentive programs are available to encourage the adoption of solar energy systems. One such program is the net energy metering (NEM) program, which allows homeowners to receive bill credits for excess solar energy they produce and send back to the grid. This system promotes energy independence, as homeowners can offset their electricity bills with the energy they produce.

However, it’s essential to understand the specifics of your solar billing plan. Some plans might offer higher bill credits during peak demand hours, while others might have a flat rate. Being well-informed will help homeowners maximize their savings and benefits from their solar energy system.

What is Net Energy Metering (NEM)?

Net Energy Metering (NEM) is a solar incentive program that allows homeowners to send their excess energy back to the grid in exchange for bill credits. Net metering programs have been instrumental in promoting the adoption of rooftop solar installations across the United States.

However, with the proposal of NEM 3.0 in California, there have been concerns about its impact on homeowners. The new proposal reduced the bill credit rate, therefore reducing the savings potential for homeowners investing in solar. Despite this, the benefits of solar energy and the drive towards a renewable future remain undeniable. A reduction in savings didn’t eliminate the homeowners ability to save, especially over time and with the additional incentives provided for solar energy storage. 

The Significance of Home Battery Storage

Home battery storage systems have revolutionized the way we think about energy. These systems store surplus solar energy produced during the day for use during the night or during power outages. Some of the benefits of battery storage include:

  • Energy Independence: With a home battery backup, homeowners no longer have to rely solely on the grid. This means during power outages, your home can still have electricity, ensuring safety and comfort.
  • Maximizing Solar Benefits: Stored energy can be used during peak demand hours when electricity rates are higher. This not only saves money, but also reduces strain on the grid.
  • Reducing Fossil Fuel Dependence: By storing surplus energy, homeowners can further reduce their reliance on fossil fuels, promoting a greener and more sustainable future.

Moreover, with the increased adoption of electric vehicles, having a home battery storage system can be beneficial for home charging. It allows homeowners to charge their vehicles using the surplus energy produced by their solar panels, further promoting a sustainable lifestyle.

The Future of Solar Energy and Home Battery Storage

The future of solar energy in California is promising. With advancements in technology, the efficiency of solar panels and battery storage systems is continually improving. This means homeowners can expect even more savings and benefits in the coming years.

Furthermore, as the world moves towards reducing its carbon footprint and combating climate change, the importance of renewable energy sources like solar cannot be overstated. The push towards a greener future will likely see more incentives and programs to encourage the adoption of solar energy systems.

FAQs About PG&E’s New Solar Billing Plan (NEM 3.0)

Q: How were changes made to solar billing?
A: The California Public Utilities Commission (CPUC) oversees the fairness and alignment of rates and programs offered by utilities like PG&E with state policies promoting renewable energy. 

The CPUC revisited the 25-year-old rooftop solar Net Energy Metering (NEM) program and, after extensive deliberation and input from various stakeholders, introduced the new Net Billing Tariff.

Q: Does the Net Billing Tariff impact existing solar customers?
A: No, if you had your solar application submitted and approved before April 14, 2023, you aren’t affected by this new plan. However, there are exceptions. 

If you modify or repair your Renewable Generator, increasing its capacity by either 1kW or 10% of its current size, you’ll transition to the new plan. Similarly, when your 20-year NEM legacy period ends, you’ll be moved to the new plan.

Q: If I move into a property with a system under one of the NEM programs, can I inherit its legacy status?
A: Absolutely! The 20-year NEM legacy program is linked to the system, not the owner. If the original owner used the NEM program for 15 years, you’d inherit the remaining five years of the original program’s benefits.

Q: Under the Net Billing Tariff, how am I charged for energy imported from the grid?
A: When your energy consumption surpasses your solar system’s production, you’ll be billed at the retail rate, similar to other customers. Most residential users will transition to PG&E’s Electric Home (E-ELEC) rate by December 2024, which includes a $15 base service fee.

Q: Under the Solar Billing Plan, how are credits for solar exports determined?
A: If your solar system produces surplus energy, this excess is sent to the electric grid. In return, you earn an Energy Export Credit, which mirrors the power’s value to the grid at that specific time. This credit’s value fluctuates based on factors like the time of day and season. 

If your system is connected before 2027, your credits are fixed for nine years. After 2027, connections will see credit values updated every two years. However, you can opt to update your credit values to the current rates if desired.

For a full list of frequently asked questions from PG&E, click here.


Overall, understanding solar billing plans, the benefits of home battery storage, and net energy metering will help homeowners make informed decisions about their energy consumption. As the world moves towards a more sustainable future, the role of solar energy and home storage will only become more significant.

If you’re ready to reduce your reliance on the grid and enjoy peace of mind protection from power outages and utility rate increases, schedule your appointment today to learn how much you can expect to save when you switch to solar energy with battery backup.


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