Is Solar Still Worth It in California Under NEM 3.0? (2026 Inland Empire Answer)
Ralph Cisneros ·
Solar is still worth it in California under NEM 3.0 — but only with battery storage. NEM 3.0 cut export rates ~75%, so self-consumption and SGIP-backed batteries, not panels alone, now drive payback. The federal 25D residential credit ended Jan 1, 2026.
Solar is still worth it in California under NEM 3.0 — but only with a battery. The CPUC's Net Billing Tariff cut what utilities pay for your exported solar by roughly 75%, from near-retail (~$0.30/kWh) down to avoided-cost rates averaging $0.05–0.08/kWh. The honest answer for Inland Empire homeowners in 2026: solar-plus-storage still pays back in 6–9 years and eliminates 85–100% of your SCE bill, while solar-only is now marginal, stretching payback to 10–13 years.
What Is NEM 3.0 and What Actually Changed?
NEM 3.0 — officially the Net Billing Tariff — is California's current policy for crediting rooftop solar exports, adopted by the CPUC in Decision D.22-12-056 on December 15, 2022, and effective for new interconnections on or after April 15, 2023. It replaced NEM 2.0 as the default tariff for PG&E, SCE, and SDG&E customers going solar.
What changed is the export credit. Under NEM 2.0, every kilowatt-hour you sent back to the grid earned near-retail credit (about $0.30–0.35/kWh). Under NEM 3.0, exports are valued at the Avoided Cost Calculator (ACC) rate — a wholesale figure that averages roughly $0.05–0.08/kWh throughout the day. That is approximately a 75% reduction in export compensation versus NEM 2.0.
What did not change is the value of solar you consume directly. Every kilowatt-hour your panels produce and your home uses in real time still offsets a kilowatt-hour you would have bought from SCE at full retail. NEM 3.0 punished exporting — it did not punish self-consuming. That single distinction is the entire strategy behind making solar pay in 2026.
NEM 2.0 vs NEM 3.0 at a Glance
The difference between the two tariffs comes down to export value, payback, and whether a battery is now essential. Here is the side-by-side.
The table makes the strategy obvious: under NEM 3.0, the gap between solar-only and solar-plus-storage payback widened sharply, and the battery moved from an add-on to the core of the economics.
Why a Battery Changes Everything Under NEM 3.0
A battery is what makes residential solar economical under NEM 3.0. New solar customers in SCE territory are placed on the TOU-D-PRIME rate plan, which charges a base service charge of about $0.79 per day (roughly $24/month) and levies its highest electricity prices during the 4–9 PM summer peak window. On-peak summer rates run approximately 58¢/kWh, while off-peak rates drop to roughly 26¢/kWh.
That rate gap is the entire financial engine. If you export a kilowatt-hour at noon, you earn about $0.06. If you store that same kilowatt-hour in a battery and discharge it at 6 PM, you avoid buying peak power at $0.58–0.74/kWh. That is roughly a 7–12x improvement in the value of the same unit of solar energy — without producing one extra watt. A 15 kWh battery like the Franklin aPower 2 covers most Inland Empire households' entire 4–9 PM peak window, lifting self-consumption from 25–40% (solar-only) to 60–90% and all but eliminating evening grid draws.
What Real Inland Empire Homeowners See on Their Bills
The fear that NEM 3.0 "kills" solar is driven by national headlines that ignore one fact: SCE's retail rates are among the highest in the country. At roughly $0.35–0.45/kWh blended, every kilowatt-hour your home self-consumes is worth more here than almost anywhere in the United States.
Homeowners in Riverside, Moreno Valley, Corona, and Temecula carrying $250–$400/month SCE bills who install solar plus battery under NEM 3.0 typically report monthly electric bills of $10–$30 (the fixed base charge), 85–100% bill elimination during summer months with proper battery sizing, and payback periods of 6–9 years depending on system size, bill level, and whether they paid cash or financed. Two years into NEM 3.0, California solar homeowners with a battery and smart TOU scheduling are saving $150–$300/month, roughly double the savings of solar-only customers under the same tariff.
The homeowners who are disappointed are almost always solar-only installs — grid-tied systems with no storage — where daytime export earns pennies and evening buying still costs full peak rates. That is a design problem, not a NEM 3.0 problem.
Is Solar Worth It Without a Battery?
It can be, but the math is noticeably weaker. A solar-only system under NEM 3.0 exports excess daytime generation at $0.05–0.08/kWh while still buying back peak-hour electricity at $0.58–0.74/kWh, pushing payback out to roughly 10–13 years. If your budget only allows solar today, the right move is to design the system battery-ready — a hybrid-capable inverter and a panel with room on the main service panel — so you can add storage later without a full rewire. The single biggest mistake Inland Empire homeowners make is installing solar-only under NEM 3.0 and discovering a year later that they need a battery to make the numbers work.
Under NEM 3.0, the battery is not an accessory — it is the system. We size the array to cover annual consumption and the battery to cover the 4–9 PM peak, then program it to discharge when SCE charges 58¢. That single design choice is the difference between a 6-year payback and a 12-year payback on the same roof.
— Ralph Cisneros, CSLB #983330, Canyon Construction Services d.b.a. SolarCCS
What Incentives Still Apply in 2026?
The federal residential solar tax credit (Section 25D) ended January 1, 2026, so homeowners can no longer claim a 30% federal ITC or a domestic-content bonus on residential solar. Do not let anyone promise you one. For homeowners in 2026, the primary remaining incentive is California's Self-Generation Incentive Program (SGIP), a state rebate — not a federal credit — that pays for qualifying battery storage at tiered rates — the standard residential tier is lower, while the equity and equity-resiliency tiers (low-income or high-fire-risk customers) can reach up to $1,000–$1,100/kWh depending on eligibility and which CPUC budget step is open. SGIP is what moves the number on a battery purchase, and SGIP budget steps fill on a first-come basis, so the rebate you actually receive depends on which step is open when your reservation is processed.
Commercial property owners are on a different track. Businesses may qualify for the federal Section 48E Clean Electricity Investment Credit, a 30% base credit that can stack a 10% domestic-content bonus and a 10% energy-community bonus when prevailing-wage and other requirements are met. For Riverside and San Bernardino Counties — both designated energy communities — that stack can be material. See our Section 48E federal solar credit guide for the commercial side. For a homeowner, the relevant incentive is SGIP.
Are Existing NEM 2.0 Solar Customers Affected?
No. If your system received Permission to Operate before April 15, 2023, you are grandfathered on NEM 2.0 terms for 20 years from your PTO date, per the CPUC's grandfathering provisions. NEM 3.0 applies only to new interconnection applications submitted on or after April 15, 2023. NEM 2.0 customers keep near-retail export credits for the full grandfathering window — but that window is finite, and homeowners approaching year 15–18 of their grandfathering should start planning now for the day their export rate resets to NEM 3.0 terms. If you are unsure which tariff you are on, check your most recent SCE bill or your interconnection confirmation letter — the tariff name is listed there.
What Separates a Good NEM 3.0 Install from a Frustrating One
Not all solar installs are designed for NEM 3.0 conditions. The difference between a system that pays back in 6 years and one that limps along for 13 comes down to four design choices. First, battery sizing: a competent designer pulls your actual SCE interval data and sizes storage around your real 4–9 PM evening load — not just the most popular battery SKU. Second, rate plan: new solar customers land on TOU-D-PRIME by default, and the right rate plan can shift payback by a full year. Third, roof condition: NEM 3.0 makes removing and reinstalling panels to replace a failing roof expensive, so a quality installer inspects the roof and structure before proposal — not after. At SolarCCS, every proposal includes a pre-install roof and structural inspection because we hold a California General Contractor license (CSLB #983330) — we do not just bolt panels down, we assess what is underneath them. Fourth, electrical work: improper wiring and poor connections are the root cause of nearly every solar underperformance and fire issue, and licensed electrical work is code-required, not optional. Verify any installer's CSLB license in the state database before signing.
Frequently Asked Questions
Is solar worth it in California under NEM 3.0 in 2026?
Yes, solar is still worth it in California under NEM 3.0 — but only when paired with battery storage. Solar-plus-storage pays back in roughly 6–9 years for Inland Empire homeowners and eliminates 85–100% of the SCE bill. Solar-only under NEM 3.0 is marginal, with payback stretched to 10–13 years because export credits dropped about 75% versus NEM 2.0.
How much did NEM 3.0 cut solar export credits?
NEM 3.0 cut solar export compensation by approximately 75% compared to NEM 2.0. Exports dropped from near-retail rates of about $0.30–0.35/kWh down to Avoided Cost Calculator rates averaging $0.05–0.08/kWh. The CPUC adopted the Net Billing Tariff in Decision D.22-12-056, effective April 15, 2023, for all new PG&E, SCE, and SDG&E interconnections.
Is solar worth it without a battery under NEM 3.0?
It is marginal. A solar-only system exports excess daytime generation at $0.05–0.08/kWh and still buys peak-hour electricity at $0.58–0.74/kWh, pushing payback to 10–13 years. If budget only allows solar today, design the system battery-ready with a hybrid-capable inverter and panel capacity so storage can be added later without a full rewire.
What is the best battery strategy for NEM 3.0?
Size the battery to cover your 4–9 PM peak window, when SCE's TOU-D-PRIME rate charges approximately 58¢/kWh. For most Inland Empire households with a $250–400/month bill, that means 10–20 kWh of storage — one Franklin aPower 2 (15 kWh) or two Enphase IQ Battery 5P units. Program the battery to discharge during peak hours rather than exporting at a few cents per kWh.
Am I grandfathered under NEM 2.0 if I already have solar?
Yes, if your system received Permission to Operate before April 15, 2023, you are grandfathered on NEM 2.0 terms for 20 years from your PTO date. NEM 3.0 applies only to new interconnection applications submitted on or after that date. Check your SCE bill or interconnection confirmation to confirm which tariff you are on.
What incentives are available for solar in California in 2026?
For homeowners, the primary incentive is California's SGIP battery rebate — a state rebate paying up to roughly $1,000–$1,100/kWh for equity and equity-resiliency tiers (the standard residential tier is lower) for qualifying battery storage. The federal residential 25D solar tax credit ended January 1, 2026, so homeowners cannot claim a 30% federal ITC. Commercial property owners may qualify for the federal Section 48E credit — see our Section 48E guide.
How much can I save on my SCE bill with solar and a battery?
Inland Empire homeowners with $250–400/month SCE bills who install solar plus battery under NEM 3.0 typically see monthly bills drop to $10–30 — the fixed base service charge — and eliminate 85–100% of their electricity costs during summer months. Savings depend on system size, battery sizing, rate plan, and whether you pay cash or finance.
Last updated August 2026.
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