On the oldest plan, the power you send back to the grid is worth close to full price. On the newest one, it’s usually worth about 5 to 8 cents.
Whether you’re with PG&E, SCE or SDG&E, by the end of this post you’ll know which plan you’re on, what it’s really worth, and the two ways people lose the older plans without realizing it. And if your solar was turned on around 2006, keep reading. Your clock may be running out right now.
What net metering is
Net metering is how your electric utility company credits you for the solar power you don’t use. During the day, your panels often make more than your house needs. That extra power goes out to the grid, and you get a credit. At night, you pull power back, and those credits help pay for it. Once a year, everything gets settled up on your true-up bill.
What’s changed over the years is how much those credits are worth. That’s really the whole difference between the three plans.
The three plans side by side
| NEM 1.0 | NEM 2.0 | NEM 3.0 (Net Billing Tariff) | |
|---|---|---|---|
| Who’s on it | Applied before 2016-2017 | Applied up to April 14, 2023 | Applied April 15, 2023 or later |
| Credit for power you send out | About the same price you pay | Close to retail, by time of day | About 5 to 8 cents on average |
| Time-of-use plan required | No | Yes | Yes |
| Extra grid charges | No | About 2 to 3 cents per kWh pulled from the grid | Yes |
| How long it lasts | 20 years from permission to operate | 20 years from permission to operate | Export prices locked 9 years if you enroll before 2028 |
NEM 1.0 closed on June 29, 2016 at SDG&E, December 15, 2016 at PG&E and July 1, 2017 at SCE. All three plans also pay the Base Services Charge, about 24 dollars a month for most homes, and solar credits can’t cover it.
NEM 1.0: the best deal there is
On NEM 1.0, the power you sent to the grid was credited at about the same price you paid for power. Send a kilowatt-hour out at noon, pull one back at night, and it basically washed out. No required time-of-use plan, and none of the small extra charges that came with the next plan.
If you’re on NEM 1.0 today, you’ve got the best deal there is. Your job now is to protect it.
NEM 2.0: still a very good plan
NEM 2.0 stayed open until April 14, 2023. Credits are still close to full retail, but three things changed: you have to be on a time-of-use plan, you pay non-bypassable charges of about 2 to 3 cents on every kilowatt-hour you pull from the grid, and there was a one-time fee to connect the system (about 94 to 145 dollars).
So NEM 2.0 costs a little more than 1.0, but for most homeowners it’s still a great plan and still worth protecting.
NEM 3.0: a different way to design solar
NEM 3.0’s official name is the Net Billing Tariff (PG&E calls it the Solar Billing Plan). It started April 15, 2023, and it’s what every new solar customer gets now.
The power you send to the grid is credited at what it’s worth to the grid at that hour. On average, that’s about 5 to 8 cents per kilowatt-hour, roughly a 75 percent cut from NEM 2.0. Meanwhile, buying power back between 4 and 9 PM in summer costs about 52 to 68 cents, depending on your electric utility company.
So sending power out cheap and buying it back expensive is a losing trade. The goal on NEM 3.0 is to use the power you make yourself, and that’s why a battery matters so much.
The size rules changed too. You can size a system up to your yearly usage, plus up to 50 percent more if you confirm you’ll need it, like for a future electric car. Leftover credits at your true-up are paid out at only about 2 to 3 cents.
To be fair, NEM 3.0 isn’t all bad. On some late-summer evenings, export credits can run higher than retail. And if your system enrolls before 2028, you lock in the export prices for nine years. It just means a NEM 3.0 system has to be designed differently. If someone sizes it like an old 2.0 system and has you sending a lot of power out for 5 to 8 cents, the numbers won’t work the way you were told.
On LADWP or another city-run electric company? You’re not on NEM 3.0. LADWP still credits exports close to retail, so a battery is optional for you.
Which plan are you on?
The surest way to check is your electric bill. In the solar or net metering section, the plan name is usually listed: NEM, NEM 2, Net Billing or Solar Billing Plan.
You can also look at your permission to operate (PTO) date, the day your electric utility company gave the okay to turn your system on. It’s usually in an email or letter from back then, and your installer should have it.
One thing trips people up: your plan was set by when your application went in, not when the system turned on. So a system that turned on in mid-2023 can still be on NEM 2.0.
Way 1 to lose your plan: the 20-year clock
NEM 1.0 and 2.0 last 20 years from your permission to operate date. If you sell your house, the plan stays with the house, and the buyer gets the years that are left.
When the 20 years are up, you get moved to NEM 3.0 at your next true-up, and you don’t get the nine-year lock that brand-new NEM 3.0 customers get. So a system turned on around 2006 is hitting its 20 years about now, and a 2.0 system turned on in 2017 has about 10 years left.
The good news: adding a battery by itself doesn’t change your plan. So the time to get ready for 3.0 is before your clock runs out, not after your electric bill jumps.
Way 2 to lose your plan: adding too much
This is the one I see all the time. A homeowner adds panels, and the whole system gets moved to NEM 3.0.
On NEM 1.0 or 2.0, you can add up to 1 kilowatt or 10 percent of your system’s size, whichever is bigger. Go over that, and the whole system moves to NEM 3.0. Not just the new panels. All of it.
Say you have a 6 kilowatt system. Ten percent is only 0.6 kilowatts, so the 1 kilowatt rule applies. That’s about two panels. Now say you bought an electric car and someone tells you to add eight more panels. That’s way over the limit, and your old panels and new ones are now all on NEM 3.0.
So before you add anything to an older system, ask: "Will this keep me on my current plan? Show me in writing."
If you need more power on an older solar home, there are two ways I set it up. I run your numbers both ways, and you pick.
- Keep your NEM 1.0 or 2.0 plan. I add a separate system that’s set up so it doesn’t send power to the grid. It has to be designed and approved the right way. With the options I offer, that’s done through a prepaid lease.
- Add power with nothing down. A zero-down lease adds the power you’re missing, but it moves your whole home to NEM 3.0. So on PG&E, SCE and SDG&E homes, I always design it with a battery. It can be a good fit if you’d rather save monthly than own more equipment, or if your 20-year clock is close to running out.
