California Net Metering in 2026: What Solar Contractors Need to Know About NEM 3.0

California's transition from NEM 2.0 to NEM 3.0 (officially NBT — Net Billing Tariff) in April 2023 was the biggest change to California solar economics in over a decade. For solar contractors, NEM 3.0 fundamentally changed what customers buy, which directly affects the permit types you're pulling and the complexity of your submittals.

What NEM 3.0 changed for contractors

Under NEM 2.0, customers received bill credits at close to the full retail rate for excess solar energy exported to the grid. Under NEM 3.0, export compensation was cut by approximately 75% — from around $0.30/kWh to roughly $0.08/kWh for most customers.

The result: standalone solar that exports heavily to the grid is significantly less financially attractive than before. Battery storage, which allows customers to use their own solar rather than export it, became dramatically more valuable. The market shifted — fast.

What NEM 3.0 means for your permit workload

Solar + battery storage installations have surged since NEM 3.0 took effect. This has direct implications for your permit workflow:

• More complex permits. Solar + storage permits are significantly more involved than standalone solar. Expect 40–60% longer submittal packages and 20–35% longer review times compared to standalone solar.
• More correction notices. Storage permitting has more complexity — NEC Article 706, battery UL 9540 documentation, transfer switch specs, critical load panels. Plan checkers find more to correct in storage submittals. Your correction response process matters more here.
• More utility coordination. Some storage configurations require additional SDG&E, SCE, or PG&E review beyond standard NEM applications. Grid interconnection for larger storage systems has its own approval path.
• Longer project timelines overall. Contractors who were used to 14-day solar timelines may be surprised by 21–35 day timelines for solar + storage. Planning scheduling around permit approvals rather than submission dates is essential.

NEM 3.0 grandfathering: what it means operationally

Customers who submitted a complete NEM application before April 13, 2023 are grandfathered on NEM 2.0 rates for 20 years. Contractors occasionally encounter customers who believe they are grandfathered when they are not. Before discussing expected bill savings with a customer, verify their NEM status with the utility.

The interconnection timeline: NEM 3.0 didn't change this

Utility interconnection timelines have not meaningfully changed under NEM 3.0. Expect:

• PG&E (Bay Area, Central Valley): 4–10 weeks for NEM application to Permission to Operate
• SCE (Southern California): 4–10 weeks
• SDG&E (San Diego): 4–10 weeks

The key operational principle hasn't changed: start your utility interconnection application as soon as system design is finalized, not after the building permit is approved. Parallel processing saves weeks on every project.

Battery-first customers: a new permit workflow

Some customers under NEM 3.0 are installing battery storage first and adding solar later, or making battery decisions based on load analysis before committing to a system size. This creates a new permit workflow some contractors haven't encountered before:

• Standalone battery storage permits (energy storage only, no solar) are plumbing/electrical hybrid permits that require their own submittal
• Subsequent solar addition permits need to account for the existing battery system
• Utility interconnection applications must account for both the solar and storage together