NEM 3.0: Here’s how to limit negative impacts on your solar savings


Key takeaways

  • California NEM 3.0 applies to residents and property owners who invest in solar PV systems after April 14th 2023.
  • The changes to the policy mean that solar owners will receive less compensation for the energy they sell back to the grid.
  • Battery solutions such as the Hoymiles hybrid inverters can help new customers maximize their solar savings by storing excess energy on site, rather than automatically feeding it back to the grid.

Table of Contents

What is NEM 3.0?

California NEM 3.0 is a new version of net energy metering policy that will ultimately reduce the monthly energy bill savings for new solar panel owners in California.

Essentially, net energy metering (NEM) is the practice of crediting users for the excess electricity generated by the solar panels they own. It is then sold back to the grid so that others can make use of the energy.

NEM 2.0 vs NEM 3.0, what’s the difference?

NEM 3.0 replaced the previous net metering tariff – namely, NEM 2.0 – in California back in April 2023.

For customers who are locked in with NEM 2.0 agreements before April 14th 2023, the impacts of NEM 3.0 should not be a concern as it will have no impact.

The most important difference between NEM 2.0 and NEM 3.0 is that the value of export rates is lower under NEM 3.0. In short, this means that NEM 3.0 customers will receive less money for the energy they sell back to the grid.

Some of the key differences of NEM 2.0 vs NEM 3.0 include:


NEM 2.0NEM 3.0
Customers receive a full retail rate for any excess electricity they export to the grid.Export rates are reduced by 75%, so customers receive less money for their energy.
Electricity rates are calculated every hour based on a user’s net generation and usage during that hour.Instantaneous netting means meters calculate usage in real-time instead of hourly — resulting in less financial benefit for users.
There is no mandatory charge for using the network.The mandatory grid participation charge requires users to pay a fee for using the network.

Unfortunately, since NEM 3.0 has been in effect for the better part of 2023, most users no longer have the option to lock in NEM 2.0 rates.

However, under the Grandfather clause, some customers may qualify for NEM 2.0 — but this depends on when they applied for grid interconnection.

If you applied for grid interconnection before April 14th 2023, you have until April 15th 2026 to make the connection and still qualify for NEM 2.0.

What this means is you need to have submitted your complete interconnection application alongside a signed contract, a basic drawing of your system and an attestation if you’re oversizing your system by this date to be grandfathered into NEM 2.0 for 20 years. You may change the size of your PV solar system as long as it doesn’t increase in size, and it doesn’t decrease in size by more than 20%.

For those who have not submitted the above, or those who are investing in solar generation after this date, all is not lost — there are several ways to maximize savings under the new NEM 3.0.

How does NEM 3.0 impact solar generation?

According to the CPUC, NEM 3.0 reduces compensation for net metering credits, allowing for lowered lifetime solar savings of around 60%.

For new customers under solar NEM 3.0, the CPUC projects that solar PV systems will take longer to fully pay themselves off — with estimates sitting at around nine years after installation.

Whether you’re a residential or commercial property owner, it’s important to note that the impact on users is significant.

In a regular PV inverter system, any excess power that you do not consume is directed back into the grid. However, with solar NEM 3.0 now in effect, this means users who opt for this will lose out on savings because export costs have changed.

So the best way to ensure you continue to realize cost benefits with your solar power system is by investing in battery storage options.

How does Hoymiles help you unlock the NEM 3.0 benefits?

With a solar hybrid inverter from Hoymiles, users have the option to store any excess energy at the source, ready to be used during peaks in energy usage and dips in generation.

There are two options — both an AC coupling and a DC coupling inverter solution.

While both AC and DC systems can be used with batteries, the AC systems are for solar retrofits, where users already have a solar system and wish to integrate energy storage. DC systems are for new solar installations that will be ready for battery integration from day one.

But how does the Hoymiles solar hybrid inverter help users unlock any benefits associated with NEM 3.0?

Specifically, there are three operation modes on the Hoymiles inverter.

1. Self-consumption mode

In self-consumption mode, the PV system always tries to use solar power before sending it anywhere else. This mode will ensure that there’s enough energy to meet the needs of your home over storing energy or feeding excess energy back to the grid.

During the daytime, when solar panels are using sunlight to generate power, the system will prioritize meeting the demand of your appliances.

Any surplus energy that does happen to get generated will be stored in the battery. Only when the battery is fully charged will energy then be redirected back to the grid.

By comparison, at night time when your panels are no longer generating energy, the system pulls power from the battery to meet the needs of your appliances. And if the supply runs low, then the grid will continue to supply the energy needed.

2. Economic mode

Economic mode is for the savers who want to keep their energy bills as low as possible. Otherwise known as Time of Use (TOU) mode, economic mode allows users to get the most out of their PV system for as little cost as possible.

It puts the power in the hands of solar system owners, with the ability to choose how much energy is used during different points of the day — including peak, off-peak and partial-peak hours.

The battery can be set to discharge during any given time. For instance, the battery could be discharged when electricity prices are highest, and charged by surplus PV power in the daytime or from the grid when electricity prices are lower.

This mode gives users complete flexibility, with the option to make the biggest savings depending on the time of day.

3. Backup mode

Finally, backup mode is for users whose properties are situated in areas that have inconsistent access to sunlight and experience frequent power outages.

The general mechanism is similar to that of the self-consumption mode with one key difference: users must set a limit on how much the battery is allowed to discharge before tapping into other power sources. This is known as a backup power state of change (SOC).

For example, if the property owner sets the SOC to 50%, the battery will not discharge below this limit. This means that the battery in your PV system will always retain 50% of its storage capacity.

The future of NEM 3.0 for solar owners

California NEM 3.0 represents a significant shift in California’s net energy metering policy, impacting new solar panel owners by reducing the financial benefit that they can realize by selling energy back to the grid.

As the energy landscape continues to evolve, customers should explore solar energy despite the challenges presented by NEM 3.0, and deploy solutions that align with changing regulations.

Hoymiles offers solar hybrid inverters as a solution to losses people may otherwise experience under the new NEM 3.0 policy.