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Understanding Your Rights Under NEM 3.0: A Guide for San Diego Solar Owners

Why CALSSA and the Solar Rights Alliance Are Challenging NEM 3.0 — What San Diego Solar Owners Need to Know

San Diego solar owners and leading California advocates are actively challenging the state’s current solar policy. The California Solar & Storage Association (CALSSA) and the Solar Rights Alliance have filed a significant appeal, directly contesting the California Public Utilities Commission’s (CPUC) Net Energy Metering (NEM) 3.0 decision. This comprehensive analysis delves into the specifics of that appeal, elucidates the contentious aspects of NEM 3.0, details the policy’s documented impacts on solar adoption and household economics, and outlines actionable steps homeowners can take to advocate for a more equitable outcome. We will dissect NEM 3.0’s regulatory framework, examine the strategic efforts to overturn it, and envision a more accessible solar future for all Californians.

About the Organizations Leading the Challenge

The legal challenge against NEM 3.0 is spearheaded by two of California’s most influential solar advocacy groups, bringing significant expertise and a broad base of support to the fight.

The California Solar & Storage Association (CALSSA): As the largest state solar and storage association in the U.S., CALSSA represents over 700 companies engaged in solar and storage technology. Their mission is to make California a global leader in clean energy by advancing policies that support solar and storage deployment. Their deep industry knowledge and policy expertise make them a formidable voice in regulatory battles.
The Solar Rights Alliance: This grassroots organization unites solar homeowners and advocates across California. Dedicated to protecting and expanding solar rights, the Solar Rights Alliance mobilizes public support and provides a collective voice for consumers impacted by policy changes. Their strength lies in their broad membership and direct representation of solar users.

What is NEM 3.0? California’s Net Billing Tariff Explained

NEM 3.0 is California’s new net billing tariff that replaced prior net metering rules. It fundamentally alters how rooftop solar owners are compensated for energy they export to the grid. This shift affects both new installations and the economic viability for prospective customers. Officially, the policy is intended to better reflect the grid’s costs and the value of energy timing — but its practical effect has been a significant reduction in how solar paybacks are calculated.

How does NEM 3.0 differ from previous net metering policies?

The most critical difference lies in how exported energy is valued. Under earlier net metering, customers typically received near one-to-one credits for energy they sent to the grid. NEM 3.0 replaces that with export credits tied to the grid’s avoided cost — which fluctuates by time of day and system demand. The intent is to incentivize exports that support the grid during high-cost, high-demand periods, but it also results in substantially lower credits for energy exported at many other times.

When did NEM 3.0 take effect and what are its key features?

NEM 3.0 officially went into effect on April 15, 2023. Key features include:

Time-variant export rates: Export compensation dynamically changes with the time of day and grid conditions, reflecting avoided-cost pricing.
Reduced bill credits: Many homeowners will experience significantly smaller credits for excess energy compared to NEM 2.0.
Stronger incentives for battery storage: The tariff structure explicitly encourages pairing solar with batteries to shift energy use to higher-value hours.

These changes are framed as part of California’s effort to modernize the grid — but they also have profound financial implications for rooftop solar owners and the broader solar market.

Research published since the CPUC decision documents just how much the compensation structure shifted under NEM 3.0, with some studies indicating a reduction in export compensation by 75% or more during certain periods.

California NEM 3.0 Impact on Residential Solar Compensation
On December 15, 2022, the California Public Utilities Commission passed an overhaul of the net metering program for the state’s investor-owned utilities. The changes replaced the long-standing net energy metering (NEM) tariffs with a net billing tariff (NBT) structure—colloquially known as “NEM 3.0”—which significantly reduces the compensation for behind-the-meter solar photovoltaic (PV) systems. The NEM tariffs remained open for new interconnection applications until April 15, 2023, but after that date, all new interconnection applications were submitted under NBT.
One year in: tracking the impacts of NEM 3.0 on California’s residential solar market, GL Barbose, 2024

How Does NEM 3.0 Impact San Diego Solar Owners and SDG&E Customers?

For many San Diego homeowners and San Diego Gas & Electric (SDG&E) customers, NEM 3.0 has translated into lower projected savings and a noticeable slowdown in adoption rates. These practical consequences are a primary driver for CALSSA and the Solar Rights Alliance’s appeal — they contend the policy actively discourages distributed solar and financially disadvantages consumers who choose to invest in solar energy.

Ongoing academic work is also rigorously tracking how pricing and tariff changes affect residential solar uptake and system size across states, providing critical data for policy evaluation.

Impact of Solar Pricing Policy Changes in California
As policymakers continue to develop and refine the best methods to incentivize solar adoption while reflecting true costs and potential equity concerns, this paper seeks to evaluate the impact of changes in solar pricing policies on residential solar installations. Employing a difference-in-differences regression model, this study examines the effects of policy changes on both the system capacity and number of installations of adoption in three Western states that have transitioned away from traditional Net Energy Metering (NEM) policies–Arizona, California, and Utah.
The Solar Power of Pricing: Does Electricity Pricing Policy Drive Residential Solar Demand?, 2025

What changes to export rates and bill credits should San Diego homeowners expect?

Under NEM 3.0, export credits vary significantly by time of day — and exports during off-peak hours typically earn much less than exports during peak periods. This means overall bill savings can be substantially lower unless homeowners strategically shift how and when they use or store the energy their panels generate.

How do SDG&E’s Time-of-Use rates influence solar savings under NEM 3.0?

SDG&E’s Time-of-Use (TOU) pricing interacts directly and critically with NEM 3.0. When TOU peak rates are high, exported or stored energy used during those windows becomes significantly more valuable. Homeowners who align consumption and storage with peak periods — or who export during high-value hours — can protect more of their savings. A thorough understanding of SDG&E’s TOU schedules is now an indispensable part of solar system planning and optimization.

How Can Battery Storage Maximize Your Solar Savings Under NEM 3.0?

Home battery system installed in a modern San Diego home — store daytime solar for peak-hour use and backup power

Batteries are increasingly recognized as essential under NEM 3.0. They enable homeowners to store excess midday solar generation and dispatch it during higher-value evening or peak hours, significantly improving savings and offering crucial backup power when the grid experiences outages.

Why is home battery storage essential for optimizing NEM 3.0 benefits?

Batteries empower homeowners to capture low-value exports and utilize that energy when grid rates are higher. This strategy reduces reliance on the grid during expensive hours, substantially boosts bill savings under time-variant rates, and adds critical resilience through outage protection. For many households, pairing storage with solar is now the most practical and financially sound path to maintain strong returns on their solar investment.

What Are the NEM 3.0 Grandfathering Rules for Existing Solar Customers?

Grandfathering under NEM 3.0 provides vital protection for many existing customers who interconnected before the new rules took effect. It’s crucial to understand your status if your system was installed under earlier policies.

Who qualifies for grandfathering under NEM 2.0 terms and for how long?

Systems that were interconnected before April 15, 2023, remain under NEM 2.0 terms for 20 years from their interconnection date. This means those homeowners retain the older, more favorable billing credits and protections for that entire 20-year window.

How does adding solar capacity affect grandfathered systems?

Adding significant new capacity to an already-grandfathered system can potentially jeopardize the grandfathered status for that added portion. If you’re planning an upgrade, it is imperative to consult with your installer first — they can clarify whether proposed changes will trigger new interconnection rules or negatively affect your existing credits.

The Legal Battle: CALSSA and Solar Rights Alliance’s Appeal Against NEM 3.0

Why is NEM 3.0 being legally challenged?

CALSSA and the Solar Rights Alliance assert that the CPUC’s NEM 3.0 decision fundamentally undercuts California’s ambitious clean-energy goals and may violate state law. Their primary claims include:

Undermining distributed solar: The appeal argues that NEM 3.0 severely diminishes the financial case for rooftop solar, directly contradicting legislative mandates that support distributed generation as a cornerstone of California’s energy strategy.
Unfair compensation: Lower export rates disproportionately affect those who stand to benefit most from solar savings, including lower-income households and renters, exacerbating energy equity concerns.
Slowing climate progress: By making solar less economically attractive, the policy could significantly impede the state’s progress toward its critical decarbonization timeline and renewable energy targets.
Procedural concerns: The appeal raises serious questions about the CPUC’s decision-making process and the underlying data used to justify the implementation of NEM 3.0.

The legal challenge seeks to compel a CPUC reconsideration, aiming for a policy framework that better aligns with state goals and remains equitable and accessible for all consumers.

How can San Diego solar owners support the appeal?

Public backing is paramount in this legal and policy battle. San Diego homeowners and supporters can significantly contribute by:

Joining the Solar Rights Alliance: Membership amplifies collective advocacy for fair solar policy and strengthens the voice of solar consumers.
Contacting elected officials: Urge state lawmakers and the Governor to pressure the CPUC for a comprehensive reconsideration of NEM 3.0.
Raising awareness: Share accurate and clear information with neighbors, community groups, and local media about how NEM 3.0 impacts solar savings and the broader clean energy transition.
Taking action on advocacy campaigns: Actively participate in petitions, attend virtual or in-person events, and respond to calls to action from CALSSA and the Solar Rights Alliance.

Collective action is the most powerful tool to strengthen the case for policy that keeps rooftop solar accessible, cost-effective, and central to California’s energy future.

Support the Appeal Today

Join the Fight for Fair Solar!

Your voice matters. Standing with CALSSA and the Solar Rights Alliance helps protect the rights of homeowners who choose clean energy. Join the effort to restore fair compensation and expand access to solar across California.

How Can San Diego Solar Owners Maximize Their Investment and Savings Post-NEM 3.0?

While the appeal progresses through the courts, homeowners can take immediate, practical steps to protect their solar investment and improve savings under the current tariff. These proactive measures help offset some of NEM 3.0’s impacts while the legal process unfolds.

What strategies optimize solar system sizing and energy management?

Effective strategies include:

Comprehensive energy audit: A professional home-level audit precisely reveals when and how you use electricity, which is crucial for correctly sizing systems and storage to meet your specific needs.
Energy-efficient upgrades: Replacing old, inefficient appliances and lighting with modern, energy-efficient alternatives significantly reduces overall electricity demand and improves solar economics.
Smart energy management: Implementing home energy management systems and smart controllers allows for automated shifting of loads and storage discharge to high-value times, maximizing savings.

Which federal and local incentives support solar and battery adoption in San Diego?

Key incentives that help lower system costs and improve financial returns include:

Federal Investment Tax Credit (ITC): A substantial federal tax credit, currently at 30%, for qualifying solar installations and paired battery storage systems.
California Self-Generation Incentive Program (SGIP): State-level rebates for energy storage systems designed to reduce upfront costs, particularly beneficial for low-income households and those in high fire-threat areas.
Local utility rebates: SDG&E and other local programs sometimes offer additional rebates for storage and grid-interactive technologies, which can further enhance affordability.

The table below highlights several widely used battery options for San Diego homeowners, including their typical capacity, rough price estimates, and core features, to aid in informed decision-making.

Battery Solution	Capacity	Estimated Price (Installed)	Key Features
Tesla Powerwall	13.5 kWh	~$11,000 – $15,000	High efficiency, scalable, integrated with Tesla ecosystem, robust backup power
LG Chem RESU	9.8 kWh	~$8,000 – $12,000	Compact design, reliable, modular for capacity expansion, good for daily cycling
Sonnen Eco	10 kWh	~$15,000 – $20,000	Advanced energy management, intelligent software, customizable for specific needs, premium features

Pairing the right battery with a well-sized solar array can meaningfully improve your long-term savings, enhance energy independence, and boost resilience against grid outages.