NEM 3.0 One Year Later: What Humboldt County Solar Owners Have Actually Experienced

The Promise and the Fine Print

When the California Public Utilities Commission voted in December 2022 to overhaul the state's net energy metering program, the reaction from the solar industry landed somewhere between alarm and grief. The new framework, formally called the Net Billing Tariff but widely known as NEM 3.0, took effect for new interconnection applications on April 15, 2023. It represented the most significant change to rooftop solar economics in California's history. The value of exported electricity, the power a home solar system sends back to the grid when it produces more than the household needs, dropped by roughly 75 percent overnight.

Now, more than three years into the new tariff, Humboldt County homeowners who installed solar under NEM 3.0 have real data to look at. The results tell a more complicated and, in some respects, more interesting story than either the optimists or the pessimists predicted.

What Actually Changed

Under the previous program, NEM 2.0, homeowners received credit for exported solar electricity at or very near the full retail rate. If PG&E charged you $0.40 per kilowatt-hour to buy electricity, you received close to $0.40 in credit for every kilowatt-hour you sent back. The math was straightforward, and it made solar a compelling investment even without battery storage. You could size a system to your annual usage, export freely during the day, and draw from the grid at night, with the credits roughly washing out.

NEM 3.0 dismantled that symmetry. Under the Net Billing Tariff, export credits are calculated based on the "avoided cost" of electricity to the grid at the time of export. During midday hours, when solar production peaks across the state, those avoided costs are low. Homeowners on the new tariff typically receive between $0.04 and $0.08 per kilowatt-hour for exports during the middle of the day. During late afternoon and evening peak hours, the value rises, sometimes reaching $0.20 or more. But the overall credit is dramatically lower than what NEM 2.0 customers receive.

The CPUC softened the transition with a Market Transition Credit, a monthly per-kilowatt adder designed to step down over four years. Homeowners who interconnected in the first year of the tariff locked in the highest adder. Those connecting in 2026 receive a significantly smaller credit, roughly 40 percent less than the original amount.

The Numbers from Humboldt County Rooftops

For a typical Eureka household consuming around 7,000 to 8,000 kilowatt-hours per year, the difference between NEM 2.0 and NEM 3.0 shows up clearly in the first year's true-up statement. Under NEM 2.0, a well-sized 5-kilowatt system could reduce an annual PG&E bill from roughly $3,200 to near zero. Under NEM 3.0, that same system, without a battery, might reduce the bill to $1,200 or $1,400. The solar still helps, but the savings gap is real.

The reason traces directly to how Humboldt households use electricity. Morning and evening consumption peaks, when families are cooking, running heat, and turning on lights, fall outside the hours when solar panels produce their best output. Under NEM 2.0, this mismatch did not matter because export credits were high enough to offset evening purchases. Under NEM 3.0, every kilowatt-hour exported at $0.05 and bought back at $0.40 represents a $0.35 loss in value.

For solar-only systems, the payback period has stretched. Where NEM 2.0 systems in Humboldt typically paid for themselves in seven to nine years, NEM 3.0 solar-only systems are tracking closer to twelve to fifteen years. That is still a reasonable investment over the 25-year life of a solar array, but it changes the conversation.

The Battery Changed Everything

The most significant shift in California's residential solar market since NEM 3.0 took effect has nothing to do with panels. It has to do with batteries. Before the tariff change, fewer than six percent of new residential solar systems in California included battery storage. By the end of 2024, that figure had risen to nearly 70 percent among Net Billing Tariff customers, according to CPUC interconnection data. The battery went from an optional luxury to an economic necessity almost overnight.

The logic is simple. A battery allows a homeowner to store solar energy produced during the day and use it during the expensive evening hours rather than exporting it for a fraction of the retail rate. Instead of sending a kilowatt-hour to PG&E at $0.05 and buying one back at $0.40, the homeowner stores that kilowatt-hour and uses it at 7 PM, avoiding the purchase entirely.

For Humboldt County households, where winter days are short and summer fog can suppress midday production, the battery serves a second function: it smooths out the variability. A system that stores morning and early afternoon production and deploys it through the evening performs more consistently than one that relies on real-time generation alone.

The economics reflect this shift. A NEM 3.0 solar-plus-battery system in Humboldt County, typically pairing a 6- to 8-kilowatt array with a 10- to 13-kilowatt-hour battery, can reduce a household's annual PG&E bill by 70 to 85 percent. The payback period, with the combined system cost of $25,000 to $35,000 before any incentives, falls back into the eight- to eleven-year range. With SGIP battery rebates still available for qualifying households, the timeline compresses further.

Time-of-Use Strategy in Practice

NEM 3.0 customers are automatically placed on PG&E's time-of-use rate schedule, E-TOU-C, which prices electricity highest between 4 PM and 9 PM every day. The March 2026 rate redesign added a fixed Base Services Charge and modestly lowered per-kilowatt-hour prices, but the time-of-use structure remains the dominant factor in determining solar economics.

Homeowners who have learned to work with this structure describe a daily rhythm. The solar array charges the battery during the morning and early afternoon. By 4 PM, the system shifts to battery discharge, powering the home through the peak pricing window. Grid purchases, if they happen at all, are pushed to the cheapest overnight hours.

Some households have gone further, adjusting their own consumption patterns to match the tariff. Running the dishwasher at noon instead of 8 PM, charging an electric vehicle during midday solar production, or scheduling the clothes dryer for early afternoon. These behavioral shifts, combined with battery dispatch, can close the gap between NEM 3.0 and the old NEM 2.0 economics more than most homeowners expect.

For households on PG&E's EV2-A rate, which offers deeply discounted overnight charging for electric vehicles, the combination of solar, battery, and scheduled EV charging creates a layered optimization that would have been unnecessarily complex under NEM 2.0 but becomes genuinely valuable under the new tariff.

What the Market Tells Us

The statewide data confirms what installers on the North Coast have observed at the individual level. California's residential solar market declined by 31 percent in 2024, according to SEIA and Wood Mackenzie, falling to its lowest installed capacity since 2021. The shock of the tariff change drove some homeowners to delay or cancel projects. But the market has begun to stabilize. SEIA projects a 7 percent increase in California residential solar installations in 2025, as installers and homeowners have adjusted to the new economics.

The adjustment has largely taken the form of system design changes. Systems are smaller, more precisely sized to the household's actual consumption rather than oversized for maximum export. Battery storage is included by default rather than as an add-on. And the sales conversation has shifted from "zero out your bill" to "reduce your bill by 70 to 85 percent and gain backup power."

That last point matters in Humboldt County more than in most California markets. PSPS shutoffs, winter storms, and the general fragility of PG&E's rural distribution network make backup power a genuine practical benefit. Under NEM 2.0, batteries were sold as an insurance policy. Under NEM 3.0, they are the financial engine of the system, and the backup capability comes as a bonus.

The Honest Assessment

NEM 3.0 made rooftop solar a less generous investment than it was under the previous program. That is a straightforward fact that deserves to be stated plainly. Homeowners who installed under NEM 2.0, and who are grandfathered on that tariff for 20 years from their interconnection date, have a better deal than those signing up today.

But the picture for new customers is not bleak. The combination of solar and battery storage under the Net Billing Tariff still produces meaningful savings, still pays for itself within a reasonable timeframe, and provides resilience benefits that the old solar-only systems could not. PG&E's rates have continued to climb, and every rate increase widens the gap between grid dependence and solar self-consumption. The base electricity rate, even after the March 2026 restructuring, remains among the highest in the nation.

For Humboldt County homeowners weighing the decision, the relevant comparison is not NEM 3.0 versus NEM 2.0. That ship has sailed. The relevant comparison is solar-plus-storage under today's tariff versus another 25 years of purchasing electricity from PG&E at rates that have historically increased 5 to 8 percent annually. Viewed through that lens, the math still works.

Six Rivers Solar has been helping Humboldt County homeowners navigate California's evolving solar landscape since 1980. For households considering the switch under the current tariff, a detailed analysis of your specific consumption patterns, roof orientation, and rate schedule is the starting point for understanding what NEM 3.0 means for your home.