NEM 2.0 vs. NEM 3.0: How to Tell Which Solar Plan You Have in California

If you own a solar system in California, knowing whether you are on NEM 2.0 or NEM 3.0 can make a huge difference in how you interpret your electric bill and how valuable the electricity your system sends back to the grid actually is.

The problem is that your bill may not simply say “NEM 2.0” or “NEM 3.0” in an obvious place. The terminology has also changed. What most homeowners call NEM 3.0 is officially California’s Net Billing Tariff (NBT), and PG&E refers to it as the Solar Billing Plan.

Fortunately, there are several ways to figure out which plan you have.

NEM 2.0 vs. NEM 3.0: What Is the Main Difference?

The biggest difference between NEM 2.0 and NEM 3.0 is how exported solar energy is credited.

Under NEM 2.0, solar exported to the grid generally receives credits based on the applicable retail electricity rate, minus certain non-bypassable charges. That makes exported solar relatively valuable and allows homeowners to build credits during high-production months that can help offset electricity consumed later.

Under NEM 3.0, or the Net Billing Tariff, exported electricity is compensated according to its value to the electrical grid at the time it is exported. In many daytime hours, that value is substantially lower than the retail price of electricity.

This is one of the reasons batteries have become much more important under NEM 3.0. Instead of sending excess solar to the grid in the middle of the day, a battery can store that energy for use later when utility electricity is more expensive or, depending on system configuration and rate conditions, when export credits are more valuable.

The California Public Utilities Commission’s Net Energy Metering and Net Billing page provides a detailed comparison of the programs.

Check When Your Solar Interconnection Application Was Submitted

A good first clue is the date your solar system went through the utility interconnection process.

California transitioned from NEM 2.0 to the new Net Billing Tariff for most new interconnection applications submitted after April 14, 2023.

So, as a general rule:

• Application submitted on or before April 14, 2023: The system may qualify for NEM 2.0.
• Application submitted after April 14, 2023: The system will generally fall under the Net Billing Tariff, commonly called NEM 3.0.

There is an important distinction here: the installation date alone does not necessarily determine your NEM status.

Some projects were installed well after the April 2023 cutoff but still qualified for NEM 2.0 because a complete interconnection application had been submitted before the deadline. PG&E also gave eligible projects additional time to complete the interconnection process.

If you bought a home with an existing solar system, this is particularly important. The date you purchased the house does not automatically reset the system into NEM 3.0. NEM legacy status is generally associated with the existing interconnected solar system.

Look at Your PG&E Solar Bill

For PG&E customers, your electric bill is often the easiest place to start.

If your statements identify the account as Net Energy Metering or NEM2, you are likely on NEM 2.0.

NEM 2.0 customers also typically see accumulated energy charges and credits tracked toward an annual True-Up. PG&E provides monthly NEM statements showing how those charges and credits are progressing throughout the year.

If your bill instead identifies your solar arrangement as the Solar Billing Plan, Net Billing Tariff, or NBT, you are under what is commonly called NEM 3.0.

The billing structure is noticeably different because energy imported from the grid and energy exported to the grid are valued separately.

If the terminology on your bill is confusing, my article PG&E Solar True-Up Explained: A Sacramento Homeowner’s Guide goes into more detail about how PG&E solar billing works.

Your Electricity Rate Can Provide Another Clue

Your rate plan can also help identify which solar billing structure you have, although I would not use the rate plan alone to make the determination.

NEM 2.0 customers are required to use an eligible time-of-use rate. Net Billing Tariff customers are also required to use specific time-of-use rates designed around the new solar billing structure.

For PG&E residential customers under the Solar Billing Plan, the applicable rate is generally E-ELEC.

Seeing E-ELEC on your bill can therefore be a clue that you are on NEM 3.0, but checking the actual solar tariff or program listed on the account is more definitive.

What If You Bought a House With Solar?

This is where I see the most confusion.

A homeowner may purchase a property in 2026 with a solar system installed in 2019 and assume that the account has automatically moved to NEM 3.0. That generally is not how it works.

NEM 2.0 legacy treatment can continue for up to 20 years from the system’s original interconnection date. Selling the house does not normally restart that 20-year period, but it also does not automatically eliminate the remaining legacy period.

For example, if a system entered NEM 2.0 in 2019 and the home changes ownership in 2026, the new homeowner may still have many years of NEM 2.0 eligibility remaining.

That makes the original Permission to Operate (PTO) and interconnection paperwork useful documents to obtain when buying a house with solar.

Sacramento Homeowners: Are You With PG&E or SMUD?

There is another wrinkle for homeowners in the Sacramento area.

If your electric utility is SMUD, the NEM 2.0 vs. NEM 3.0 discussion generally does not apply to you in the same way.

The statewide NEM 2.0 and Net Billing Tariff rules discussed above apply primarily to California’s investor-owned utilities, including PG&E, Southern California Edison and San Diego Gas & Electric.

SMUD is a municipal utility with its own solar rate structure. Depending on when the system was interconnected, a SMUD solar customer may instead be under SMUD’s older net-metering structure or its newer Solar and Storage Rate.

This distinction is particularly important around Sacramento because driving only a few miles can put two otherwise similar homes under completely different utility solar rules.

How to Confirm Whether You Have NEM 2.0 or NEM 3.0

If you are still unsure, I would check the following in this order:

1. Look at your electric bill for NEM2, Net Energy Metering, Solar Billing Plan, NBT or Net Billing Tariff.
2. Find your original Permission to Operate letter from the utility.
3. Check the interconnection application date, not just the solar installation date.
4. Review your utility account online for the solar tariff or rate schedule.
5. Contact the utility and ask which solar tariff is currently associated with the service account.

If you recently purchased the property and inherited an existing solar system, I would also request the original contract, interconnection agreement, PTO documentation and any available production history. Those records can answer a surprising number of questions about an older system.

Why Your NEM Status Matters When Evaluating Solar Performance

Knowing which plan you have matters for more than billing trivia.

A homeowner on NEM 2.0 and a homeowner on NEM 3.0 can have identical solar systems producing the exact same number of kilowatt-hours and still see very different financial results.

Under NEM 2.0, total annual solar production and net grid usage are especially important. Under NEM 3.0, when electricity is produced, consumed, stored and exported becomes much more significant.

That distinction matters when diagnosing complaints such as a high electric bill. Before assuming that a solar system is malfunctioning, I want to know how much energy the system is producing, how much the home is consuming, when that consumption occurs, and how the utility is valuing exported energy.

For Sacramento-area homeowners trying to determine whether a high bill is caused by solar production, consumption or utility billing, a proper solar performance and utility bill analysis can help separate those issues.

Before troubleshooting the solar system itself, start by knowing which rules your system is operating under. NEM 2.0 and NEM 3.0 may both involve rooftop solar and a bidirectional utility meter, but financially they are very different programs.