NEM 3.0 and the Net Billing Tariff: What Changed for Commercial Solar Buildings -

California’s switch from net metering to net billing rewrote the export math for businesses — and made on-site storage the difference between a good project and a great one

For years, California solar ran on a simple promise: send extra power to the grid, get credited at nearly the full retail rate, and effectively use the grid as a free battery. That framework — net energy metering, or NEM — is what made solar pencil out for so many buildings. In April 2023 the state replaced it for new systems with the Net Billing Tariff (NBT), widely called “NEM 3.0.” For commercial buildings, the change reshaped how solar should be designed. Here’s what actually changed and what it means for a Southern California business going solar today.

From net metering to net billing, briefly

Under the older NEM 2.0, exported solar was credited at roughly the retail rate — a kilowatt-hour you sent out was worth about the same as one you pulled back later. Under the Net Billing Tariff administered by the California Public Utilities Commission, exported energy is now credited at its avoided cost to the grid — a wholesale-style value that is far lower than retail and changes hour by hour.

The practical effect: the power your building consumes on-site is worth much more than the power you export. Solar that you use as you generate it still offsets expensive retail rates. Solar you send to the grid earns a fraction of that. The economics tilted hard toward self-consumption.

Why this hits commercial buildings differently

A homeowner’s solar decision under NBT is mostly about a home battery to shift evening use. A commercial building’s decision is more nuanced, because commercial load shapes and rate structures are different:

Daytime-heavy loads suddenly look great. A business that runs hard while the sun is up — offices, retail, manufacturing on a day shift, refrigeration — self-consumes most of its solar, so the lower export rate barely matters. For these buildings, solar under NBT still delivers strong savings.
Export-heavy designs lose value. A building that would have exported large midday surpluses under the old rules now earns much less for that power. Oversizing a system to “bank” credits no longer works the way it did.
Demand charges are untouched by export rules. Commercial accounts still carry the kW-based demand charges that net billing doesn’t address at all — another reason the commercial answer leans on storage, not just panels.

In short: NBT rewards designing the system around what the building actually uses, hour by hour, rather than around maximizing grid exports.

Storage is how you win under net billing

Because on-site power is now worth far more than exported power, a battery becomes the tool that captures the full value of every kilowatt-hour your panels make. Instead of exporting midday surplus for pennies, you store it and use it yourself when it counts:

Shift solar into the expensive evening. California loads its highest time-of-use prices into the 4–9 p.m. window on SDG&E and Southern California Edison commercial schedules. A battery charged with cheap midday solar discharges through that window so you avoid buying peak-priced grid power — turning what would have been a low-value export into a high-value offset.
Shave demand charges. The same battery trims your monthly kW peaks, addressing a cost that net metering never touched.
Add resilience. Storage keeps critical loads running through an outage — increasingly valuable given California’s grid stress and public-safety power shutoffs, which you can monitor through the California ISO.

Under the old NEM rules, a business could get away with solar-only and lean on the grid as a virtual battery. Under NBT, a real battery is what makes the numbers sing.

Does net billing make commercial solar worse? No — different.

It’s a fair question, and the honest answer is that NBT lowered the value of one specific thing — exporting surplus power — while leaving the core case intact. Southern California still has some of the highest commercial electricity rates in the country, and every kilowatt-hour of solar you consume on-site still offsets those rates at full value. Layer in the 30% federal tax credit and five-year depreciation on the capital cost, and commercial solar-plus-storage remains one of the strongest energy investments a Southern California business can make. What changed is the design: the winning system is now sized to self-consumption and paired with storage, not built to dump power onto the grid.

What this means for a system quote today

If you’re evaluating a commercial solar proposal in Southern California, the net-billing era changes what “good” looks like:

Be skeptical of designs that assume big export credits. Under NBT, exported energy is worth a fraction of retail. A proposal leaning on export revenue is modeling an economics that no longer exists for new systems.
Expect a storage recommendation for most commercial profiles — not as an upsell, but because it’s how you capture the value of your own solar under the current rules.
Insist the model uses your interval data. The right system size and battery capacity fall out of your building’s actual hourly load, not a rule of thumb.

Design for what you use, not what you export

The move from net metering to the Net Billing Tariff didn’t end the case for commercial solar in Southern California — it sharpened it. The buildings that win under NBT are the ones designed around self-consumption and paired with storage that shifts cheap midday solar into expensive evening hours while shaving demand peaks. Get the design right, and net billing is simply the framework you optimize within.

Stellar Solar has designed commercial solar-and-storage systems for the net-billing era across Southern California since 1998 — A+ rated with the BBB and a repeat winner of San Diego’s Best Solar in the Union-Tribune Readers Poll. Call 866.787.6527 for a free commercial evaluation, or visit stellarsolarcommercial.com to see how NBT changes the math on your building.

Sources & further reading

Net billing & program rules

Rates & time-of-use

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