Net Metering 3.0: Are Solar Panels Still Worth It in 2026?

Net metering (NEM) is the billing mechanism that credits solar system owners for the electricity they add to the grid. In the past, most utilities offered a 1-to-1 credit: if you exported 1 kWh of solar power to the grid during the day, you could draw 1 kWh from the grid at night for free. However, utility policies are changing rapidly across the United States. You can track your local state policies via the Database of State Incentives for Renewables & Efficiency (DSIRE).

Under new rules like California's Net Billing Tariff (approved by the California Public Utilities Commission (CPUC) and commonly known as NEM 3.0), the export rate—the price the utility pays you for your excess solar electricity—has been slashed by roughly 75% to 80%. Instead of receiving retail rates, homeowners are credited at an "avoided cost" rate, which averages just 5 to 8 cents per kWh. Meanwhile, the retail rate you pay to buy electricity remains high, often exceeding 30 to 40 cents per kWh.

This massive discrepancy has completely changed the economics of solar. If you install a solar-only system under NEM 3.0, exporting power to the grid is no longer profitable. The key to making solar worth it now is "self-consumption"—using as much of your solar electricity as possible within your own home rather than sending it back to the grid.

To achieve high self-consumption, pairing solar panels with a home battery storage system (such as a Tesla Powerwall or Enphase 5P) is now practically essential. The battery stores your excess daytime solar generation so you can use it during expensive evening peak hours (usually 4 PM to 9 PM) instead of buying costly power from the utility. While adding a battery increases the upfront installation cost by $10,000 to $15,000, it reduces your payback period under NEM 3.0 compared to a solar-only system.

In states that still offer traditional 1-to-1 net metering (NEM 1.0 or 2.0), solar-only systems remain highly lucrative with payback periods of 5 to 7 years. However, if you live in an NEM 3.0 territory, you should expect a payback period of 7 to 9 years with a battery, which is still a fantastic financial return considering solar panels are warrantied to last 25 years.