How Net Metering Works in California: A 2026 Guide

If you’re a California homeowner researching solar panels, you’ve probably come across the term “net metering.” It’s the billing arrangement that lets you earn credits for the extra solar energy your panels send back to the grid. But California’s net metering rules changed in April 2023, and understanding the new system is key to making a smart solar investment, especially here in Bakersfield and Kern County where electricity bills keep climbing.

Connect with a Sun Solar Energy Solutions Solar Educator today for a free consultation and find out exactly how much you can save with solar under California’s current billing rules.

What Is Net Metering in California?

Net metering is a billing system that credits solar panel owners for electricity they add to the grid. When your solar panels produce more power than your home needs during the day, that extra energy flows to the utility grid. Your utility company tracks that energy and gives you credits on your electric bill.

At night or on cloudy days when your panels aren’t producing enough, you pull electricity from the grid like normal. The credits you earned during the day offset some or all of that cost. At the end of each billing cycle, you’re billed for the “net” difference between what you used and what you produced.

For homeowners in Bakersfield and the Central Valley, this is particularly valuable. Summer temperatures regularly push past 100 degrees, which means air conditioning runs hard from June through September. Without solar, PG&E bills for a typical Bakersfield home can easily top $300 to $400 per month during peak summer. Net metering lets you offset a large chunk of that cost with energy your own roof produces.

NEM 2 vs. NEM 3: What Changed in California

California has gone through three versions of its net metering policy. The original program (NEM 1) ran until 2016. NEM 2 picked up from there and was the standard until April 2023. Then the California Public Utilities Commission (CPUC) introduced what’s officially called the Net Billing Tariff, commonly known as NEM 3.0.

Here’s how the two most recent versions compare:

The biggest change? Export credits dropped significantly. Under NEM 2, every kilowatt-hour (kWh) you sent to the grid earned you close to what you would have paid for that electricity, roughly $0.30 per kWh. Under NEM 3.0, those credits are based on the Avoided Cost Calculator (ACC), which values your exported energy at what it saves the utility from generating. That works out to about $0.05 to $0.10 per kWh depending on the time of day and season.

One thing that didn’t change: every kWh of solar energy you use directly in your home still saves you the full retail rate. That distinction matters a lot, and it’s why home battery storage has become such an important part of the solar equation in California.

How Solar Credits Are Calculated Under NEM 3.0

Under the current Net Billing Tariff, your solar credits are calculated on a time-of-use basis. The value of energy you export changes based on when you send it to the grid.

Here’s the basic mechanics:

1. Self-consumed energy saves the most. Any solar energy your home uses directly offsets your bill at the full retail rate. If PG&E charges you $0.35 per kWh during peak hours, every kWh your panels supply during that time saves you $0.35.
2. Exported energy earns a reduced credit. When your panels produce more than you need and send power to the grid, you earn a credit based on the ACC rate. This rate varies by hour and season but averages around $0.05 to $0.08 per kWh.
3. Peak hours matter. PG&E’s peak rate period runs from 4 PM to 9 PM on weekdays. Electricity costs the most during these hours. Since solar production drops off by late afternoon, this is typically when you pull the most grid power.
4. Monthly true-up. Your utility tracks credits and charges each month. At the end of your annual billing cycle, any remaining balance is settled.

The ACC Plus incentive, available to PG&E and SCE residential customers, adds a small bonus to each kWh you export. This adder was designed to keep solar financially viable during the transition from NEM 2 to Net Billing. It steps down over time, so systems installed sooner lock in a higher adder for their first several years.

What to Expect on Your Utility Bill With Solar

Your PG&E bill after going solar will look different than it did before. Here’s what Bakersfield and Kern County homeowners typically see:

Daytime: Your panels generate electricity. Your home uses what it needs first, and any extra flows to the grid, earning you credits. On a sunny summer day, a properly sized system will produce far more than your home uses during daylight hours.

Evening and night: When the sun goes down, you switch to grid power. This is also when PG&E’s peak rates kick in (4 PM to 9 PM), making evening electricity the most expensive.

Monthly bill: You’ll still see a bill from PG&E each month. It will include any grid electricity you used minus your solar credits, plus a fixed monthly charge that all customers pay regardless of solar production. Most solar homeowners see their monthly bills drop to $20 to $50 during non-summer months and stay well below what they paid before solar even in summer.

Want a personalized estimate of your post-solar utility bill? Sun Solar’s free home energy assessment calculates your savings based on your actual PG&E usage, roof orientation, and system size.

Why Batteries Are a Game-Changer Under NEM 3.0

Under the old NEM 2 program, batteries didn’t make much financial sense because the grid acted like a free battery. You’d export solar at near-retail rates during the day and buy it back at similar rates at night. The math was roughly even.

NEM 3.0 changed that calculus. Now, exporting energy earns you far less than using it yourself. A home battery like the Tesla Powerwall or SunVault lets you store your excess daytime solar and use it during expensive peak evening hours instead of sending it to the grid for a fraction of its value.

Here’s a practical example for a Bakersfield home:

• Without a battery: Your panels produce 45 kWh on a summer day. You use 15 kWh during the day and export 30 kWh to the grid at roughly $0.07/kWh, earning $2.10 in credits. Then you buy 20 kWh from PG&E at peak rates ($0.40/kWh), costing you $8.00. Net cost: $5.90.
• With a battery: Same day, same production. You use 15 kWh directly, store 15 kWh in your battery, and export only 15 kWh. In the evening, your battery covers most of your peak usage. Net cost: closer to $1.50.

Over a year, those daily savings add up to hundreds of dollars. The CPUC designed NEM 3.0 specifically to encourage battery adoption, and the math backs it up. Under the current rules, the payback period for solar-plus-battery systems is similar to standalone solar systems under NEM 2, roughly 8 to 10 years, with panels that keep producing for 25 years or more.

Why Net Metering Makes Solar Worth It in Bakersfield and Kern County

Even with the reduced export credits under NEM 3.0, solar remains a strong investment for Central Valley homeowners. Here’s why:

Rising electricity rates. PG&E has raised rates consistently over the past decade, and those increases show no signs of slowing. The California Public Utilities Commission approved additional rate hikes through 2026. Every rate increase makes your solar panels more valuable because the retail rate you avoid by using your own solar goes up too.

Exceptional sun exposure. Bakersfield averages over 270 sunny days per year, making it one of the best locations in the country for solar production. More sun means more energy, which means faster payback on your system.

High cooling costs. Kern County summers are brutal on electricity bills. Solar panels produce the most energy during the exact months when your air conditioning is working hardest. The seasonal alignment between solar production and energy demand is nearly perfect here.

The 30% federal tax credit. The federal Investment Tax Credit (ITC) still covers 30% of your total solar system cost, including battery storage. For a $25,000 system, that’s a $7,500 credit on your federal taxes. Learn more about how to claim it in our guide to the federal solar tax credit in 2026.

$0 down financing. You don’t need to pay anything upfront to go solar. $0 down financing options mean your monthly solar payment often costs less than what you were paying PG&E, so you start saving from month one.

How to Maximize Your Savings Under California’s Net Billing Rules

Whether you already have solar or you’re planning an installation, these strategies will help you get the most out of California’s current net metering program:

1. Shift energy-heavy tasks to daytime. Run your dishwasher, laundry, and pool pump during peak solar hours (10 AM to 3 PM). Every kWh you use while the sun is shining avoids the grid entirely.
2. Add a battery. Storing excess solar for evening use is the single biggest lever you have under NEM 3.0. It keeps your expensive peak-hour usage off the grid.
3. Pre-cool your home in the afternoon. Set your thermostat a few degrees lower at 2 PM while your panels are still producing, then let it coast through the peak rate period starting at 4 PM.
4. Size your system correctly. An oversized system that exports most of its energy earns less per kWh than a right-sized system paired with a battery. A good solar installer will model your actual usage patterns and design a system that maximizes self-consumption.
5. Monitor your production and usage. Most modern solar systems come with monitoring apps that show real-time production and consumption. Use that data to find opportunities to shift load to sunny hours.

Connect with a Sun Solar Energy Solutions Solar Educator to get a custom system design that maximizes your savings under California’s current net metering rules.

Frequently Asked Questions About Net Metering in California

Is net metering still available in California in 2026?

Yes. California’s current program is called the Net Billing Tariff (sometimes still referred to as NEM 3.0). It applies to all new residential and commercial solar installations with applications submitted after April 14, 2023. The program allows you to earn credits for excess solar energy you send to the grid, though at lower rates than the previous NEM 2 program.

How much will I save with solar under NEM 3.0?

Savings depend on your system size, energy usage, and whether you have a battery. A typical Bakersfield home with a properly sized solar-plus-battery system can reduce annual electricity costs by 60% to 80%. The exact amount varies based on your roof orientation, household energy patterns, and PG&E rate plan. Request a free quote for a personalized savings estimate.

Do I need a battery with solar in California?

A battery isn’t required, but it significantly improves your return on investment under NEM 3.0. Without a battery, you export excess solar at low ACC rates and buy expensive grid power in the evening. A battery lets you store that energy and use it when rates are highest. The payback math for solar-plus-battery is now similar to what standalone solar offered under NEM 2.

What happens to my NEM 2 rates if I already have solar?

If you installed solar before April 2023 and were grandfathered into NEM 2, you keep those rates for 20 years from your original interconnection date. Your higher export credits are locked in. If you add a battery to an existing NEM 2 system, you may be able to stay on NEM 2 depending on your utility and system configuration.

How long does it take for solar panels to pay for themselves in Bakersfield?

Under NEM 3.0, the typical payback period for a solar-plus-battery system in Bakersfield is 8 to 10 years. With the 30% federal tax credit factored in, some homeowners see payback in as few as 6 to 7 years. After that, the electricity your panels produce is free for the remaining 15 to 20 years of the system’s lifespan.

Take the Next Step Toward Lower Energy Bills

California’s net metering rules have changed, but solar is still one of the smartest investments a Bakersfield homeowner can make. With the right system design, a battery to capture your excess production, and California solar incentives like the 30% federal tax credit and SGIP rebates, going solar means lower bills from day one and energy independence for decades.

Sun Solar Energy Solutions has been helping Central Valley and Kern County homeowners with residential solar installation for over 15 years. As SunPower’s most award-winning partner with 9 consecutive Residential Regional Top Producer awards, we design systems that maximize your savings under California’s current net metering rules.

Schedule your free solar consultation today and find out how much you can save with a solar-plus-battery system designed for your home.