If you have been researching solar in Fresno over the last few years, you have probably heard about NEM 1, NEM 2, and now NEM 3.0, also known as net billing. The biggest change that happened in April 2023 completely shifted how solar systems are designed in California. The way import and export rates work today is very different than how they worked just a few years ago.
So how do these changes affect homeowners in Fresno and their plans for installing solar at home? Let’s break it down in simple terms.
First, What Are Import and Export Rates?
Before we talk about NEM changes, we need to define two key terms.
- Import rate is what you pay PG&E when you pull electricity from the grid.
- Export rate is what PG&E pays you when you send electricity back to the grid.
Under older programs, import and export were nearly equal. Under today’s structure, they are very different. That difference is what changed everything.
NEM 1.0: Retail One for One Credits
Under NEM 1.0, solar was extremely straightforward. If you sent 1 kilowatt hour to the grid, you received a 1-kilowatt hour credit at the full retail rate. It did not matter what time of day you exported it. Morning, afternoon, or even evening if you had a battery. You were credited at the same retail value you would have paid. This was called one for one retail net metering. If PG&E was charging 40 cents per kilowatt hour and you exported 1 kilowatt hour, you got a 40-cent credit. That meant solar only systems worked perfectly fine. You did not need a battery because the grid acted like your battery. You produced extra during the day. You used those credits at night.
NEM 2.0: Time of Use Based Credits
Following NEM 1.0, California transitioned to NEM 2.0, which introduced time of use rates. Instead of one flat retail value, credits depended on when the electricity was exported. If you exported during lower value hours, such as mid-morning to early afternoon, your credit was lower. If you exported during peak hours, typically 4 pm to 9 pm, your credit was higher.
This created interesting design strategies. For example, west facing solar systems became more valuable because they produced more energy later in the afternoon when peak pricing began. Homeowners could benefit by aligning solar production with peak export windows.
Still, under NEM 2.0, export credits were strong enough that solar only systems made sense. You were still getting near retail value, especially during peak times. Batteries were helpful but not necessary.
NEM 3.0 and Net Billing: The Major Shift
April 2023 changed everything. California introduced NEM 3.0, also known as net billing.
The main change was this: Export rates were dramatically reduced. Instead of receiving near retail value for exported power, homeowners now receive export credits based on a dynamic calculator called the Avoided Cost Calculator. This calculator changes every hour of every day of the year. Export rates are now tied to grid demand conditions, not retail pricing.
Why did this happen? Because of the duck curve.
What Is the Duck Curve?
The duck curve describes how solar generation across California spikes during midday, then drops sharply in the evening while demand rises.
There is now so much solar installed statewide that during spring and early summer afternoons, the grid has excess electricity. When supply is high and demand is low, the value of exported electricity drops. In some spring months, export rates can fall as low as 2 to 4 cents per kilowatt hour. That is a massive drop from retail import rates, which in Fresno can average around 45 cents per kilowatt hour.
In simple terms:
- You might pay 45 cents to import power.
- You might receive 3 cents to export power.
That difference is why solar only systems no longer make financial sense in most cases.
How Import Rates Compare Today
Import rates under PG&E in Fresno remain high. Blended rates typically average around 45 cents per kilowatt hour, sometimes higher depending on time of use and seasonal adjustments.
So, the gap between import and export rates is significant. The new reality under NEM 3.0 is import high, export low.
Why Solar-Only Systems Struggle Under NEM 3.0
Many homeowners still ask if they can install solar without batteries: technically yes. But financially it usually does not make sense. This is because, during the day your solar system produces power and your home uses what it needs first. Anything extra gets exported to the grid at low rates. You are effectively selling power for pennies. Alternatively, at night, when solar is no longer producing, you buy power back at full retail price. When you sell low and buy high, it is not a strong financial strategy.
Under NEM 1 and NEM 2, export credits were strong enough to offset nighttime imports. Under NEM 3, they are not.
The New Strategy: Solar and Battery Working Together
The correct strategy under NEM 3.0 is solar paired with battery storage.
The priority order is:
- Solar powers the home first.
- Excess solar charges the battery.
- Only after the battery is full does power export to the grid.
At night, the process reverses. The battery discharges to power the home. The goal is to avoid importing from PG&E. Instead of exporting cheap and buying expensive, you self-consume your production. This is the fundamental shift in how solar works in Fresno today.
How Battery Sizing Impacts Import and Export Rates
Battery sizing is critical. If the battery is too small, it fills early in the day and excess production gets exported at low rates. Then it empties early in the evening and the home begins importing at high rates. If the battery is properly sized, it stores enough daytime production to carry the home through the night.
In Fresno, we have found that sizing the battery at about 2.5 to 3 kilowatt hours of usable storage for every 1 kilowatt of solar installed works best for most homeowners.
For example:
- 10-kilowatt solar system
- 25 to 30 kilowatt hours of usable battery storage
That proportional sizing typically reduces grid reliance to under 5 percent. This dramatically reduces exposure to high import rates and low export rates.
What About High Export Windows?
There are still limited times of year, especially late summer evenings, when export rates spike higher due to grid demand. In rare hours, export rates can increase significantly. However, designing an entire system around exporting for profit is not the most reliable strategy. The safest financial approach is self-consumption first. If high value export windows occur, they are a bonus, not the primary plan.
How These Changes Affect ROI in Fresno
Despite lower export rates, solar still makes strong financial sense in Fresno. When a system is properly sized to offset 120 to 130 percent of annual usage and paired with the correct battery capacity, homeowners can still reduce their electricity costs by around 50 percent.
The key difference is this:
- Under older programs, savings came from exporting.
- Under NEM 3.0, savings come from avoiding imports.
Common Misunderstandings About NEM 3.0
One misunderstanding is that solar no longer works. That is not true. Solar still works extremely well in Fresno. It just requires smarter design.
Another misunderstanding is that NEM 3.0 eliminated savings. Savings are still strong because import rates are high and continue rising. The structure changed, not the opportunity. The opportunity moved from exporting to storing.
What These Changes Mean for Fresno Solar Installation
The changes in import and export rates fundamentally shifted solar design strategy. Under NEM 1 and NEM 2, the grid acted like a free battery. Under NEM 3.0, you need your own battery. If you install solar only in 2026, you are exposed to low export rates and high import rates. But, if you install solar and battery sized correctly, you control your own energy cycle.
In Fresno, where PG&E rates are high and sun hours are strong, the new import and export structure does not eliminate savings. It simply rewards homeowners who design their systems properly. The biggest impact of the change is this: system design matters more than ever.
If the system is sized correctly for your home, your usage habits, and your battery capacity, solar remains one of the strongest financial upgrades you can make in 2026.
Call our Fresno solar installers at Supreme Solar today to learn more.