Does a Battery Actually Pay Back Under NEM 3.0 in California?
Last verified 2026-09-05. Figures carry their sources at the foot of this page.
A 13.5 kWh home battery installed in California in 2026 runs $12,000 to $16,500 (EnergySage installed-cost data puts the market average at $15,647 for a 13.5 kWh system, checked 2026-09-05). Whether it pays for itself under NEM 3.0 depends almost entirely on which utility is on your bill, because the underlying math is not the same statewide.
Here is the mechanism in one line. NEM 3.0 — officially the Net Billing Tariff, in effect for anyone who interconnected after April 15, 2023 — pays you an export credit set by the CPUC's Avoided Cost Calculator, not by retail rates. That works out to roughly 5 to 8 cents per kWh across the three investor-owned utilities, with PG&E's actual January 2026 hourly table running about 6.4 to 10.9 cents depending on the time of day. Meanwhile, buying power back from the grid at peak costs 40 to 75 cents per kWh depending on utility and plan. A battery does not make money by exporting solar. It makes money by letting you use your own solar instead of selling it cheap and buying it back expensive.
That spread — export credit versus peak retail — is the whole trade, and how wide it runs depends on whether PG&E, SCE, or SDG&E bills you. This page covers only those three. NEM 3.0 does not apply to LADWP, SMUD, or any of California's other publicly owned utilities, and nothing here should be read as urgency if one of those is on your bill.
The core math: export credit versus peak retail
Every battery-payback question under NEM 3.0 reduces to one comparison: what you're paid to export a kilowatt-hour versus what you'd otherwise pay to buy one back. The export side is set by the CPUC's Avoided Cost Calculator, which prices exports off wholesale-generation-cost assumptions, not retail rates — that's why it lands at 5 to 8 cents per kWh instead of anywhere near retail. The buy-back side is whatever your utility charges at the hour you'd otherwise be pulling from the grid, which for a peak-window kilowatt-hour runs 40 to 75 cents depending on utility and plan.
A battery captures the difference by storing midday solar you'd otherwise export at 6-11 cents and using it that evening instead of buying grid power at 40-75 cents. It does not capture value by exporting more — under NEM 3.0, exporting is the low-value move, full stop. This is also why NEM 3.0 vintage matters: PG&E and SCE customers who interconnect before the end of 2027 get a 9-year 'ACC Plus' adder on top of the base export rate (0.88c/kWh general, 3.6c/kWh for CARE/FERA customers, on 2026 vintage — confirmed against multiple independent industry sources, checked 2026-09-05), and the whole export rate then locks for 9 years from your interconnection year. SDG&E customers do not get this adder. None of this changes the fundamental shape of the trade — it just nudges the PG&E/SCE export numbers slightly.
PG&E: the flat-rate wrinkle
PG&E's NEM 3.0 customers are typically defaulted onto E-ELEC, a flat rate with no time-of-use differentiation — $0.53835/kWh total (nem3calculator.com, citing PG&E tariff filings, independently re-checked 2026-09-05; a PG&E-primary tariff sheet with the raw figure could not be directly extracted, so this remains a medium-confidence, third-party-sourced number). That changes the shape of the arbitrage: it isn't about shifting stored power into an evening peak window, because there isn't one on this plan. It's simply avoiding any grid purchase at 53.8 cents by using stored solar instead of exporting it at 6.4 to 10.9 cents.
The resulting spread — roughly 43 to 47 cents per kWh of self-consumption enabled — is real but it's the narrowest of the three utilities covered here. For comparison, PG&E's non-solar E-TOU-D plan shows summer peak at $0.56/kWh and winter peak at $0.47/kWh, both against a $0.43/kWh off-peak floor — useful context if you're deciding between rate plans, but E-ELEC is what most new NEM 3.0 battery households actually land on.
SCE: two peak windows, one meaningful spread
SCE offers two relevant TOU plans with materially different peak pricing, both confirmed directly against sce.com's own rate pages (checked 2026-09-05). TOU-D-4-9PM prices peak hours (4-9pm) at $0.58/kWh against a $0.34/kWh summer off-peak rate. TOU-D-5-8PM compresses the peak window but raises the price to $0.74/kWh, same $0.34/kWh summer off-peak. Winter off-peak and super off-peak on both plans run $0.32-$0.38/kWh. Both plans carry a $0.79/day fixed charge.
We could not retrieve an SCE-specific hourly export-credit table this research cycle — sce.com's downloadable rate file wasn't accessible — so the 5-8 cents per kWh figure applied here is the general cross-utility estimate, not an SCE-verified number. Treat it as directional. Even with that caveat, the spread between a 58-74 cent peak rate and a 5-8 cent export credit is wide enough that, as the next section shows, SCE's tighter plan is actually the single widest arbitrage case on this page — not SDG&E, despite what an earlier draft of this page claimed.
SDG&E: consistently high on both plans, no longer the widest spread
SDG&E carries high peak retail rates on both of its main plans. Per SDG&E's own current tariff filings — read directly from the utility's regulatory-filing PDFs, checked 2026-09-05 — TOU-DR1 prices summer on-peak (4-9pm) at $0.691/kWh against off-peak at $0.464/kWh and super off-peak at $0.374/kWh (effective 8/1/2026). TOU-DR2, an alternate 2-8pm peak window, runs slightly higher at $0.700/kWh on-peak against $0.429/kWh off-peak (effective 4/1/2026). [Corrected 2026-09-05: an earlier draft of this page stated the TOU-DR2 on-peak rate as $0.749/kWh, sourced to two secondary blog posts. That figure does not match any SDG&E tariff filing found on sdge.com and has been replaced with the $0.700/kWh figure verified directly against SDG&E's own published rate table.]
As with SCE, no SDG&E-specific export-credit table was retrievable this cycle, so the 5-8 cent figure here is the general estimate, not SDG&E-verified. With the corrected numbers, SDG&E's self-consumption spread runs roughly 61 to 65 cents per kWh — wide, and sustained across both of its plan options, but no longer the widest on this page. That distinction now belongs to SCE's TOU-D-5-8PM plan, whose 74-cent peak rate produces a spread up to roughly 69 cents per kWh in its narrow 3-hour window. Read together: SCE's tightest plan edges out SDG&E on a strict per-kWh basis, but SDG&E runs high on both of its plans rather than requiring a customer to opt into an extreme narrow window to get there. Treat SCE and SDG&E as roughly tied for the strongest arbitrage case in the state, not SDG&E alone.
SGIP won't help you pay for it
The state rebate that used to soften battery costs is not available to a typical homeowner anymore. Per the program administrator's own status page (selfgenca.com, checked 2026-09-05), the general-market Small Residential Storage rebate is closed across CSE, SCE, SoCalGas, and PG&E service territories. So is the Residential Solar & Storage Equity - Ratepayer tier and Equity Resiliency. The only tier still open or waitlisted is Residential Solar & Storage Equity - AB 209, and that's income- or disadvantaged-community-gated — not a program a typical homeowner qualifies for.
Before SGIP closed, the general rebate paid $0.15/Wh at its final Step 7 tier (sgipsd.org's own incentive-rate table, checked 2026-09-05), roughly $2,025 off a 13.5 kWh Powerwall-class battery. That money is gone from the equation for ordinary homeowners statewide. If an installer's proposal still lines up an SGIP rebate for your project, ask them to show you, in writing, which open program tier you actually qualify for — and verify your income/community eligibility yourself before counting on it.
The federal credit is gone for owned batteries — a PPA is a different calculation
The 30% federal residential clean energy credit (Section 25D) — which covered both solar panels and owned battery storage — ended for any expenditure made after December 31, 2025, per the IRS's own guidance (irs.gov/newsroom, dated Aug. 21, 2025, following the One Big Beautiful Bill Act signed July 4, 2025). If you buy and own a battery outright now, there is no federal tax credit offsetting that $12,000-$16,500 hardware cost.
A third-party-owned system — a lease or PPA where the installer keeps title — is a different story. Industry sources indicate storage attached to a commercial Section 48E investment tax credit structure is on a slower phasedown schedule than the abrupt cutoff residential systems just went through, though we could not confirm an exact sunset year from a Treasury or IRS primary source — treat the direction as reasonably solid and the specific year as unverified. This is precisely why PPA/TPO structures matter more in 2026 than they used to: it's one of the only remaining paths to any federal credit on a home battery. The tradeoff is counterparty risk — Freedom Forever converted to Chapter 7 liquidation in mid-2026 after filing Chapter 11 that spring, Sunnova filed Chapter 11 in mid-2025 and is now administered by a legacy-portfolio servicer rather than writing new contracts, and SunPower filed Chapter 11 in 2024. If you sign a 20-year PPA, the company on the other end of it needs to still exist in year 15.
Illustrative payback math — read the assumptions before you trust it
No credible third-party study gives a verified payback-year figure for a NEM 3.0 battery, so here's the arithmetic built from the sourced rates above, not a borrowed conclusion. Assume a battery shifts a conservative 9 kWh per day from 'exported at the credit rate' to 'self-consumed instead of bought back at retail' — a rough, illustrative number, not a guarantee tied to your roof, panel size, or household load.
On PG&E's flat E-ELEC plan, a spread near $0.45/kWh times 9 kWh/day works out to roughly $1,480/year, which against $12,000-$16,500 of hardware (EnergySage installed-cost data, checked 2026-09-05) is an 8-to-11-year simple payback — right at or beyond a typical 10-year battery warranty window. On SCE, a spread near $0.55/kWh nets roughly $1,810/year, a payback closer to 7-to-9 years. On SDG&E, a spread near $0.62/kWh (averaging TOU-DR1 and TOU-DR2, corrected from an earlier draft's overstated TOU-DR2 rate) nets roughly $2,040/year, a payback closer to 6-to-8 years — in the same range as SCE, not clearly the fastest of the three the way an earlier version of this page claimed. These are back-of-envelope numbers built for illustration. Your actual usage curve, solar oversizing, and rate plan choice can move any of them by several years in either direction.
What actually moves your number
Four things swing these numbers more than the utility does. First, how much excess solar your system produces relative to your household load — a battery can only shift power you're actually generating and not using, so an undersized solar array starves the arbitrage. Second, whether you charge the battery from solar only or also from off-peak grid power, which changes which spread applies. Third, financing cost — a loan at typical current rates against $12,000-$16,500 of hardware eats into or erases the annual savings figures above; a cash purchase or a very low-rate loan preserves them. Fourth, EV charging: if you're charging a vehicle at home, that load competes with the battery for the same stored solar, and the math has to account for which use gets priority.
None of these four are the same for any two households, which is exactly why a generic 'batteries pay back in X years' claim from an installer should be treated as a sales pitch to verify against your own bill, not a fact to accept.
NEM 3.0 export credit vs. peak retail rate by utility (2026 figures) — the spread is what a battery actually monetizes
| Utility | Peak retail rate | NEM 3.0 export credit | Approx. self-consumption spread | Governing TOU plan(s) cited | Subject to NEM 3.0? |
|---|---|---|---|---|---|
| PG&E | $0.47-0.56/kWh (E-TOU-D peak, winter vs. summer) or a flat $0.53835/kWh on E-ELEC | ~6.4-10.9c/kWh, Jan-2026 hourly ACC table (medium confidence, third-party source) | ~$0.43-0.47/kWh — E-ELEC's flat rate minus the export credit floor | E-ELEC (flat, no time-of-use differentiation) or E-TOU-D | Yes — CPUC-regulated |
| SCE | $0.58/kWh (TOU-D-4-9PM peak) or $0.74/kWh (TOU-D-5-8PM peak); $0.32-0.38/kWh off-peak/super off-peak | ~5-8c/kWh — cross-utility estimate only; no SCE-specific ACC table was retrievable (low-medium confidence) | ~$0.50-0.53/kWh (TOU-D-4-9PM) to ~$0.66-0.69/kWh (TOU-D-5-8PM) — the widest on this page | TOU-D-4-9PM or TOU-D-5-8PM | Yes — CPUC-regulated |
| SDG&E | $0.691/kWh (TOU-DR1 peak, eff. 8/1/26) or $0.700/kWh (TOU-DR2 peak, eff. 4/1/26); $0.374-0.464/kWh off-peak/super off-peak | ~5-8c/kWh — cross-utility estimate only; no SDG&E-specific ACC table was retrievable (low-medium confidence) | ~$0.61-0.65/kWh — wide and sustained across both plans, but not the widest (see SCE TOU-D-5-8PM) | TOU-DR1 or TOU-DR2 | Yes — CPUC-regulated |
| LADWP, SMUD, and other publicly owned utilities | $0.17-0.27/kWh blended residential (varies by POU) | Not applicable — NEM 3.0 does not govern these utilities | Set entirely by the individual POU's own tariff | Utility-specific, not CPUC-filed | No — outside CPUC jurisdiction |
When this is the wrong move
A battery arbitrage case falls apart under several common conditions. If you're still grandfathered on NEM 2.0, none of this applies — you likely have a far better export deal already, and adding a battery is a different calculation entirely; don't let anyone push you off that agreement. If your solar system is sized close to your household load with little consistent midday excess, there's not enough surplus power to shift, and the battery mostly just backstops outages rather than earning arbitrage. If you're on LADWP, SMUD, or another publicly owned utility, NEM 3.0 doesn't govern your bill at all — this entire spread analysis is irrelevant to you. If you plan to move within five to seven years, a battery in the 8-to-11-year payback range on PG&E specifically may not return your money before you sell. If financing costs on the $12,000-$16,500 hardware price are high, they can erase the annual savings shown here entirely — run the loan math before the arbitrage math. And if your actual reason for wanting a battery is outage backup rather than bill savings, that's a legitimate but separate decision — don't let a resilience purchase get sold to you as a fast financial payback when the numbers don't support it.
Frequently asked questions
What is the actual NEM 3.0 export credit right now?
For PG&E, the January 2026 hourly Avoided Cost Calculator table runs roughly 6.4c/kWh at midday up to about 10.9c/kWh in the early evening, pulled from a third-party site citing PG&E's own tariff filings (medium confidence — no PG&E-primary page with the raw table was retrievable). Industry shorthand across all three investor-owned utilities converges on "5 to 8 cents per kWh" as the general range. We could not obtain SCE- or SDG&E-specific hourly export tables this cycle; treat 5-8c/kWh as directional for those two, not exact, and ask your installer to show you the actual rate class before you sign.
Does a home battery pay for itself in California now that SGIP is closed?
The general-market SGIP battery rebate — which paid $0.15/Wh at its final Step 7 tier (sgipsd.org, checked 2026-09-05), roughly $2,025 off a 13.5 kWh battery — is closed to CSE, SCE, SoCalGas, and PG&E customers as of the program administrator's own status page (selfgenca.com, checked 2026-09-05). Only income-qualified AB 209 equity tiers remain open or waitlisted, and those are gated by income or disadvantaged-community designation, not available to a typical homeowner. Without that rebate, payback runs on the retail-vs-export spread alone, which is why the utility you're on matters more than it used to.
Should I get a PPA/leased battery instead of buying one outright?
An owned residential battery lost its 30% federal tax credit (Section 25D) for any expenditure after December 31, 2025, per the IRS's own August 2025 guidance. A third-party-owned system — the installer keeps title, you pay for the power or the lease — can still access a federal credit through the commercial Section 48E investment tax credit, which industry sources say phases down on a much later schedule than the residential credit did. We could not confirm the exact sunset year from a Treasury or IRS primary source, so don't take a specific year as fact. The tradeoff: you gain a credit path, but you take on counterparty risk with the installer, which matters given how many major national solar companies have gone through bankruptcy in the past two years.
Which utility has the best case for adding a battery?
[Corrected 2026-09-05] It's close between SCE and SDG&E, and the exact answer depends on which plan you're compared against — an earlier draft of this page overstated SDG&E's TOU-DR2 rate and wrongly called SDG&E the clear winner. SCE's TOU-D-5-8PM plan has the single highest peak rate on this page (74c/kWh, confirmed against sce.com), producing a spread up to roughly 69c/kWh against a 5-8c/kWh export credit. SDG&E runs high on both of its plans — $0.691/kWh (TOU-DR1) and $0.700/kWh (TOU-DR2), both verified directly against SDG&E's own tariff filings — for a spread around 61-65c/kWh either way, without needing to opt into a narrow 3-hour window the way SCE's best plan requires. PG&E's case is the least clear-cut of the three, partly because NEM 3.0 customers there are typically defaulted onto the flat E-ELEC rate rather than a time-varying plan, so the arbitrage isn't about timing, it's about avoiding grid purchases at all.
I'm still on NEM 2.0 — does any of this apply to me?
No. NEM 3.0 (the Net Billing Tariff) only governs systems that interconnected after April 15, 2023. If you're grandfathered on NEM 2.0, you're likely still getting a retail-rate-equivalent export credit, which is a materially better deal than anything described on this page, and adding a battery changes that calculation entirely — get a system-specific review before you touch your existing interconnection agreement.
Does this analysis apply to LADWP, SMUD, or other city-owned utility customers?
No, and this is worth saying plainly: publicly owned utilities including LADWP, SMUD, MID, Anaheim, Roseville, Lodi, Imperial ID, and Turlock ID are not subject to CPUC jurisdiction and do not follow NEM 3.0 at all. They set their own net metering and export terms. None of the urgency or spread math on this page should be applied to a POU bill — that utility's own tariff is the only document that matters.
What about backup power during outages — does that change the payback math?
Yes, but it's a separate decision from the pure dollars-and-cents arbitrage covered here. If you're weighing a battery partly or mainly for outage resilience, the value of keeping the lights, fridge, and medical equipment running during a PSPS event or grid failure doesn't show up in a cents-per-kWh spreadsheet. That's a legitimate reason to buy a battery even where the arbitrage payback alone is marginal — just be clear with yourself and any installer about which reason is actually driving the purchase, because the sales pitch tends to blend the two.
The bottom line
A battery in California is not a blanket yes or a blanket no under NEM 3.0 — it's a utility-specific spread calculation. PG&E's flat E-ELEC rate structure and lower peak retail rate make the case marginal on hardware alone. SCE and SDG&E are close to tied for strongest: SCE's narrow TOU-D-5-8PM window peaks at 74c/kWh, SDG&E runs $0.69-$0.70/kWh on both of its plans, and either produces a self-consumption spread in the low-to-mid 60s of cents per kWh — still without any state or federal rebate propping it up. SGIP's general-market rebate is closed statewide as of this writing, and the federal 25D credit for an owned battery ended December 31, 2025. The only federal credit path left runs through third-party-owned systems under Section 48E — which trades a subsidy for counterparty risk, worth weighing given how many national installers have gone through bankruptcy in the past two years. Get your actual TOU plan, your actual usage curve, and your actual export table before signing anything, and treat any contractor's "8-year payback" claim as a starting point to verify, not a fact to accept.
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Sources
Rates and incentive programs change. Each figure above traces to one of these.
- IRS FAQ on modification of energy credits under OBBBA — Confirms Section 25D residential credit, including owned battery storage, ends for expenditures after Dec. 31, 2025
- CPUC — Net Billing Tariff (NEM 3.0) program information — Confirms NEM 3.0 effective date (April 15, 2023), scope limited to PG&E/SCE/SDG&E, and Avoided Cost Calculator basis for export credits
- SCE Help Center — Time-of-Use Residential Rate Plans — SCE TOU-D-4-9PM and TOU-D-5-8PM peak/off-peak/super-off-peak retail rates and $0.79/day fixed charge; independently re-verified 2026-09-05
- SDG&E — Schedule TOU-DR1 and TOU-DR2 Total Rates Tables (official tariff filings) — TOU-DR1 (eff. 8/1/2026) and TOU-DR2 (eff. 4/1/2026) on-peak/off-peak/super-off-peak retail rates, read directly from SDG&E's own regulatory-filing PDFs, checked 2026-09-05 — corrects an earlier draft's overstated TOU-DR2 figure
- nem3calculator.com — PG&E hourly ACC export-credit table, E-ELEC and E-TOU-D retail rates, and ACC Plus adder figures (third-party aggregator citing PG&E tariff filings; independently re-verified 2026-09-05)
- SelfGenCA (SGIP program administrator) — program status table — Statewide SGIP battery rebate closure status by utility and program tier, checked 2026-09-05
- SGIP program administrator — Incentive Rates table — Confirms the $0.15/Wh (Step 7) historical general-market Small Residential Storage incentive rate cited in this page's SGIP math
- EnergySage — Solar Battery Cost report — Installed-cost data supporting the $12,000-$16,500 battery hardware cost range used throughout this page (EnergySage average: $15,647 installed for a 13.5 kWh system, checked 2026-09-05)
- Kroll Restructuring Administration — Freedom Forever case page — Freedom Forever Chapter 11 filing and Chapter 7 conversion date
- Sunwise Energy / Solar Insure — Section 48E commentary — Directional claim that third-party-owned battery storage retains access to the commercial Section 48E investment tax credit on a slower phasedown than residential 25D (industry commentary, not Treasury primary source)