When NEM 3.0 went live in April 2023, every solar contractor in LA had a guess about what real payback would look like. The math models projected a longer payback for solar-only than for solar+battery. Now we have actual 2+ year data from 200+ HUS installs, and the picture is clear (payback depends on usage, rate plan, equipment, financing, and utility program rules).

What NEM 3.0 changed.

Under NEM 2.0 (legacy), if your solar exported 1 kWh to the grid you got credited at retail rate — roughly $0.30-$0.40/kWh during peak hours. You could basically run your meter backwards.

Under NEM 3.0, exports are credited at the “avoided cost” rate — what it would have cost the utility to produce that kWh. In LA in 2025-2026, this works out to about $0.05-$0.08/kWh. That’s a 75-85% reduction in export value.

The implication: every kWh of solar you export to the grid is worth roughly 1/5 of what it was under NEM 2.0. The only way to recover the value is to use the solar power yourself instead of exporting it. That’s what battery storage is for.

Real 2026 payback numbers.

Here’s the data from 200+ HUS installs across LA, broken down by configuration and utility territory:

Illustrative ranges only; actual payback depends on usage, rate plan, equipment, financing, and utility program rules.

Two clear patterns:

• →Battery typically shortens payback in SCE territory (NEM 3.0) — battery captures excess solar production for self-consumption during peak rate hours instead of exporting at avoided-cost rate
• →LADWP customers benefit less from battery because their legacy net metering still credits exports at favorable rates. Battery still improves payback but the delta is smaller

Why solar-only is a 2026 mistake.

If your solar system has no battery and you’re an SCE customer (or moving forward in 2026 a PG&E/SDG&E customer), here’s what your typical day looks like:

• →8 AM: Solar starts producing. You’re at work, low home load. Excess solar exports at $0.05/kWh.
• →12 PM peak production: 6 kW of solar production, 1 kW home load. 5 kW exported at $0.05/kWh = $0.25/hour earned.
• →5 PM: Solar production drops, home load rises (AC kicks on). You’re now importing at $0.36/kWh.
• →8 PM peak rate: Solar is done. You’re paying $0.45/kWh to run AC + dishwasher + EV charger.

You earned $0.05/kWh during the day and pay $0.45/kWh in the evening — a 9× reverse arbitrage. NEM 3.0 turns solar-only into a marginal investment because the math literally penalizes the time-shift between production and consumption.

Right-sizing battery for NEM 3.0.

The optimal battery size for NEM 3.0 captures peak-hour solar export for evening peak-hour use. Sizing rule of thumb from HUS install data:

If you’re LADWP customers — ignore NEM 3.0.

LADWP (the municipal utility serving City of LA) is NOT bound by NEM 3.0 — that ruling applies to investor-owned utilities (SCE, PG&E, SDG&E). LADWP operates its own net metering rules that remain much more favorable.

For LADWP customers in 2026:

• →Solar-only payback is still attractive (payback depends on usage, rate plan, equipment, financing, and utility program rules)
• →Solar+battery payback is typically better, but not a dramatic gap vs solar-only (actual results vary by home)
• →LADWP solar incentives still apply on top of the federal ITC
• →If your address is within City of LA (zip codes 90001-90089, 90201, 90291-90295, etc.), you’re likely LADWP

Battery is still recommended for LADWP customers for backup resilience (PSPS / earthquake / outage backup), but the financial math doesn’t demand it the way it does for SCE customers.

Related guides.