SDG&E NEM 3.0: Why Home Batteries Matter More Than Ever for San Diego Solar Homes

January 19, 2026

For many years, solar power made financial sense for San Diego homeowners because of generous net metering rules. Homeowners could send extra solar energy to the grid during the day and receive strong credits that helped offset nighttime electricity use.


With the introduction of SDG&E NEM 3.0 (Net Energy Metering), that system has changed. Solar is still valuable, but how homeowners get paid for excess energy looks very different—and this has made home battery storage an important part of modern solar systems.



To understand why batteries are now so important, it helps to first understand what changed under NEM 3.0.

What Is SDG&E NEM 3.0?

Net Energy Metering is the billing system that determines how homeowners are credited for the extra solar energy they send back to the grid. Under NEM 3.0, SDG&E significantly reduced how much it pays homeowners for that excess power.


The key issue:

  • Solar panels produce the most energy in the middle of the day
  • SDG&E pays very little for energy exported during that time
  • Electricity is most expensive in the evening, when solar production drops

This creates a situation where homeowners may be giving away solar power at a low value and then buying electricity back later at a much higher cost.

Why Solar-Only Systems Are Less Effective Under NEM 3.0

Solar panels still reduce how much electricity a home needs from the grid overall. However, under NEM 3.0, timing matters more than total production.


A common scenario looks like this:

  • During the day, your solar system produces more energy than your home uses
  • That extra energy is sent to the grid at a low credit rate
  • In the evening, when energy use increases, you buy electricity from SDG&E at peak prices


Even if your solar system produces plenty of energy over the course of the day, much of its value is lost because it is not being used when electricity is most expensive. For many San Diego homeowners, this means solar-only systems do not provide the same level of savings they once did.

How a Home Battery Changes the Situation

A home battery allows homeowners to store excess solar energy instead of sending it to the grid. That stored energy can then be used later—especially during the expensive evening hours.


Key Benefits of Adding a Home Battery

  • Better Use of Your Solar Energy

A battery allows homeowners to actually use the energy their solar system produces, rather than losing its value through low export rates. This improves the overall financial performance of the system.


  • Lower Dependence on SDG&E

By using stored energy during peak hours, homeowners rely less on the utility. Over time, this helps protect against future rate increases.


  • More Predictable Energy Costs

With a battery, homeowners have more control over when they use grid electricity and when they rely on stored solar energy. This makes monthly energy costs more predictable.


  • Reliable Energy During Outages

While savings are the main reason batteries are now important, they also provide backup power. During outages, stored energy can keep essential appliances running.

Batteries Are now a Core Part of Solar

and Design Matters Under NEM 3.0

Before NEM 3.0, batteries were often considered optional—mainly added for backup power. Under SDG&E NEM 3.0, they have become a key part of making solar work financially.


But not all battery systems are created equal. To work well under NEM 3.0, a system needs to be designed around how energy is actually used in the home.

Important factors include:

  • How much energy the household uses in the evening
  • When the battery charges and discharges
  • How the system interacts with time-of-use rates


Williams Mechanical Co is an EG4 certified installer, meaning they design and install battery systems that are compatible with modern rate structures like NEM 3.0. This ensures stored energy is used strategically—during high-cost periods—rather than being wasted or exported unnecessarily.

The Future of Solar for San Diego Homeowners

For San Diego homeowners, solar is no longer just about producing electricity—it is about when that electricity is used. Battery storage transforms solar into a more flexible, resilient, and financially sound energy solution.


SDG&E NEM 3.0 has changed how solar systems perform financially, but it has not made solar obsolete. Instead, it has made home batteries an essential part of modern solar systems.


By storing solar energy and using it during peak rate periods, homeowners can:

  • Get more value from their solar investment
  • Reduce dependence on SDG&E
  • Increase energy independence
  • Enjoy more reliable energy overall