When your panels make more power than your house is using, the surplus goes to the grid and PG&E credits you for it. The size of that credit is the single most consequential number in California residential solar, and it is the one most quotes handle badly.
This page had an earlier version that gave a flat figure — four to five cents per kilowatt-hour. That was both out of date and misleading in a more important way: the export rate is not flat. It changes every hour of every day. The spread between the cheapest hour and the most expensive one is the whole argument for how a system should be designed.
What is an avoided cost rate, and why does California use it?
An avoided cost rate is what your exported kilowatt-hour saves the grid. Not what it’s worth to you — what PG&E avoids spending because you produced it.
The CPUC calculates it in the Avoided Cost Calculator, which stacks up the components the grid genuinely avoids in that hour: wholesale energy, generation capacity, transmission and distribution capacity, avoided greenhouse gas costs and a few smaller items. The result is a value for every hour of the year.
The logic behind the switch is straightforward, whether or not you like the outcome. Under the old net metering rules, an exported kilowatt-hour was credited at close to the full retail rate — which includes the cost of poles, wires, wildfire mitigation and public programs. Solar owners were being paid for infrastructure they weren’t providing, and that cost got picked up by everyone else. Avoided cost pricing strips the credit back to the grid value.
The practical effect for a homeowner is blunt: the same kilowatt-hour is worth much more used inside your house than sold to PG&E.
What does PG&E actually pay per kWh for exported solar in 2026?
There is no single number, and anyone who quotes you one is rounding off the thing that matters.
Averaged across a full year in PG&E territory, NEM 3.0 export credits land in the region of 5 to 9 cents per kilowatt-hour. That is roughly a quarter of what the same export earned under NEM 2.0.
Set that against what you pay to buy power: PG&E’s volumetric rate is around 36 cents per kWh in 2026, on top of a $24 monthly Base Services Charge your generation cannot offset. Full detail on the retail side is in PG&E rates in 2026.
So the gap is roughly four to seven times. A kilowatt-hour you use yourself is worth about 36 cents. The same kilowatt-hour exported might be worth 6.
That ratio is the entire design problem. It did not exist under NEM 2.0.
One caveat we’d rather state than bury: the CPUC updates the avoided cost tables, and your exact blend depends on your rate plan and export profile. The 5-to-9-cent range is the shape of it as of August 2026. Any quote showing a precise annual export figure is a model, not a published tariff.
Why does the export rate change hour by hour — and when is it highest?
Because the grid’s need changes hour by hour.
At midday in spring, California has more solar than it can use. Your export at 1pm in April is competing with several gigawatts of utility-scale solar doing exactly the same thing, so the avoided cost is at its lowest — commonly in the low-to-mid single digits of cents.
By late afternoon, that solar is dropping off while air conditioning is still running. Avoided cost climbs.
The highest-value hours are summer evenings, roughly 4pm to 9pm, when the sun is gone, demand is at its peak and the grid is running its most expensive resources. Export credits in those hours can be several times the midday value, and in a genuine grid-stress event they run far higher still.
Here is the awkward part: your panels produce almost nothing in the hours when exports are worth most. Peak production and peak value do not overlap. That mismatch is not a flaw in your system — it is the defining condition of solar under NEM 3.0.
There are two responses to it. Use the power while it’s being made — dishwasher, pool pump, EV charger and laundry at midday rather than 8pm. Or store it and discharge in the evening, which is what a battery does, and why batteries became standard in California designs after April 2023.
What changed on 15 April 2023, and are older systems safe?
15 April 2023 is the date the Net Billing Tariff — NEM 3.0 — took effect for new applications at PG&E, SCE and SDG&E. Those three are the CPUC-regulated investor-owned utilities. Municipal utilities set their own rules and are not covered.
If your interconnection application was complete before that date, you are on NEM 2.0, and you keep it for 20 years from your permission-to-operate date. Nothing about the 2023 change moved you. Nothing about it reduced your credits.
If you are in an MCE, EBCE or other CCA territory: your community choice aggregator buys the generation, but PG&E owns the wires and the export tariff. NEM 3.0 applies to you. Being a CCA customer is not an exemption, and we have had this conversation with enough Richmond and El Cerrito homeowners to know it’s a common misunderstanding.
If you have a NEM 2.0 system, the practical advice is: don’t do anything that risks the grandfathering. Substantial expansions of an existing system can trigger a review of your tariff status. Ask before you add panels.
Did AB 942 shorten NEM 2.0 grandfathering? (No — here’s what happened.)
This was the most-asked question of 2025 and it deserves a direct answer.
AB 942, as introduced, would have cut NEM 1.0 and 2.0 grandfathering from 20 years to 10, and terminated a home’s net metering agreement when the property was sold. As written, it would have wiped out much of the value of every pre-2023 solar system in California.
It did not become law in that form. In July 2025 the Senate Energy, Utilities and Communications Committee amended the bill to remove the home-sale transfer provision, and the 10-year cutoff did not take effect.
As of 30 August 2026, 20-year NEM 2.0 grandfathering stands, and it transfers with the home on sale. Because legislative proposals of this kind recur, we date this answer rather than presenting it as permanent. If you’re relying on it for a decision, check the current status.
What does this mean for how your system should be sized?
It means the old instinct — build the biggest array the roof will hold — is now the wrong instinct.
Under NEM 2.0, oversizing was close to free: every surplus kilowatt-hour banked at near-retail value. Under NEM 3.0, every surplus kilowatt-hour you export is worth roughly a quarter of what it would be worth used at home. Paying $2,800 a kilowatt for panels whose output you’ll mostly sell at 6 cents is a poor trade.
So the design questions we actually ask are:
- When do you use power? Not how much — when. A household home all day is a different design from one that’s empty from 8am to 6pm.
- What’s your daytime baseline? Pool pump, air conditioning, home office, EV charging schedule. Every load you can move into daylight is worth 36 cents instead of 6.
- Does a battery earn its keep here? Around $15,000 in a project, and it moves typical offset from the 40–55% range for solar alone into the 55–75% range. Worth it for some households, not for all — we work through that in do you actually need a battery with solar in the East Bay.
- What can you shift for free? A dishwasher timer and an EV charging schedule cost nothing and change the math.
The result is usually a system smaller than an aggressive salesperson would propose, and matched to your consumption curve rather than your roof area. That is not us being modest about what we sell. It’s what the tariff rewards.
You can see how sizing plays out on your own bill in the savings calculator, and how we approach design on our residential and services pages. The wider question of whether the whole thing pencils out in 2026 is covered in is solar still worth it in Contra Costa.
Ask us the awkward version of the question
If you want to know what your exports would actually be worth — your roof, your usage, your rate plan, not a marketing average — book a free consultation. No pressure, no obligation, and if the honest answer is a smaller system or no system, that’s the answer you’ll get.
Start with the savings calculator. More short answers are on the FAQ.
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Rates and rules verified 30 August 2026.
Sources: CPUC net billing tariff decision and Avoided Cost Calculator; PG&E Advice Letter 7846-E and Base Services Charge page; California AB 942 (2025–26) as amended in Senate committee, July 2025. Export credit ranges are current-year estimates from published 2026 analyses of the PG&E ACC tables, not a fixed published tariff.
Changelog
- 30 Aug 2026 — Full rewrite. Replaced the previous flat “$0.04–$0.05/kWh” figure with the hourly ACC range; removed non-California material; added the 20-year grandfathering and AB 942 answers.