In April 2023, California replaced Net Energy Metering 2.0 with the Net Billing Tariff â universally referred to in the industry as NEM 3.0. For buyers and sellers of luxury homes in Los Angeles County, the change is not a footnote. It reshaped the payback math on residential solar, altered the value proposition of battery storage, and quietly changed what a savvy buyer now looks for on the roof of a $4 million home. Three full years into the new regime, the data is clear enough to make informed decisions.
This piece is written for LA County luxury homeowners and buyers who want a plain-English read on what NEM 3.0 actually did, what it means for installation decisions in 2026, and how solar reads on a listing today compared with five years ago.
What Changed Under NEM 3.0
Under the prior NEM 2.0 regime, a homeowner with rooftop solar sold excess production back to the grid at roughly retail electricity rates. The economics were favorable enough that a significant share of luxury homes in Manhattan Beach, Palos Verdes, and the Westside installed solar during the 2018 to 2022 window â many of them as oversized arrays designed to cover pool heating, EV charging, and air conditioning during peak summer months.
NEM 3.0 reduced the rate at which utilities compensate homeowners for exported solar power by roughly 75 percent. Export credits are now valued closer to wholesale â pennies per kilowatt-hour rather than the 25 to 40 cents per kilowatt-hour that retail customers pay for imported electricity. The math flipped overnight. A solar array that exports its production during the middle of the day is no longer earning the same value it once did.
The Rise of Self-Consumption and Batteries
The strategic response under NEM 3.0 is straightforward: consume your solar production at home rather than exporting it. That means storing midday production in a battery and discharging it during evening peak hours, when electricity rates are highest. A properly designed system under NEM 3.0 typically pairs a 9 to 20 kilowatt solar array with 20 to 40 kilowatt-hours of battery storage.
For luxury homes â where 3,500 to 10,000 square feet of conditioned space, pool equipment, EV chargers, and elevated HVAC loads are the norm â battery capacity has become the center of the design conversation. A 2026 installation without meaningful storage is generally not economically competitive.
Installation Costs in Today's Market
For a representative LA County luxury home, current market pricing looks roughly like this:
- Solar-only (12 kilowatt array): $38,000 to $52,000 installed, before the 30 percent federal Investment Tax Credit.
- Solar plus battery (12 kilowatt array, 27 kilowatt-hour storage): $65,000 to $95,000 installed, pre-credit.
- Premium system (18 kilowatt array, 40 kilowatt-hour storage, whole-home backup, EV integration): $105,000 to $160,000 installed, pre-credit.
The federal tax credit continues to apply to both solar and battery components through 2032 under the current schedule. California's Self-Generation Incentive Program (SGIP) offers supplemental rebates for battery storage, with elevated tiers for customers in high fire threat districts â which covers substantial portions of the Hollywood Hills, the Santa Monica Mountains, and the Palos Verdes uplands.
Payback Math in 2026
Under NEM 2.0, a typical LA luxury solar installation paid back in six to nine years. Under NEM 3.0, the simple payback period for a solar-only system has stretched to 11 to 14 years at current electricity rates. When a correctly sized battery is added â specifically one large enough to shift consumption out of the 4 p.m. to 9 p.m. peak window â payback typically returns to the eight to ten year range.
The critical variable is how much of the home's evening load can be shifted to battery discharge. A home with high evening consumption â air conditioning running late, a hot tub on a timer, EV charging on a standard schedule â benefits disproportionately from storage. A home with minimal evening load sees less benefit.
Resale Impact â What Buyers Look For Now
In the LA luxury market today, the presence or absence of solar is increasingly a diagnostic question rather than a premium driver. Three observations from the last twelve months of listings:
- Homes with a paid-off, modern solar-plus-battery system are viewed favorably by buyers, but rarely command a documented premium beyond the value of the equipment itself.
- Homes with leased solar under legacy power purchase agreements can face buyer hesitation. Assumption paperwork, transfer fees, and long residual terms complicate escrow. Owners should review lease documents carefully before listing.
- Homes with aging pre-NEM-3.0 arrays but no battery are often viewed as partial systems. The buyer's engineering question becomes: what would a full retrofit cost to bring this into line with current economics?
The clearest resale advantage goes to owners who installed cleanly designed, owned systems in the last three years with batteries sized to the home's actual load profile.
Practical Guidance for 2026 Decisions
For owners considering a new installation in 2026, three principles consistently produce better outcomes:
- Design for self-consumption, not export. Size the array to match your home's annual consumption, not to maximize production.
- Size the battery for your evening peak, not your summer day. The highest-value kilowatt-hours are the ones you avoid importing at 6 p.m.
- Document everything for the next owner. Keep the interconnection agreement, the Permission to Operate letter, the battery warranty, and the as-built drawings in a single folder. At resale, this documentation accelerates escrow and removes buyer-side questions.
For owners considering a sale in the next two years, the threshold question is whether to upgrade an existing system, leave it in place, or remove it before listing. There is no universal answer. The correct choice depends on the age of the array, the terms of any lease, and the expected buyer profile for the property.
Equal Housing Opportunity. Elite Collective is a division of KW Luxury International. This article is general information and not tax, legal, or engineering advice. Homeowners should consult a licensed electrical contractor, a qualified tax advisor, and their utility for decisions specific to their property.