How NEM 3.0 Will Affact the Solar homeowners in California
What Is Net Metering?
Net metering, also known as NEM (Net Energy Metering), is a billing arrangement that allows electricity customers to generate their own renewable energy and receive credits for any excess electricity they produce. Under NEM, a bi-directional meter is installed, which measures both the electricity consumed from the grid and the surplus energy generated by the customer’s renewable energy system, such as solar panels or wind turbines.
Has NEM 3.0 been approved？
Yes, NEM 3.0 was given the green light by the California Public Utilities Commission (CPUC) with a vote of unanimous approval on December 15, 2022. After a transition period of 120 days, the new policy became effective on April 15, 2023, marking the end of NEM 2.0.
Is It Still Worth it to Go Net Metering?
And the answer is that home solar is still absolutely worthwhile and there are strategies to increase the savings of a NEM 3.0 system. In fact, even under NEM 3.0 billing, solar systems in California will still largely provide more energy cost savings than systems in any other state. California still has one of the highest ROI on solar investment compare to other states in the US.
It’s also worth noting that energy cost reductions aren’t the sole advantage of going solar at home. There are also the following:
- Providing backup power in the event of a power loss (if you have battery storage)
- Increasing the value of your home
- Carbon emissions reduction
- Giving your friends, family, and neighbors a positive example
- Making a difference in the resilience of the grid
NEM 3.0 compare to NEM 2.0
The most significant difference between NEM 2.0 and NEM 3.0 is the value of export rates, which is the price of extra power generated by solar systems. The value of solar exports under NEM 2.0 is based on retail rates, therefore a kWh of power put into the grid was valued the same as a kWh of electricity removed off the grid. Residential solar export prices under NEM 3.0 will be based on a “Avoided Cost Calculator,” which will be closer to wholesale power rates (what utilities pay for electricity).
NEM 3.0 export rates are typically 75% lower than NEM 2.0 export rates.
Under NEM 3.0, lower export rates imply longer payback times and lower cost savings for solar owners.
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When Will NEM 3.0 Start to operate?
IOU Customers who filed interconnection applications on or before April 14, 2023 are eligible to be grandfathered into the NEM 2.0 system for a period of 20 years. Customers that submit interconnection agreements on April 15, 2023 or after will be billing through the NEM 3.0
Advice For the Homeowners In California: Solar Battery Storage Is Worth More to Invest In NEM 3.0
The combination of solar and battery storage is a prominent subject in the NEM 3.0 policy language. That’s because the challenge in California isn’t creating solar power; it’s storing and utilizing it, since peak solar output doesn’t coincide with peak energy usage.
Returning to our helpful import/export pricing graph, you’ll see that export costs rise between 7-8 p.m. because energy consumption is peaking while solar power is tapering down for the night – an issue that affects the whole state.
During peak demand hours in September, NEM 3.0 export prices might reach $3.32 per kWh. According to solar.com, households with NEM 3.0 battery storage may make $200 per week by storing solar power produced during the day and exporting it to the grid during these high-value times.
Under NEM 3.0 solar billing, the overall return on investment for solar plus battery storage will be nearly equivalent to the return on investment for solar-only installations. With this in mind, combining solar and battery becomes more appealing since you receive the same return on investment as well as the added advantage of having battery backup during power interruptions.
Frequently Asked Questions
Most frequent questions and answers
NEM 3.0: Will it be invalidated?
Three environmental organizations filed a complaint on May 4, 2023, alleging that the California Public Utilities Commission (CPUC) violated the law when it approved NEM 3.0. The complaint contends that the CPUC violated legislative directives to guarantee that the new solar billing policy ensures that solar adoption “continues to grow sustainably” and failed to take into account all of the advantages of rooftop solar.
The case requests that the California Court of Appeals reverse the CPUC’s NEM 3.0 ruling and create a brand-new set of guidelines.
An “application for rehearing” will be taken under consideration by the CPUC at its meeting in June, according to information from the LA Times.
Are LADWP customers affected by NEM 3.0?
The Los Angeles Department of Water and Power does not provide power to households, thus NEM 3.0 does not apply to them. NEM 3.0 solar billing will only be available to consumers of California’s three investor-owned utilities, PG&E, SCE, and SDG&E, as of April 2023.
Municipal utilities like LADWP may eventually adopt regulations resembling NEM 3.0, though.
After filing my interconnection application, can I switch installers and still be grandfathered into NEM 2.0?
Before the system is deployed, you might be able to switch installers if you’ve submitted an interconnection application to secure your seat in NEM 2.0. However, your contractor and your utility supplier also play a role in this.
Customers of PG&E are free to switch contractors, but doing so will require your current contractor to voluntarily hand up the task and your login credentials for the application site so the new contractor may take over and file the final construction permit.
SCE customers may also change contractors as long as the first contractor gives written consent to do so.
Without withdrawing the interconnection application, which at this moment would result in losing NEM 2.0 status, SDG&E customers are not permitted to change contractors.
is nem 3.0 retroactive?
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How does NEM 3.0 affect solar?
Residential solar power export rates drop by around 75% with NEM 3.0, from a typical of 30 cents every kWh to 8 cents per kWh. Under NEM 3.0, lower costs for export will lengthen the payback time for solar owners and reduce total savings. This significantly raises the value of combining solar power with battery storage. The return on investment for solar plus battery under the new tariff structure is comparable to that for solar alone, but with the advantages and flexibility of having an alternate source of electricity.
It’s important to note that even with NEM 3.0 solar billing, household solar systems will still result in significant energy cost reductions.
How will economically disadvantaged Californians be affected by NEM 3.0?
According to the new net metering regulations, single family homeowners living in underserved areas and on tribal territory are categorized as “low-income” and qualify for an extra export rate adder. As a result, they will be likely to take advantage of higher savings depending on solar export rates. Low-income residential clients may also qualify for a discount of 50% off the $16 set monthly “electrification rates” fees.