What is NEM 3.0 and How Will it Impact California Solar Owners?

What is NEM 3.0 and How Will it Impact California Solar Owners?

Final Decision on NEM 3.0: The California Public Utilities Commission (CPUC) overwhelmingly approved NEM 3.0. Customers of PG&E, SCE, and SDG&E with solar systems will receive an average of 8 cents per kWh for extra power they push onto the grid under NEM 3.0. This is nearly 75% cheaper than the average export rate of 30 cents per kWh under NEM 2.0. IOU clients can be grandfathered into NEM 2.0 until April 13, 2023, by filing a complete interconnection application for a new solar system.

Even if the federal solar tax credit has been reinstated at 30% until 2032, California residents have lots of reasons to go solar sooner rather than later.

The California Public Utilities Commission (CPUC) passed NEM 3.0, a new net metering policy that will eventually limit monthly energy bill savings for new solar owners, on December 15, 2022.

Key insights from NEM 3.0:

California residents that submit an Interconnection Application for their solar system by April 13, 2023 will be grandfathered into NEM 2.0.

Current solar owners will maintain their current net metering policies.

Under NEM 3.0, solar owners will earn approximately 75% less for the extra electricity they send to the grid.

The payback period for solar and battery storage systems will be about equal to the payback period for solar only installations under NEM 3.0.

What precisely is Net Energy Metering (NEM)?

Net Energy Metering is a billing methodology used by utilities and solar homeowners. Solar owners who use net metering receive credit for the excess electricity they send to the grid when the sun shines. This credit is used to offset the cost of off-grid electricity when the sun isn’t shining.

Historically, net metering policies have had a one-to-one offset. This means that the cost of a kWh of power pushed onto the system was the same as the cost of a kWh withdrawn off the grid.

Solar owners with systems designed to produce the same amount of electricity as the home consumes, essentially replace their utility electricity bill with a lower monthly payment on their solar equipment. This results in energy cost reductions in the tens — or hundreds — of thousands of dollars over the 25-year warranty period of a solar system.