If you are a California homeowner considering going solar, you may have heard about the recent changes to the net energy metering policy, also known as NEM 3.0. This policy affects how much you get paid for the excess solar energy you send back to the grid, and it will take effect on April 15th, 2023.
In this post, we will explain what NEM 3.0 is, how it differs from the previous net metering policies, and why solar batteries are a smart investment for homeowners who want to maximize their solar savings under the new rules.
NEM 2.0 and the Old California Net Metering Program
Net metering is a billing mechanism that allows solar customers to receive credits for the excess electricity they generate and export to the grid. These credits can be used to offset their electricity bills when their solar panels are not producing enough power, such as at night or during cloudy days.
Under the old net metering policy, NEM 2.0, solar customers received credits at the same rate as the retail price of electricity, which is also known as one-to-one net metering. This means that for every kilowatt-hour (kWh) of solar energy you send to the grid, you get one kWh of credit that you can use later.
What is NEM 3.0 and how does it affect California solar customers?
Under NEM 3.0, which was approved by the California Public Utilities Commission (CPUC) on December 15th, 2022, solar customers will receive credits at a much lower rate than the retail price of electricity. This rate is based on the “avoided cost” of electricity, which is calculated by taking into account various factors such as wholesale prices, transmission costs, environmental benefits, and grid reliability.
According to some estimates, NEM 3.0 will reduce the value of solar credits by about 75% for customers of PG&E, SCE, and SDG&E, which are the three major utilities in California. This means that for every kWh of solar energy you send to the grid, you will only get about 0.25 kWh of credit that you can use later.
NEM 3.0 will also introduce a monthly fixed charge of $14 for SCE customers, $15 for PG&E customers, and $16 for SDG&E customers, regardless of how much electricity they use or generate. Additionally, NEM 3.0 will require all new solar customers to switch to a time-of-use (TOU) rate plan, meaning they will pay different prices for electricity depending on the time of day and season.
NEM 3.0 will only apply to new solar customers who submit their interconnection applications after April 14th, 2023. Existing solar customers and those who submit their applications before April 14th will be grandfathered into their original net metering policy for 20 years from the date their solar system is turned on.
How do solar batteries help homeowners reduce costs after NEM 3.0?
Solar batteries store excess energy produced by your solar panels throughout the day and release it when needed. They allow homeowners to use more of their own solar energy instead of relying on the grid or selling it back at a low rate.
By adding a solar battery to your solar system, you can reduce your dependence on the grid and avoid paying high electricity prices during peak hours or seasons. You can also avoid paying the monthly fixed charge and reduce your demand charges by lowering your peak usage.
Solar batteries can also provide backup power in case of a blackout or a public safety power shutoff (PSPS), which are becoming more frequent and severe in California due to wildfires and climate change.
One of the benefits of NEM 3.0 is that it adds additional funds for battery storage rebates through the Self-Generation Incentive Program (SGIP), which helps reduce the upfront cost of installing a solar battery. The SGIP offers up to $850 per kWh of battery capacity for residential customers who meet certain income or fire risk criteria.
Combining solar energy with battery storage is the key to getting the most out of solar under NEM 3.0. This combination allows you to use the energy you generate when it is most valuable while avoiding higher retail rates and lower export credits.
Additional Benefits of Installing a Solar Battery in Your Home
In addition to the additional cost savings for California residents under the new NEM 3.0 program, there are additional benefits of installing a solar backup battery system in your home or business. Here are some of them:
- You have an uninterrupted power supply during blackouts, storms, or natural disasters. Solar backup batteries can keep your essential appliances and devices running for hours or even days, depending on the size and capacity of your battery. This can protect you from losing food, water, communication, security, and comfort in an emergency situation.
- Save money on your electricity bills by using solar energy during peak rate hours. Solar backup batteries can store excess solar energy during the day and discharge it during the evening or night when electricity rates are higher. This can help you avoid paying high prices for grid electricity and lower your monthly bills.
- Reduce your carbon footprint and environmental impact by using clean and renewable energy. Solar backup batteries can help you reduce your reliance on fossil fuels and lower your greenhouse gas emissions. By using solar energy, you can also support the development of green energy sources and contribute to a more sustainable future.
- Increase the value of your property by adding a solar backup battery system. Solar backup batteries can make your home or business more attractive to potential buyers or renters who are looking for energy efficiency and reliability. According to some studies, solar homes sell faster and for more money than non-solar homes.
- Enjoy peace of mind and convenience by having a solar backup battery system. Solar backup batteries can provide you with reliable and consistent power without any maintenance or hassle. You don’t have to worry about fuel shortages, noise, pollution, or safety issues that come with traditional generators. You can also monitor and control your battery system remotely through a smartphone app or a web portal.
By adopting a new pricing structure, NEM 3.0 will encourage solar customers to use more of their own energy and reduce their reliance on the grid during peak hours. This will help lower their electricity bills and avoid potential fees or charges. Solar batteries are a key component of this strategy, as they allow solar customers to store excess energy during the day and use it when they need it most. If you are interested in installing a solar backup battery system in your home or business, contact us, and one of our clean energy experts will help you choose the best option for your needs and budget.
Frequently Asked Questions About NEM 3.0 and How It Will Affect California Residents
Q: What are the main changes in NEM 3.0 compared to NEM 2.0?
A: The main change in NEM 3.0 is that it reduces the value of the credits that solar customers receive for their excess generation. Under NEM 2.0, solar customers received credits at the same retail rate that they paid for electricity from the grid, which included generation, transmission, and distribution components. Under NEM 3.0, solar customers receive credits based on the “avoided cost” rate, which is much lower and only includes generation and some transmission components. The CPUC estimates that this will reduce the value of solar credits by about 75%. Another change in NEM 3.0 is that it introduces a one-time interconnection fee for new solar customers, ranging from $86 to $145, depending on the utility. Additionally, NEM 3.0 requires new solar customers to pay a monthly non-bypassable charge of about $8 to $10 per kilowatt (kW) of installed solar capacity. This charge covers some of the fixed costs of maintaining the grid that are otherwise paid by non-solar customers.
Q: Who is affected by NEM 3.0 and when does it start?
A: NEM 3.0 affects new solar customers who submit their interconnection applications after April 14, 2023. Existing solar customers who interconnected their systems under NEM 1.0 or NEM 2.0 are grandfathered into their original net metering policy for 20 years from the date of interconnection. This means that they will continue to receive credits at the retail rate and will not have to pay the interconnection fee or the non-bypassable charge.
Q: How will NEM 3.0 impact my solar savings and payback period?
A: NEM 3.0 will reduce the savings and increase the payback period for new solar customers compared to NEM 2.0. The exact impact will depend on several factors, such as your electricity usage pattern, your utility rate structure, your system size and orientation, and your financing option. However, according to EnergySage, an online marketplace for solar quotes, NEM 3.0 could reduce solar savings by up to 60% and increase the payback period by up to five years for new solar customers.
Q: Is there a way to avoid or minimize the impact of NEM 3.0?
A: Yes, there are two main ways to avoid or minimize the impact of NEM 3.0: go solar before April 14, 2023 or add battery storage to your solar system. If you go solar before April 14, 2023, you will be able to lock in NEM 2.0 rates for 20 years and avoid paying the interconnection fee and the non-bypassable charge. This means that you will maximize your solar savings and shorten your payback period compared to going solar after April 14, 2023. If you add battery storage to your solar system, you will be able to store your excess generation during the day and use it at night or when electricity prices are high. This way, you will reduce your reliance on the grid and increase your self-consumption of solar energy. Doing so will reduce the impact of lower net metering credits and non-bypassable charges on your bill.