What Is NEM 3.0? How Will It Impact California Solar Owners?

Californians have every reason to get solar energy, even with the federal tax credit for solar at 30% through 2032.

California Public Utilities Commission has proposed Net Energy Metering 3.0. It would drastically alter the utility bills, rates, and charges for solar homeowners if approved. It will also reduce monthly energy bill savings.

We will discuss how Net Metering works, the proposed changes, the utility reasoning, and the next steps for NEM 3.0.

What’s Net Energy Metering?

Net energy metering describes the structure of utility bill for homeowners with solar power. The utility will subtract energy charges from the grid and send excess solar energy back to the grid. This usually happens over one year.

The excess energy generated by a customer’s sun-powered solar system is returned to the grid if it produces more energy than the home uses (on a sunny day). The homeowner earns the excess energy credits. This is offset by a customer who pulls energy from the grid and is charged for that energy.

Customers who produce more than they consume and still have credit at the end of year will be paid wholesale by the utility for the credits. Customers who consume more energy than they produce will be paid by the utility at the year’s close.

Net metering can be beneficial as solar owners can use credits from more-producing months to offset higher energy draw months.

What’s NEM 3.0?

The CPUC has proposed NEM 3.0, a new version for net energy metering. Three areas of change are highlighted in the NEM 3.0 proposal:

  • Export value of solar energy
  • Solar customers need to pay the required rates
  • Solar fees

The solar energy export value is the price a customer pays for the power they send back to the grid. All customers would be charged solar-specific rates under the NEM 3.0 proposal. This would result in an additional monthly charge from each utility.

  • PG&E: $20.66/month
  • SCE: $12.02/month
  • SDG&E: $24.10/month

The utilities propose a solar fee based on system size in kW.

  • PG&E: $10.93/kW
  • SCE: $7.39/kW
  • SDG&E: $11.09/kW

If NEM.30 is approved, these charges will be settled monthly.

The Utilities’ View

Utilities are responsible for providing affordable, reliable, and safe energy to all-electric grid users. They are concerned about the possibility of cost shifts between solar’s and non-solar customers, including low-income customers who may not be financially able to adopt distributed energy resources such as onsite solar or energy storage.

Utility companies also offer incentives to customers to combine storage and their home solar systems.

According to their proposal NEM 3.0 “provides storage incentives through non-tiered costs based TOU rates, and ensures customers pay the costs incurred in serving them through a customer fee.”

This means that customers with a battery storage system can avoid the higher rates of pulling power from the grid at night when Time-Of-Use rates (TOU) are higher.

When will NEM 3.0 take effect?

These NEM 3.0 changes should be understood as a suggestion at this point. NEM 3.0 will be effective March 2023, as of August 19, 2022. This gives Californians plenty of time to get solar installed and grandfathered into NEM 2.0.

NEM 3.0 timeline will look like this:

  • The California Public Utilities Commission released the draft proposal on September 29, 2022
  • The public has a minimum of 30 days to comment on the release
  • The CPUC will schedule a November or December 2022 vote
  • After the vote, NEM 2.0 has a grandfathering period of 120 days
  • NEM 3.0 will take effect in March 2023

Based on this schedule, Californians would have to file interconnection applications to be grandfathered into NEM 2.0 by March 2023.

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