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Don’t lose out on the grandfathered rates that Net Metering 2.0 (NEM 2.0) currently provides solar homeowners. The Net Metering 3.0 (NEM 3.0) policy has passed and is taking effect in April, 2023. To provide further clarification, we’ll present a quick overview of Net Energy Metering.
What is Net Energy Metering (NEM) and why does this matter?
The NEM program was established in 1996 to incentivize utility customers who generated their own solar energy by offering financial credit on their electric bills for any surplus energy fed back to their utility. This was in addition to helping their community by adding renewable electricity to the utility power grid that everyone relies upon.
When NEM 2.0 went into effect, it became required for all solar energy customers to switch to Time of Use (TOU) rates. These rates altered the price the utility company had to pay for surplus electricity based on time of day. While higher rates could be charged during times of peak demand, such as in the late afternoons, renewable energy generated during off-peak times was reimbursed at lower rates. Under NEM 2.0, you can get back almost as much as the retail rate but there’s a small amount deducted to help pay for the power grid.
What impact will NEM 3.0 have on NEM 1.0 and NEM 2.0 customers?
For customers who are currently on NEM 1.0 or NEM 2.0, there will be no changes to your service agreements. All the benefits of NEM 1.0 and NEM 2.0 have been grandfathered in for existing customers, protecting you from any revisions in NEM 3.0 for the full 20 years from the date of when you received Permission to Operate (PTO) from your utility after your solar installation.
Can homeowners still apply for NEM 2.0?
A completed Interconnection Application package will need to be submitted to the utility prior to 5pm PST April 13, 2023, in order to fall under NEM 2.0 rates and regulations. Keep in mind that it takes some time to prepare an application properly, so you will want to connect with your Fresno and Bakersfield energy provider, SunPower by Quality Home Services as early as possible before the deadline, we know what requirements are needed for you to be eligible for NEM 2.0. You can be rest assured knowing that they will submit the necessary documentation on your behalf.
How will NEM 3.0 be different?
NEM 3.0, which was finalized on December 15, 2022, will include several changes from previous net metering plans, but there are no fixed charges or other fees specifically charged to NEM customers. However, there will be changes that impact the amount that homeowners with solar will be able to recuperate when selling excess energy back to the utility grid.
With NEM 3.0, the value of the credits for net exports will be tied to the state's Avoided Cost Calculator (ACC). The ACC is a set of formulas that attempts to estimate the value of solar generation for the entire electrical grid, as well as other distributed energy resources, by modeling the utility’s avoided cost for not having to generate or procure a megawatt-hour of energy.
The anticipated result will be an average net export rate of approximately 7.5 cents/kWh across all three utilities statewide by 2023 for any solar electricity that you do not consume in your home and that is “exported” back onto the grid.
Another change with NEM 3.0 will be applied to the netting period -- the time period over which the utilities measure the clean energy being imported or exported. In general, longer netting periods have been better for solar power customers because any consumption can be offset with production. NEM 3.0 will instead measure energy using instantaneous netting, which means interval netting approximately every 15 minutes. This will lead to more NEM customers’ electricity registering as exports, now valued at the new, lower ACC value. This means that customers who pair their solar with electric appliances, whole-home energy management and/or battery storage – to capture more of the solar benefit by matching it to electricity consumption patterns or storing it in a battery system - can save more under this new program.
In addition, NEM 3.0 offers different provisions and considerations for low-income homeowners and multifamily dwellings. Specifically, low-income homeowners who are on CARE/FERA rates, homeowners in single family homes that live in disadvantaged communities, and residential customers in California Indian Country are eligible for higher export rate credits.
What’s the key to getting the most out of solar under NEM 3.0? Solar + storage.
In short, the timing of your clean energy exports is the biggest determining factor in how they will be valued. The most valuable export rates and retail rates will be in the evening. This makes owning a solar battery very beneficial. During the night, your solar battery can kick on and power your home to avoid high retail rates, while sending any leftover energy back to the grid for maximum profit.
Installing a solar system is still a smart financial move for most homeowners. It’s a proven solution for minimizing electricity costs – and keeping them stable. And when integrated with a battery backup system, it becomes an energy resource you can count on, even when the electrical grid goes offline. On top of that, the possibility of new funding for the Self Generation Incentive Program (SGIP), which provides battery storage rebates for SCE, PG&E, SDG&E and SoCalGas customers, could further incentivize homeowners to pair battery storage with their solar system.
