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NEM 3.0 Goes Live in California: What It Means for EPCs and Homeowners?

Chase OliverApril 13, 2023 1168 5

NEM 3.0 key takeaways:

  • Current solar owners will remain under their existing net metering policy

  • Solar owners under NEM 3.0 will earn around 75% less for the excess electricity they push onto the grid

  • Under NEM 3.0, the payback period for solar and battery storage systems will be roughly equal to the payback period for solar-only systems

  • Californians can be grandfathered into NEM 2.0 by submitting an Interconnection Application for their solar system by April 13, 2023

 

NEM 3.0 is a new version of the net energy metering policy approved by the CPUC on December 15, 2022. It applies to utility customers in the territories of California’s three major investor-owned utilities:

Pacific Gas & Electric (PG&E)

Southern California Edison (SCE)

San Diego Gas & Electric (SDG&E)

It’s important to note that NEM 3.0 is not retroactive, so solar systems installed under NEM 1 or NEM 2 will remain under their current policy.

 

5 things to know about NEM 3.0

  1. It features a major reduction in the net metering value of solar electricity.

  2. There are no new charges or fees, commonly known as “solar taxes.”

  3. Pairing solar with battery storage will be more beneficial under NEM 3.0

  4. Solar customers that submit an interconnection application before April 13, 2023, can be grandfathered into NEM 2.0 for 20 years

  5. Solar owners that are grandfathered into NEM 2.0 will be able to add battery storage later and remain on NEM 2.0

Is NEM 3.0 retroactive?

No, NEM 3.0 is not retroactive. This new net metering policy will only apply to homeowners that submit their solar interconnection applications after April 13, 2023. Homeowners that submit a complete interconnection application prior to NEM 3.0 taking effect will be grandfathered into NEM 2.0 for 20 years.

Has NEM 3.0 been approved?

Yes, on December 15, 2022, the California Public Utilities Commission (CPUC) voted unanimously to approve NEM 3.0. The new policy will take effect on April 13, 2023 following a 120-day sunset period for NEM 2.0. Utility customers can still be grandfathered into NEM 2.0 during this period by submitting a complete interconnection application.

What does NEM 3.0 mean for solar?

NEM 3.0 reduces the export rate for residential solar electricity by around 75%, from an average of 30 cents per kWh to 8 cents per kWh. Lower export prices will increase the payback period for solar owners under NEM 3.0 and decrease the overall savings.

This effectively increases the value of pairing battery storage with solar. Under the new rate structure, the return on investment for solar and battery is similar to that of solar only, but with the added benefits and independence of having a backup power source.

 

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