Net Energy Metering, or NEM, is changing soon. The time for Californians to act is now. If you want to enjoy energy at reasonable rates, then you can wait no longer. You may not be familiar with Net Energy Metering in California, so before talking about why you need to act now, let’s bring you up to speed. (Want to see the changes, click here)
What is Net Energy Metering?
Net energy metering (also known as net metering or NEM) is the foundation for solar incentives in California. It was created as a way of using the utility grid to store energy generated by solar panel systems for use at a later time.
Homeowners with solar power can measure the energy they generate with an energy meter and compare it to the energy they consume. The sum, or net, of what is left decides how much they have to pay on the next bill to their utility company.
You generate credits toward your bill if you produce more electricity than you consume. Some utilities apply this to your account, while others issue payments. Most utility companies now place you on a 12-month billing cycle and “settle up” the bill at the end of each year.
When your solar panels generate more electricity than you use, the extra energy is sent back to the grid, running your electric meter backward. With a properly designed solar energy system, you will produce enough energy for your home all year long. However, you will produce more electricity in the summer and less in the winter.
The regulation details for repayment are set by California State Assembly Bill 920, allowing utilities to make payments to NEM customers who generate more electricity than they use over the entire year. This payment, known as your Net Surplus Compensation (NSC), is calculated by the utility company over your 12-month billing cycle.
They use a 12-month average of market rates for energy, which is usually about 2¢ to 4¢ per kilowatt-hour (kWh). They use this average rate for what you have consumed and subtract your solar credits or the energy you produced that year multiplied by its monetary value.
Essentially, you are using the utility grid as a battery to support your solar panel system and deliver energy when you are not generating, such as at night. Your solar panels are now the actual energy provider for your home.
NEM in 2022
few changes throughout the years. We currently are in the second version or NEM 2.0. This current regulation standard has been favorable to solar energy owners and producers. The passage of California AB 327 in 2013 set NEM 2.0’s guidelines, which went into effect at the end of 2016. The legislation safeguarded homeowners’ solar investments, keeping utilities from deviously changing rates and fees to hinder or steal credits from homeowners generating solar energy. The state was the one making the rules and determinations now, not utility companies.
Recently, the California Public Utility Commission formally opened its NEM 3.0. They lobbied for heavily, which will change the rules for net metering tariffs for California solar energy system owners. Their claim is, “it’s not fair for non-solar customers to be subsidizing solar for the minority that does have solar.”
When, in actuality, they are not happy that residents who generate solar power pay very little when compared to those who don’t have solar panels. Over the years, the net metering program has enabled solar homeowners to generate more clean energy than they need, just making their electric bills cheaper and cheaper.
The for-profit utility companies did not like the loss in revenue. Now you see the problem, especially when utilities can add fees and increase rates pretty much on a whim.
Why wouldn’t every Californian resident switch to solar with incentives like net metering? This is what keeps utility CEOs and shareholders up at night, especially with rates on the continual rise.
When Will NEM Change?
The latest estimate is that the final decision will be made in January 2022. Implementing these changes is expected to happen within 6 months of that final decision. NEM 3.0 is also likely to significantly impact solar projects’ economics across California.
While the final rules for this version of net energy metering are yet to be determined, the inevitable outcome is that the value of solar will probably go down. While we are fighting to stop these changes, we don’t have the political power and resources of the vast electricity corporations.
How to avoid NEM changes in 2022?
If you don’t have it already, the simple answer is to install a solar energy system now, and get in the NEM program before the change.
Anyone that starts installing their solar power system under the current system, NEM 2.0, is locked into its rules and regulations for 20 years. That means if you go solar now, the new and worse NEM 3.0 will not affect you. They will grandfather in your system and account.
This is the best protection for solar investments in all of California. While this new NEM system hinders solar development, you will enjoy your energy independence and little to no energy bills for at least two decades, guaranteed.
We still don’t know how long NEM 2.0 program standards will last. Protect your budget and energy future by installing solar on your business or property. Like Option One Solar, Dependable solar experts Option One Solar, are here to help you go solar and get NEM 2.0 today.