(Updated 12/15/2022, New NEM 3.0 voted and passed, we summarized the latest updates with a few updates from the revised proposal)
(Updated 11/11/2022, New NEM 3.0 proposed decision is scheduled to vote on Dec 15, 2022; we summarized the updates from the latest NEM 3.0 PD)
(10/09/22 Update – The information provided on this page has been provided by CALSSA. Since NEM 3 is still being finalized, all information is subject to change)
(06/05/22 Update – The information provided on this page has been provided by CALSSA. Since NEM 3 is still being finalized, all information is subject to change)
California Utility Companies Are Changing The NEM(Net Energy Metering)!
California Net Metering 3.0 Facts:
- When you get solar for your home, any extra energy you generate is sent back through the power grid and the utility company gives your credit. This credit pays for the energy you use at night. This is called NEM or Net Energy Metering.
- If you purchase a home solar energy system before mid-January 2022, you will be guaranteed 20 years of the NEM 2 grandfathered program. That means you’ll get more credit for your energy without extra fees.
- If you purchase solar after January 2022, you will still be eligible for the NEM 2 grandfathered program. It won’t be guaranteed for 20 years, but it will be long enough to reach your payback period.
- If you purchase solar after April 2022, you will start on NEM 2 for a set period of years, but you will have to pay extra solar fees each month.
- If you purchase solar after August 2022 you will be stuck with NEM 3, which will give you lower credit for your energy buyback and you will have to pay additional solar fees every month!
How Are California Utilities Changing Solar Power Systems?
Soon, the rules for all new solar owners will change. Last year, the California Public Utilities Commission (CPUC) started a new proceeding to change the rules for everyone that uses solar energy. California utilities have proposed new monthly fees of around $75 per month for any new residential customers just to use solar energy. On top of that, they want to reduce the value of NEM credits by 55%-80%.
The California Solar + Storage Association (CALSSA), a Solar advocate entity that fights for our rights in CA, expects these monthly solar fees to actually be much smaller than what was proposed by the utility companies, but they project the overall outcome to be a reduction in the value of NEM credits. This is what NEM 3 will be for any solar customers after August 2022.
More Updates on California NEM:
Net Zero & The Importance of Solar Panel System Size
How To Claim The Solar Tax Credit – IRS Form 5695
Can You Avoid These Changes To NEM?
The easiest way to avoid these changes is to purchase solar systems before the end of 2021 with the grandfathered program.
The solar market will change drastically in the next few years, and you should try to lock in the great incentives we currently have available to us.
If you decide to purchase a residential solar energy system after August 2022, you will be stuck with NEM 3 and whatever charges might come with it.
Even new commercial and agricultural solar customers will be subject to these new rules, which means they might be subject to monthly fees as high as $3,600 for a 250 kW system.
Get a quick energy audit to see if you are qualified for NEM 2.0 of your home solar:
History Of Net Energy Metering
Net Metering started in California in 1996, allowing solar customers to get credits from utility companies for the electricity and then send it back to the grid. When a home solar energy system produces more energy than the house is using, the extra electricity flows onto the power grid and is consumed by neighboring customers. This way everyone can benefit from solar energy!
Back when it started, net metering provided a one-to-one credit. A kWh that was exported was worth one kWh back from the grid.
In 2016, the CPUC made revisions to net metering. With NEM 2, customers are charged “non-bypassable charges” or NCBS on all exported energy.
These additional charges were meant to help pay for low-income utility bill assistance, energy efficiency programs, and wildfire mitigation.
In reality, they just improved the profit margins for these investor-owned utility companies by shifting costs to solar energy customers.
In NEM 2, solar customers sell power to the utility for approximately 2¢ less than they are actually worth.
Now, the proposed changes in NEM 3 will be worth up to 80% less than that! From the outside, this seems like simple money grabs from greedy investor-owned companies.
Most likely, there will be a buffer period of a couple of months after the decision is final. August 2022 is the most probable cutoff date for NEM 2.0.
If you have been interested in solar for your home, the time to act is now!
Recovering your investment may take much longer if you make that investment after next year. Also, read our article to learn more about the Top 10 Benefits of Solar.
Solar has proven to be cheaper than electricity bills. If you can afford your bills, you can definitely afford a brand new solar energy system.
There is no reason to wait. Give us a call and get started today!