If you’re a resident of California and have installed solar panels, you’re probably familiar with the term “Net Energy Metering” or NEM. It is a billing system that credits solar-powered homeowners for excess energy they generate and send back to the grid. Under this system, homeowners can offset their energy bills by utilizing credits earned from selling excess electricity to the utility company.
Since California implemented NEM 2.0 in 2016, homeowners have enjoyed numerous benefits, including incentives, tax credits, and bill credits. However, the sunset period for NEM 2.0 is here, and the program will be replaced with NEM 3.0 on April 13, 2023. In this blog, we’ll discuss NEM and what will occur as NEM 2.0 transitions to NEM 3.0. We’ll also demonstrate how homeowners can retain current benefits for the next 20 years.
Lock-In Your Solar Benefits Now Before Your Savings Drop
The golden days of California’s generous solar incentives are coming to an end. According to a recent decision by the California Public Utilities Commission, the state’s net energy metering program will soon undergo changes that reduce the financial benefits of going solar. The new rules, set to take effect on April 13, 2023, will lower the rates utility companies pay homeowners with solar panels for their excess electricity. For Californians who have been pondering the idea of switching to solar to save money on energy bills, the time to act is now if they want to lock in the most significant financial incentives before they diminish. Although the solar industry in California is likely to evolve in the coming years, getting solar panels installed sooner than later can still offer considerable long-term cost savings.
What is NEM?
Net energy metering, commonly known as NEM, is a billing system that credits solar-powered homeowners for excess energy they generate and send back to the grid. Under this system, the utility company offers credits to the homeowner for the excess electricity produced by solar panels. This allows homeowners to offset their future electricity bills by utilizing the credits earned from selling their electricity back to the grid.
What is NEM 2.0?
NEM 2.0 is the current program that has been in place since 2017. It allows homeowners to avoid transmission and distribution (T&D) fees, enjoy the benefit of the retail rate, and have the option to export excess energy to the grid. In addition to these benefits, homeowners receive a bill credit for each kilowatt of excess electricity generated each month. This bill credit can be used to offset future utility bills.
What Changes Will Occur in NEM 3.0?
When NEM 2.0 ends, NEM 3.0 will take effect. Under this new system, utility companies will only credit homeowners for excess electricity at the wholesale rate, which is significantly less than the current retail rate. This means that homeowners will earn less for every kilowatt of excess electricity they produce. Another significant change is the introduction of the grid access charge, which will increase over time. This will ultimately increase the amount homeowners must pay for grid access while also reducing their bill credit.
What Can Homeowners Do to Keep Their Benefits?
California’s new NEM 3.0 policy brings significant changes to the state’s solar industry. While current solar owners can keep their existing net metering rates, new solar adopters will earn 75% less for the excess electricity they export to the grid. This reduction in credits will increase payback periods for solar and battery systems, making the economic case for solar-plus-storage less compelling relative to solar alone. However, homeowners looking to lock in more favorable rates still have a window of opportunity—by submitting interconnection applications for new solar systems before April 2023, Californians can secure NEM 2.0 rates and potentially improve the return-on-investment of their clean energy investments. You must install and receive permission to operate within three years of your interconnection application submission to be grandfathered into NEM 2.0.
What Are The Benefits of NEM 3.0?
Homeowners who sign up for NEM 3.0 can continue to receive the same benefits they have enjoyed under the current NEM 2.0 program. This enables them to offset their electricity bills and earn credits for excess electricity. It also provides them with long-term protection and stability, avoiding any unpredictable changes in the future. By retaining the retail rate, homeowners will continue to receive bill credits that will cover future charges on their electricity bills. Additionally, the program offers an option to utilize an energy storage device system.
Overall, NEM 3.0 signals a gradual shift away from incentivizing distributed solar growth towards a more balanced approach that also recognizes the costs solar imposes on utilities and non-solar customers.
Act Now! Contact Sunlogix Energy Today!
Homeowners who have installed solar panels and enjoy the benefits of NEM 2.0 should be aware of the upcoming changes to NEM 3.0. By signing up for the NEM successor tariff system, homeowners can continue to earn credits at a retail rate and lock in their savings for the next 20 years. This program ensures homeowners remain happy and satisfied with their solar investment, saving them time and money in the long run. By investing in solar energy and taking advantage of NEM 3.0, homeowners can improve their homes’ resale value, save on utility bills, and make a significant impact on the environment. Contact Sunlogix Energy today at (760) 209-5041 for help with your Interconnection Application! We proudly serve the following areas: Palm Desert, Palm Springs, Indian Wells, Riverside, Temecula, Moreno Valley, San Bernardino, Imperial, and Tucson, AZ!