Starting April 2023, the state of California will be implementing a new version of the net energy metering (NEM) program, known as NEM 3.0. This new law will have a significant impact on new solar purchases in California. On December 15th, the California Public Utilities Commission (CPUC), voted unanimously to approve this new version of the NEM program. In this article we will cover the NEM program, what is changing with the newest version of NEM, and provide some advice for people looking into going solar.
What is NEM and How Does it Work?
NEM is a program that allows customers with solar panels to receive credits on their utility bills in exchange for the excess energy they generate and feed back into the electric grid. These credits can then be used to offset the cost of the energy they consume from the grid, especially during times when their solar panels are not generating enough energy, such as at night or Winter months.
The current NEM 2.0 program has been in place since 2017. It has been super popular with solar customers, as it helps them save a good amount of money on their energy bills through excess energy credits. Because of its benefits to customers, the NEM program, and specifically NEM 2.0, has been a crucial part of the continued growth of renewable energy in California. However, with the increasing number of solar panels being installed, CPUC and the state have decided to update the program with the goal to continue to serve the needs of customers and the electricity grid. Let’s dive a little deeper into the new version.
What is Changing with NEM 3.0?
Under NEM 3.0, new solar customers will no longer receive full retail credit for the excess energy they generate and feed back into the grid. Instead, they will receive a lower “time-of-use” credit based on the time of day when the energy is fed into the grid. This means that customers receive a higher credit for excess energy generated during times when the demand for electricity is high, such as a hot afternoon, and a lower credit for energy generated during times when demand is low, such as night or early morning. Overall, the credits earned for excess energy are expected to be about 75% less under NEM 3.0 than they were under NEM 2.0.
This change is designed to encourage customers to generate and feed energy back into the grid during times when it is most needed and to reduce the strain on the grid during times of high demand. However, it also means that new solar customers will likely receive lower credits for their excess energy, which may impact their overall savings from solar.
What Does this Mean for Customers Considering Solar?
For customers considering solar, the implementation of NEM 3.0 means that it is more important than ever to act quickly to take advantage of the current NEM 2.0 program. Customers who install solar before April 2023 will be “grandfathered” into the NEM 2.0 program and will continue to receive full retail credit for their excess energy for 20 years.
For those who wait until after April 2023, the lower credits under NEM 3.0 may impact their overall savings from solar. However, even with the changes to the NEM program, solar remains a smart investment that can help customers save money on their energy bills while also reducing their carbon footprint and supporting the growth of renewable energy. Adding a backup storage system to your solar project is another option for solar customers. A backup battery system provides solar customers more independence from utility companies.
If you are considering solar, we highly recommend speaking with a solar professional as soon as possible to understand the benefits and potential impacts of NEM 3.0 on your energy savings. At Capital City Solar, we have years of experience helping customers make the switch to solar and would be happy to answer any questions you may have; feel free to contact us.
In conclusion, NEM 3.0 represents a significant change to the net energy metering program in California.. For customers looking to install solar, it is important to act quickly to take advantage of the current NEM 2.0 program before it expires in April 2023. For those that are a few years away from considering solar, even with the new law, it will remain a smart investment that can help you save money on your energy bills while reducing your carbon footprint. While the changes to NEM may impact your overall savings, the benefits of solar are still substantial and should not be overlooked.