August 10, 2023
NEM 3.0: A New Era for Solar in California Net energy metering (NEM) is a policy that allows solar customers to offset their electricity bills by sending excess solar power back to the grid. NEM has been a major driver of solar adoption in California, and it has helped to make the state a leader in clean energy. In December 2022, the California Public Utilities Commission (CPUC) approved NEM 3.0, a new version of the NEM program. NEM 3.0 makes some significant changes to the way that solar customers are compensated for their excess energy, and it is expected to have a major impact on the solar industry in California. What is NEM 3.0? NEM 3.0 is based on a concept called "avoided cost," which means that solar customers are compensated for the amount of energy that they save the utility. This is in contrast to NEM 2.0, which was based on a concept called "retail rate," which meant that solar customers were compensated for the amount of energy that they exported to the grid at the same rate that they paid for electricity. The avoided cost rate is lower than the retail rate, which means that solar customers will receive less compensation for their excess energy under NEM 3.0. However, NEM 3.0 also includes a number of new benefits for solar customers, such as: A 20-year grandfathering period for customers who install solar before April 15, 2023. This means that these customers will be able to keep their NEM 2.0 rates for 20 years, even after NEM 3.0 goes into effect. A new demand charge credit for solar customers with battery storage. This credit will help to offset the cost of the demand charge, which is a fee that utilities charge customers based on their peak electricity usage. A new program called the Solar Self-Generation Incentive Program (SSIG). This program will provide financial assistance to low-income customers who install solar. How will NEM 3.0 affect solar adoption in California? The impact of NEM 3.0 on solar adoption in California is still uncertain. Some experts believe that the lower compensation rates under NEM 3.0 will discourage some people from installing solar, while others believe that the new benefits under NEM 3.0, such as the 20-year grandfathering period and the demand charge credit, will offset the lower compensation rates. It is also important to note that NEM 3.0 is only one factor that will affect solar adoption in California. Other factors, such as the cost of solar panels and the availability of financing, will also play a role. Overall, NEM 3.0 is a significant change to the NEM program in California. It is too early to say what the long-term impact of NEM 3.0 will be, but it is clear that it will have a major impact on the solar industry in the state.