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Understanding the Net Billing Tariff (NEM3) in California

Logan Vierstra • September 30, 2024

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The most important question is: Can solar still save homeowners money? 

(Spoiler Alert: The short answer is YES. You're in the right place to find out how.)


Contents:

  1. What changed
  2. What to do about it
  3. Main Takeaways


The introduction of the NBT marks a significant shift in California's approach to solar energy. It's crucial for homeowners to understand these changes to make informed decisions about solar installations and energy usage. 


Read Time: 3 Min

Last August we posted about the then recent changes to Net Energy Metering in California. At the time we knew it was going to have a major impact, but no one knew exactly how it was going to affect the bottom line. Well it’s been over a year since the new program took effect and we have a solid understanding of what the new solar landscape looks like. 


What changed?
The Net Billing Tariff (NBT) was established by the California Public Utilities Commission (CPUC) on December 15, 2022, as a successor to the Net Energy Metering (NEM2) program. The NBT applies to customers who submit an interconnection application on or after April 15, 2023.


The key change with the NBT is that customers no longer receive retail credit for solar energy exports put into the grid. Until April 2023, PG&E customers were able to earn a dollar for dollar credit for energy they sent back to the grid. Now instead, compensation for excess generation exported to the electric grid is applied to a customer's bill at a rate reflecting the value of this generation to the grid at that specific time. The value of the export compensation, termed "Energy Export Credits", is usually lower than the retail rate, but can rise above the retail rate on late summer evenings. If this is confusing to you, don’t worry. We are here to help you make sense of it in plain terms. Click here to find a time to chat with one of our solar experts and we will make sure you understand how this actually affects you. 


So I get less credit for the energy my system produces; what’s the solution? 
To maximize bill savings under the NBT, homeowners are advised to install battery storage along with their generation, allowing them to use energy during low value hours and export stored energy during high-value hours. With the combination of production, storage, and smart battery technology that can be programmed to earn you the highest credits available, we're able to save most of our homeowners around $100k on electricity over the life of their systems.


However, it's more important than ever to have a properly sized and customized solar system. Too big or too small, wrong type of battery, not planning for the future, these are all ways you could squander a lot of the savings you would have otherwise been able to take advantage of. Take a look at some of our reviews to see for yourself that this is exactly what we excel in helping homeowners with.


Main Takeaways

  • Batteries are now necessary
  • Doing nothing is still the worst choice. Solar can save you in the neighborhood of 6 figures over the life of your system. 
  • Proper customization is more important than ever
  • Call 916-713-7950 or click here to request a no obligation consultation.


To learn about how to pick the best solar company check out this blog post.


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Let's Make Sense of Nem 3.0

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.
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