residential solar panels

How Does Net Energy Metering (NEM 3.0) Work In California?

houseJoe Mendez Mar 10, 2023

N.E.M. 3.0. is the new Net Energy Metering Program in California which was passed by the California Public Utilities Commission (CPUC) on December 15, 2022, and will be fully in place by April 14, 2023.

Key NEM 3.0 vs NEM 2.0. Takeaways

  • Export rates are now based on what your rate is worth to the grid at a given time (value changes based on time and day) as opposed to retail rates.
  • On average, there will be about a 75% reduction in export rates to the average customer
  • Savings are still strong in California, but not as good with NEM 2.0.
  • If you already have solar before the deadline of April 14, 2023, you will still be able to be grandfathered in NEM if your solar company submits the proper paperwork

Contact us Now to Discuss Nem 3.0. Vs 2.0.

What is Net Energy Metering?

NEM (Net Energy Metering) is a program in California that incentivizes homeowners to install solar panels while staying connected to the traditional power grid. With this program, homeowners are offered credits for extra energy generated from their panels as a benefit of going solar. This billing structure helps customers save on electricity costs when the sun is not at full power.

What are the Changes in Net Energy Metering from 2.0 to 3.0

Under NEM 2.0, customers were credited for excess energy generated at the same rate they were for electricity from the grid. With NEM 3.0, customers will receive credits based on the time of day/week/month they generate the extra energy. So customers will get more credits for energy generated during peak hours.

One of the key changes is the capacity limit for eligible systems which has increased from 1 MW to 5 MW, allowing larger industrial commercial customers to participate.

A push for pairing solar and battery

The big change with NEM 3.0 is that customers who are grandfathered in with NEM 2.0 can keep their NEM 2.0 status by filling out an interconnection application before April 14, 2023, to keep their NEM 2.0 status.

If you have a solar system or install one before the April 14 deadline in California, you won't be moved from 2.0. to 3.0.

Contact us for more information about how to stay grandfathered into 2.0 for the next 20 years. Net metering is the solution to dealing with excess solar electricity without paying the price for it.

What is the NEM 3.0 timeline?

The plan was approved on December 15, 2022, but officially goes into place on April 14, 2023. If you have solar panels installed with registered documentation by this date, you will follow NEM 2.0. rules. If you miss the deadline, you will not be grandfathered in and will be under NEM 3.0 instead.

For solar customers under NEM 2.0 rules, we highly recommend taking advantage of this grace period before the NEM 3.0 deadline.

Has NEM 3.0 been approved?

Yes, NEM 3.0 has been approved by the California Public Utilities Commission. The approval of NEM 3.0 was finalized on December 15, 2022. To be grandfathered into NEM 2.0 for 20 years, solar customers just need to fill out an "interconnection application". This is great news for some customers because it means you get to keep the increased solar savings for another 20 years.

NEM 3.0. Billing Process

Under NEM 3.0 plans, customers will be charged based on the time of day and day of the week they use energy. Billing statements will divide charges into two columns:

  • Generated Charges show the energy that was generated from the solar system during peak TOU times.
  • Grid Use Charges show energy consumed or delivered back to the grid during off-peak periods.

This makes it easier to track the benefits of renewable energy. Customers enrolled in NEM 3.0 plans can save money by generating power during peak periods and using stored power during off-peak periods.

NEM 2.0 Existing Customers

As long as NEM 2.0 customers get officially registered with NEM 2.0 program, they will be able to add battery storage later. This is true even if your solar system is under construction as of April 14, 2023. As long as your solar energy system will be completed within 3 years of the deadline, and you have filled out the appropriate paperwork, you will still qualify.

The solar power industry has recognized that the downfall of renewable energy is that you can't produce solar energy when the sun is down. For this reason, storing excess energy is a brilliant way to keep things running smoothly. Pairing battery storage with renewable energy is making it more possible for utility customers to support "going green."

Existing customers under NEM 2.0 have an opportunity to get credit for surplus energy. This is the same deal as a solar customer under NEM 3.0 would get, but the savings won't be as much as existing customers will receive.

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NEM 3.0 Solar & Battery Storage

As a result of more people using solar systems, there has been an increase in excess solar production. With net metering, you can stack solar savings on top of solar savings by receiving credit when you send excess power back to the electric grid.

NEM 3.0 isn't introducing net metering, but you will see a difference in your electric bills. Although you will always be saving more with a solar energy system in general, the amount of additional savings from these battery storage rebates and credits is shifting.

If you are a customer under 2.0, be sure to submit your interconnection application ASAP so you can qualify before the deadline of April 14, 2023.

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