California’s net energy metering (NEM) policy has recently undergone some significant changes. After much debate, the California Public Utilities Commission voted to revise its net metering policy in December 2022. The changes went into effect on April 15, 2023, and will apply to all new solar customers from here on out.
The new policy—referred to as NEM 3.0—aims to modernize California’s electric grid and improve its reliability. Keep reading to find out what’s changing with net metering in California and what NEM 3.0 means for your rooftop solar installation plans.
NEM 2.0 vs NEM 3.0: What’s Changing?
California has offered net metering for years, and the policy has been revised several times in the past. The previous version of net metering in California was called NEM 2.0. Here’s what’s changing from NEM 2.0 to NEM 3.0.
Shift from Net Metering to Net Billing
The biggest change to California’s net metering policy is a shift from net metering to net billing. Under a traditional net metering structure (like NEM 2.0) solar customers receive the full retail rate for the electricity they send to the grid. With net billing, export rates are lower. Solar NEM 3.0 uses an “avoided cost calculator” to calculate export rates. The avoided cost calculator determines how much money the utility would save in any given hour if privately owned solar panels were to produce electricity for it.
Export Rates Vary By the Hour
Thanks to the avoided cost calculator, NEM 3.0 solar export rates will vary by month, day, and hour. During peak-demand periods, when the grid is under strain, rates will be higher than they are during off-peak hours when the grid doesn’t need help meeting demand.
Solar Plus Battery Storage Is More Valuable than Solar Alone
NEM 3.0 is pushing for more solar plus battery installations. Peak solar production doesn’t align with peak electricity demand times in California, which means solar-only systems don’t do much to help the grid. Solar plus storage systems, on the other hand, can store excess power during peak production hours and deploy it when it’s needed most. Solar NEM 3.0 export rates are highest in the evening when generation is low and demand is high to incentives solar batteries.
Solar Is Still Worth It in California!
A lot is changing with the NEM 3.0 update in California, but the benefits of solar are not going away, especially for solar plus battery systems. If you pair your solar panels with battery storage, you will be able to store the excess power your solar panels generate so you can use it yourself instead of exporting it to the grid. Under NEM 3.0, solar plus battery systems are expected to have a faster payback period than solar panels alone, making battery storage a sound investment.
Export rates are lower with NEM 3.0 than they were with NEM 2.0, but home solar is still the most affordable way to power your home. And, while electric bill savings are an important consideration for your solar installation, they’re not the only benefit of solar panels.
Additional benefits of a solar panel and battery installation include:
- Backup power during outages
- Increased home value
- Less reliance on the grid
- Lower carbon emissions
- Affordable at-home EV charging
Find Out If Solar Makes Sense for Your Home
The benefits of solar remain strong in California. If you’re ready to add solar panels and batteries to your home, call Element Electric. We are a locally owned and operated solar installer in Dixon, CA and we can help you maximize your solar savings with NEM 3.0. Our team takes quality seriously and we install top-rated products including REC solar panels, Enphase batteries, and Tesla wall chargers. With one of our custom solar designs, your house will look sleek, modern, and environmentally friendly while you reap the benefits of at-home power generation.
