Net Energy Metering is Changing

In California, Net Energy Metering (NEM) is the program that has been the driving factor behind many homeowners’ decision to install solar on their roof. One of the first questions customers have when they consider going solar is what impact the solar system will have on their utility bill. The NEM program is an integral component to answering that question.

During sunny periods, solar customers generate electricity that their system produces. Electricity that is needed in the home at that time is used by the home. If the system is producing more electricity than is being used, then the NEM program allows the customer to send electricity back to the grid and earn credits. During the night or on cloudy days, customers spend those credits when their solar system is not producing enough electricity to meet their usage. Exactly how much those credits are worth is what the California Public Utilities Commission (CPUC) is debating as it considers changes to the NEM program.

The NEM program has already changed once. NEM 2.0, as it is colloquially called, was adopted by the CPUC in January of 2016 and PG&E switched over to NEM 2.0 in December of 2016. Compared to its predecessor, NEM 2.0 was a less desirable program for solar customers. Under NEM 2.0 solar customers are required to pay a one-time interconnection fee, non-bypassable charges for each kilowatt-hour (kWh) they consume from the grid, and they are required to transfer to a time-of-use rate plan. A recent study commissioned by the CPUC “found that NEM 2.0 participants [have benefited] from the structure.” At SunWork, we see NEM 2.0 as very compelling for homeowners who are going solar — helping them achieve payback periods for their solar investment relatively quickly. The good news for customers on the NEM 2.0 program is that they are grandfathered into the program for 20 years from the date their solar system went into service.

As the NEM 3.0 proceedings play out over the next 15 months, the details of how NEM 3.0 will change compared to NEM 2.0 will come to light. Early indicators, however, suggest that NEM 3.0 is likely to be a less compelling deal for solar customers. There is still time to become a NEM 2.0 customer if you act soon. The CPUC expects to adopt the new tariff by December 31, 2021.

To keep informed on the proceedings use this link to join the California Public Utilities Commission Subscription Service and then subscribe at this link by entering the Proceeding Number R2008020.