How the 30% ITC and California NEM 3.0 are affecting Solar in the US

Supply issues in 2022 caused significant delays in the installation of household solar panels across the nation, which presented a difficult start for the solar industry. Fortunately, the supply chain concerns have since been somewhat remedied, and thanks to President Biden's reinstatement of the Inflation Reduction Act (IRA), substantial financial incentives for someone interested in purchasing solar panels are once again on the table. The IRA reinstates the 30% solar investment tax credit (ITC), lowering the cost of solar for the typical American home.

The Solar Energy Industries Association (SEIA) and Wood Mackenzie, a global research and consultancy firm, have revised their prior projections for the solar sector as a result of this discovery, and they now anticipate 40% higher growth by 2027 than they previously anticipated. The two groups estimate that within the next five years, solar capacity might rise from 129 GW to 336 GW.

What about solar in California?

Although the IRA offers incentives across the US, in California, a different policy is affecting the solar industry.  The revised Net Energy Metering (NEM) 3.0 policy was adopted by the California Public Utilities Commission (CPUC) on December 15, 2022, with a unanimous vote. The advantages of the present Time-of-Use (TOU) rates will be decreased under NEM 3.0, and payments for extra solar energy delivered back to the grid will be 75% less. NEM 3.0 is not retroactive, however, and won't go into effect until April 14, 2023, thus consumers who have already switched to solar will continue to be bound to the NEM 1.0 or NEM 2.0 regulations for 20 years after the original Permission to Turn On (PTO) date.

Going forward

The IRA is timed just as an increasing number of households are exploring solar panel purchases for reasons like financial savings, blackout protection, and environmental concerns. Furthermore, the IRA extends the 30% tax credit for the next ten years, the greatest time frame to date, as compared to previous tax credit extensions, which had only been up to five years.

Here are some important details you should be aware of if you are a California homeowner who is thinking about switching to solar energy:

  • The value of the electricity you return to the grid will be lower due to NEM 3.0, which will affect your overall savings from solar.
  • The "Mandatory Residential rate" will be a fixed monthly fee of $14 for SCE under NEM 3.0. SDG&E will charge $16.00 and PG&E $15.
  • If you file your interconnection application before April 14, 2023, you will still be eligible for NEM 2.0's benefits.
  • Early versions of the bill's additional "solar taxes" seem to be no longer on the table.

Are you ready to begin your DIY solar project?

Now is the best time ever to switch to solar power. You may start to save money on home utility costs as soon as your solar panels are installed. By acting right away, you may still optimize your savings and benefit from NEM 2.0, if you can submit paperwork before the deadline of April 14, 2023.

To get things started and complete your interconnection paperwork before the April 14th deadline, get in touch with DIY Solar Power right away at 888 349 3490. If you have any questions or worries, our Solar Experts are standing by and ready to help.

For more industry news and updates, be sure to follow DIY Solar Power on FacebookTwitter, and Instagram. To get your home solar project started, Build Your System now.