What You Need to Know About California’s NEM 3.0

Net metering, also known as net energy metering, or NEM is a solar incentive program that allows customers to store power in the electric grid. For example, if a homeowner’s rooftop solar system generates more electricity than they need, they can sell the excess power to their utility provider and obtain credits on their monthly bills.

What is California NEM 3.0?

NEM 3.0 was proposed by the California Public Utilities Commission (CPUC) on the 13th of December 2021. It is the intended replacement to previous versions of NEM 1.0 and NEM 2.0. and contains new policies which state how utility companies may credit solar energy consumers for any utilities sent back to the grid. More specifically, the following modifications will take effect as a result of the proposal:

  • Allow Net Billing customers to upgrade their systems to a maximum of 150% of their historical loads to have capacity for future vehicle and appliance electrification
  • Allow Net Billing of customers to rate with high differentials between the peak and off-peak prices to encourage energy conservation or use stored solar energy during the net peak window, which falls between 6 P.M. to 9 P.M.
  • Allow a monthly residential Grid Participation charge of $8 per kW of installed solar with exception to some low-income and tribal households based on their Grid Participation Charge
  • Create a four-year glide path for the solar industry through a monthly market transition
  • Set up to $600 Million Storage Evolution fund that offers storage benefits to the existing NEM 2.0 customers who will transfer to California NEM 3.0 within the next four years by adding more storage systems and becoming more resilient to natural disasters and wildfires
  • Transition NEM 1.0 and 2.0 customers to NEM 3.0 after 15 years of being connected to the electricity grid, rather than the existing 20-year timeline

In addition, NEM 3.0 recommends a solar penalty cost of $57 per month for a typical home solar system. Despite a $15 per month credit that seeks to offset the cost for at least 10 years, California will have the highest solar penalty rates in the country.

What the Solar Industry is Saying About the Proposal

NEM 3.0 aims to slash the economic value of going solar by 50-75%, posing a significant financial threat to consumers as a result, once implemented. For the moment, the decision for NEM 3.0 has been postponed indefinitely.

The Save California Coalition has criticized the CPUC's decision, stating that it was swayed by the profit-driven NEM 3.0 proposal at the expense of energy users and California's clean energy future. The Solar Rights Alliance feels that large utilities are impeding future progress. According to their statement, they're attempting to persuade the CPUC to impose a monthly solar penalty tax on ratepayers and substantially limit the credit solar customers earn for selling excess energy back to the grid.

Go Solar Now

Consumers currently receive the best net metering financial benefits under NEM 2.0. However, with the adoption of NEM 3.0, this will most likely disappear. Expert sources anticipate that the CPUC will likely grandfather older systems and honor original agreements. This suggests that switching to solar today will almost certainly lock in NEM 2.0 gains over the next two decades. You can install your very own solar system with a custom DIY Kit from DIY Solar Power. Build your system today to receive a fast quote.

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