Yep. I wish I was making this up. The California Public Utilities Commission is going forward with NEM 3.0, which is an agreement with energy companies that reduced savings for homeowners with solar after April.
When a homeowner installs solar, they begin exporting some of their energy back to the electric company. With the changes, new solar customers after Apr 14th will receive far less payment for that extra energy.
The electric companies will no longer compensate you for your generated power at the same rate that they charge you. According to EnergySage.com, they will only pay around 25%. This means that 75% of the compensation you would have received will be lost under NEM 3.0.
How much does that affect overall solar savings? Some sources are estimating a staggering 60% of total solar savings will be lost. For example, an average 7kW system that would have saved you a whopping $96,000 will only save you about $36,000 under NEM 3.0. If you opt to install a solar battery, you would save a bit more at around $50,000. This means that to pay for itself, solar would have to be installed for up to a decade instead of just 5 or 6 years. But remember, these savings cuts only apply to NEW systems on NEM 3.0 (with some exceptions).
The bottom line: Going solar before April 14th will lock in substantial savings.
How to avoid NEM 3.0
In order to be grandfathered in on NEM 2.0, you need to submit an interconnection application before April 14th. This includes signing a contract with a solar company and working with them to design a system that works for your needs. It’s important to get multiple solar bids and understand your energy needs when you are ready to take that step. As an Independent Energy Expert, I represent your interests and not the interests of the solar installers. I find you multiple bids so you end up saving, on average, $2000-$7000 compared to going with an installer directly. Watch this video to find out how.
Due to supply chain issues, a solar installer might not be available immediately to start construction on your system. But don’t fear! You have three years to build your system from the time you submit your application. Even if you didn’t size it right for your energy consumption, you’re allowed to change it slightly without going on NEM 3.0. Just make sure your system is up and running by April 2026, and you can keep enjoying those sweet, sweet, savings.
Will this affect existing solar installations?
No, solar systems that are already installed will not be on the new NEM 3.0. These systems are on NEM 2.0 for 20 years after their installation completion.
There is one big exception, however. If you want to add more solar panels to your existing system or replace it entirely, you would be redesignated under NEM 3.0 and lose those extra savings. If you’re planning on making those changes, it would be best to do it now.
How does NEM 3.0 affect solar batteries?
Good news! If you add a battery or upgrade your electric panel after April 14th, it won’t change your NEM 2.0 savings. In fact, the NEM legislation encourages homeowners to buy battery storage and provides incentives to do so. By storing the power you generate, you can save in two ways. You can either use that stored power during times your panels aren’t producing or you can sell it back to the power company during high-value hours when they’ll pay you more for it. In this way, solar + storage systems will generate more savings than solar systems with no batteries under NEM 3.0. The differences are drastic. With a solar battery, the owner of an average 7kW system could save an extra $14,000 under NEM 3.0.
NEM 3.0 is coming Apr 14th. Now is the time to get solar before 60% of the savings are cut. If you do want a few months to think it over, consider going with a battery to optimize your savings once we’re under NEM 3.0.
Overwhelmed by all of this? Let me help you make the complicated simple.
As an Independent Energy Expert, I represent your interests and NOT the interests of the solar installers. I find you multiple bids so you end up saving, on average, $2000-$7000 compared to going with an installer directly.
The best part is, the installer pays my small referral fee, not you! This unique business model allows me to truly represent you and give you unbiased advice.
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CPUC. (n.d.). Customer-sited renewable energy generation. California Public Utilities Commission. Retrieved February 21, 2023, from https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/net-energy-metering
Thoubboron, K. (2023, February 15). NEM 3.0 in California: What you need to know: Energysage. EnergySage Blog. Retrieved February 21, 2023, from https://news.energysage.com/net-metering-3-0