Changes are coming to solar energy Net Energy Metering (NEM)—a term that describes the structure of a utility bill for homeowners with solar. Homeowners thinking of switching to solar may want to consider taking advantage of current solar billing rates, before the existing program in California is scaled back in April.
The federal solar tax credit is back at 30 percent until 2032, but on December 15, 2022, The California Public Utilities Commission (CPUC) passed Net Energy Metering (NEM) 3.0, significantly altering the net billing rates for solar production and reducing the monthly energy bill savings for homeowners with solar.
If a customer’s solar system generates more energy than the home consumes, then that excess energy is sent back to the grid. The homeowner earns credits for the excess energy. This is offset when a customer pulls energy from the grid and is charged for that energy. The biggest change from NEM 2.0 to NEM 3.0 is the rate at which solar owners are compensated for the excess electricity they put on the grid.
Under most net metering policies, including NEM 2.0, solar owners are credited for the full retail value of each kWh of electricity they put on the grid. In this one-to-one exchange, every kWh you put onto the grid (export) offsets a kWh that you pull off (import). Under the NEM 3.0 proposal, the value of solar exports will no longer be based on retail rates. Export prices will vary by the hour based on Time of Use rates. NEM 3.0 is not retroactive. Solar systems installed under NEM 1 or NEM 2 will remain under their current policy. Solar customers that submit their interconnection application before April 14, 2023 can be grandfathered into the much more favorable NEM 2.0 for 20 years. More information can be found at https://www.solar.com/dashboard
