Net Energy Metering (NEM) 3.0 versus 2.0: How it Will Impact Homeowners Who Are Interested in Solar Energy!

Net Energy Metering (NEM) is a system of metering and billing electricity used by utility companies that encourages the installation of solar energy systems. NEM 3.0 and NEM 2.0 are two versions of this system, with NEM 3.0 being the newest version. Homeowners who are considering solar energy for their homes should be aware of how the differences between NEM 3.0 and NEM 2.0 could impact their decision. In this blog post, we will explore how NEM 3.0 and NEM 2.0 differ and how it will affect homeowners who are interested in solar energy. Net Energy Metering (NEM) is an important policy for homeowners in California who are interested in solar energy. In particular, the latest version, NEM 3.0, has recently been approved and will soon replace NEM 2.0. As a result, it's important for homeowners to understand how NEM 3.0 differs from NEM 2.0 and how it will affect them if they decide to switch to solar energy. In this blog post, we will explore how NEM 3.0 and NEM 2.0 compare, and how they will impact homeowners in California who are interested in solar energy.

What is NEM?

Net Energy Metering (NEM) is a policy approved by the California Public Utilities Commission (CPUC) that allows residential and commercial customers who install solar energy systems to receive full retail credit for the excess electricity their system produces. On December 15, 2022, the CPUC approved NEM 3.0, a new version of the NEM policy that applies to utility customers in the territories of California’s three major investor-owned utilities (IOUs): Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E).

It’s important to note that NEM 3.0 is not retroactive. Solar energy systems installed under NEM 1 or NEM 2 will remain under their current policy. The biggest change between NEM 2.0 and NEM 3.0 is the value of export rates. Instead of receiving full retail credit for their excess solar power, solar owners will be paid based on an “Avoided Cost Calculator,” earning around 75% less than they did under NEM 2.0. This will have a significant impact on solar owners across California, including cities like San Diego, Bakersfield, San Jose, Fresno, Lake Elsinore, Rancho Cucamonga, and many others.

How will NEM 3.0 impact homeowners who are interested in solar energy?

The introduction of Net Energy Metering (NEM) 3.0 in California is set to significantly impact homeowners who are interested in installing solar energy systems. NEM 3.0 is the latest iteration of the net metering regulations that have been in place since 1996, and is set to replace the existing NEM 2.0 system in the coming years.

Under NEM 3.0, homeowners with solar panels will be credited at their utility’s “time-of-use” rates for the electricity they generate and export to the grid. This means that homeowners in cities like San Diego, Bakersfield, San Jose, Fresno, Lake Elsinore and Rancho Cucamonga, can benefit from solar power even more than before, as the new system allows them to monetize the excess energy they produce.

This is especially beneficial for homeowners in California, where high electricity prices can put a strain on monthly budgets. By installing solar panels and taking advantage of NEM 3.0, these homeowners can reduce or even eliminate their electricity bills and potentially earn extra income by selling the excess energy they generate back to the grid.

NEM 3.0 also seeks to further incentivize homeowners to install solar by allowing them to receive more money for the excess energy they produce during peak demand hours. This additional incentive will ensure that more people are able to benefit from solar energy, helping California reach its goal of generating 100% of its electricity from renewable sources by 2045. On December 15, 2022, The California Public Utilities Commission (CPUC) unanimously voted to approve NEM 3.0, which will reduce the monthly energy bill savings for new solar owners. Solar system customers of PG&E, SCE, and SDG&E will receive an average of 8 cents per kWh for the excess power they push onto the grid, which is approximately 75% less than the average export rate of 30 cents per kWh under NEM 2.0. Investor-Owned utilities (IOUs) customers have until April 13, 2023 to be grandfathered into NEM 2.0 by submitting a complete interconnection application for a new solar system.

To further sweeten the deal for Solar Energy California customers, the federal solar tax credit is back at 30% until 2032. This means that new solar owners will still be able to receive the full 30% tax credit, which can help reduce their out-of-pocket costs when installing a solar system.

How to Grandfather Your Solar System into NEM 2.0

As the new Net Energy Metering (NEM) 3.0 policy in California takes effect, it is important for homeowners who are interested in solar energy to understand their options for grandfathered into NEM 2.0. Under NEM 3.0, compensation for excess solar energy exported onto the grid will be on average 75% less than under NEM 2.0, so it is worth exploring your options to take advantage of the higher rates available.

To grandfather your solar system into NEM 2.0, there are two steps you must complete: submit an interconnection application or request by April 13, 2023 and install and receive permission to operate within three years of submitting the application or request. An interconnection application includes a completed application, signed contract, single-line diagram, CSLB Disclosure Document, signed consumer protection guide, and over-sizing attestations (if applicable).

It is important to note that NEM 3.0 is not retroactive and existing solar systems will remain under their current net metering policy for 20 years from their interconnection date. Homeowners in Solar Energy California, San Diego, Bakersfield, San Jose, Fresno, Lake Elsinore and Rancho Cucamonga should all consider taking advantage of this opportunity.

Still not sure if a solar system for your home is still worth it?

Installing a solar system on your home provides you with access to unlimited, sustainable energy for years to come. Not only is it eco-friendly, but it can also help to significantly lower your electricity bills. In addition, installing a solar system can also add value to your home, making it an even more attractive option. And in California, solar energy has become even more appealing due to the various tax breaks and incentives available in cities like San Diego, Bakersfield, San Jose, Fresno, Lake Elsinore, and Rancho Cucamonga. By taking advantage of these local incentives, homeowners can make the switch to solar energy with greater ease.

Contact us at Saracen Energy Solutions for a free your own personalized solar savings report

Are you interested in harnessing solar energy to reduce your electricity bill and help save the environment, but not sure if it’s worth the cost? Saracen Energy Solutions is here to help. We offer free solar savings reports to homeowners in California, including San Diego, Bakersfield, San Jose, Fresno, Lake Elsinore, and Rancho Cucamonga.

Our personalized solar savings report will provide you with an accurate estimate of the financial savings you could enjoy if you decide to switch to solar energy. We’ll also provide information about any local incentives or tax credits you might qualify for. With this information, you can make an informed decision about whether or not investing in a solar system is right for you.

Contact Saracen Energy Solutions today for your free personalized solar savings report. We look forward to helping you make the switch to clean, renewable solar energy! Click here now.