Update on NEM 3.0

The California Public Utilities Commission (CPUC) finalized its net energy metering (NEM) 3.0 decision.  

As background, NEM is a utility billing mechanism that is available in the majority of states and provides a bill credit for surplus energy produced by a solar system on a home or business. NEM has been instrumental in launching the California rooftop solar market and supporting the creation of tens of thousands of jobs across the state.

The final decision upheld important improvements to the original proposed decision from December 2021:

  • Rejection of the solar tax.
  • No retroactive changes to NEM 1.0 or NEM 2.0.
  • Allows installers to submit applications under NEM 2.0 until April 13, 2023. Projects have 3 years to complete in order to keep eligibility.

What is Net Metering?

  • Net energy metering is a utility billing mechanism that is available in the majority of states and provides a credit to residential and commercial customers.
  • NEM was instrumental in launching the California rooftop solar market, which has grown to 1.3 million homes with panels, accounting for roughly half of the US residential market.
  • It also aided in the creation of tens of thousands of jobs in solar.
  • Its purpose is to ensure that households generating electricity into their local grid are adequately compensated for the value rooftop solar provides to the utility.

These wins are a direct result of industry, contractor and solar homeowner advocacy. Thank you to all those who raised your voice to support solar.

Although we’ve come a long way from the original proposed decision, the final decision is a disappointing setback. The California Solar and Storage Association (CALSSA) estimates that the export rate for NEM will drop 70-75%. While the decision creates a more complicated structure, there are still opportunities to save with stand-alone solar and the combination of solar plus storage presents an opportunity for additional savings.

With electricity prices rising and the expanded ITC tax credits for both solar and battery storage, we believe residential solar energy is still a great alternative to save money, make a home more resilient against grid instability, and reduce a household’s carbon footprint.

We will be working with our partners to continue to provide savings for homeowners on their electricity bills.

This includes helping contractors sell more battery storage to customers. Battery storage is the best way to help homeowners get the most out of their solar energy systems. Demand for battery storage continues to grow as homeowners look to save on utilities and protect their homes against grid instability and power outages.

We believe that California markets will continue to be an important part of the clean energy future, despite the limitations of NEM 3.0. For many, this will mean a shift towards solar plus storage to preserve savings and make homes more resilient. However, contractors should note that prior to April 13, 2023 is the best time to help customers apply for solar and lock in NEM 2.0 before these changes are put into effect.

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