NEM 3.0: What’s the Future of Solar in California?

2022 has been a year of bold climate action. The Inflation Reduction Act was a historical step forward in legislation, and rising energy costs are causing more households to add solar than ever before. 

But this year has also brought very real climate impacts. In California, an unstable grid coupled with record heat created an increasing number of flex alerts and higher risk of blackouts.

Policy changes are the best way to promote clean energy adoption and break down barriers to access. One of these policy decisions is taking place right now in California. Close to a year after its first proposal, the California Public Utilities Commission (CPUC) released a revised Net Energy Metering (NEM) decision, NEM 3.0.

What is net energy 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.

The positives of the NEM 3.0 bill:

  • A series of charges and fees for solar owners, “solar taxes” aren’t included in the new proposal.
  • This version of the bill includes a 20-year grandfathering period from NEM 2.0, allowing homeowners to keep the agreement they signed up for when they first purchased their solar panels.
  • Solar customers that submit the interconnection paperwork before NEM 3.0 takes effect in April 2023 can be considered for NEM 2.0.

Despite these wins, the CPUC must reconsider the proposal to reduce solar credits by 75%. This part of the legislation will reduce customer savings, and although home battery storage could lessen the impact, it could still hinder clean energy expansion in California. 

It is important to note that NEM 3.0 is not yet final. The expected vote date is December 15, 2022, meaning that there is still time for the CPUC to make changes to the proposal.

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