Skip to Content

Net Energy Metering - NEM 3.0

NEM 3.0

Net Energy Metering 3.0. What does this mean for you? Will you benefit from it?

Update 12/15/2022: Based on the current timeline, this new net metering policy will only apply to homeowners who submit their solar interconnection applications after April 14, 2023. Homeowners who submit a complete interconnection application prior to NEM 3.0 taking effect will be grandfathered into NEM 2.0 for 20 years.

Read along as we discuss what NEM 3.0 is and how it will impact your decision when going solar.

The California Public Utilities Commission (CPUC) has proposed Net Energy Metering (NEM) 3.0, which, if approved, would alter the net billing rates for going solar. If you want a quote, now is the time. NEM 3 proposed decision is going to be voted on Dec 15th!

What to Expect from NEM 3.0 graphic

In this article, we will break down what will happen when NEM 3.0 goes into effect.

What is Net Energy Metering?

Net Energy Metering describes the structure of a utility bill for homeowners with solar. The utility will net out energy charges from the grid with excess solar energy sent back to the grid, usually over a 12-month period also known as your anniversary date from when your system was turned on and started to produce energy to the grid.

If a solar system generates more energy than the home consumes (for example a nice sunny day in the spring), 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 (say, in the evening) and is charged for that energy.

For homeowners who overproduce and have remaining credit at the end of their year, the utility company will pay the customer for those credits at a wholesale rate. If a customer consumes more energy than they produce, they’ll settle up with the utility at the end of the year for their remaining balance.

What is NEM 3.0?

NEM 3.0 is a new version of net energy metering policy proposed by the CPUC. Released on November 10, 2022.

  1. It features a major reduction in the net metering value of solar electricity
  2. There are no new charges or fees, commonly known as “solar taxes”
  3. Pairing solar with battery storage will be more beneficial under NEM 3.0
  4. Solar customers that submit their interconnection application before April 14, 2023 may be grandfathered into NEM 2.0 for 20 years
  5. Solar owners that are grandfathered into NEM 2.0 will be able to add battery storage later and remain on NEM 2.0

Pros and Cons

The biggest change from NEM 2.0 to NEM 3.0 is the rate at which solar owners would be compensated for the excess electricity they put on the grid.

  • NEM 2.0 - solar owners are credited for the full retail value of each kWh of electricity they put on the grid.
  • NEM 3.0 proposal - the value of solar exports would no longer be based on retail rates. Export prices would be based on the “Avoided Cost Calculator” and would vary by the hour based on time use of rates as shown in the graph below. (Export compensation to be verified for PG&E & SCE utility companies*)

Base Export Compensation Rates - PG&E Weekdays graphic

Net billing under NEM 3.0 would still be settled on an annual basis instead of a monthly basis, as proposed by utilities. The annual cycle is considered more favorable to solar owners.

Will NEM 3.0 Pass?

Whether NEM 3.0 will pass or not is up to the California Public Utilities Commission.

It’s expected that there will be minor revisions to the proposal. The final agreement for the next iteration of Net Energy Metering will likely lay in a middle ground between the various proposals from all parties intervening at the California Public Utilities Commission (CPUC).

Wherever NEM 3.0 lands, however, it will not be as beneficial for solar owners as NEM 2.0.

If passed, NEM 3.0 would drop the export rate for residential solar electricity by around 75%, from an average of 30 cents per kWh to 8 cents per kWh. Lower export prices would increase the payback period for solar owners under NEM 3.0 and decrease the overall savings.

Frequently Asked Questions:

  1. Am I affected as a current solar customer? No.
  2. If I have a friend or family member interested in solar, when is the best time to get their information over for a solar quote? Now.
  3. How do I get grandfathered into NEM 2.0? Call Sun Solar today and reserve your spot and pricing for future savings!