What is NEM / net energy metering?
Net energy metering, or NEM, is a billing mechanism that allows utility customers who generate their own solar power to receive a financial credit on their electric bills for excess energy fed back to the grid. For many customers, solar power exported to the grid offsets much of the cost of using utility power, and these savings help in paying off the cost of the solar system installation itself.
What Changed?
On December 15, 2022, the California Public Utilities Commission (CPUC) approved a new set of net energy metering policies, nicknamed NEM 3.0 (also referred to as net billing), which will replace the current rules for new metering, NEM 2.0. The policy will be implemented starting April 15, 2023.
How is NEM 3.0 different from NEM 2.0?
The main difference with NEM 3.0 is that solar export rates will change, becoming much more complicated and requiring increasingly complex strategies and calculations to ensure profitability. On average, the export rate for solar energy could be reduced to a quarter of its current price per kWh. Under the current NEM 2.0, utility customers who generate their own solar power and sell what they can’t use back to the grid receive payment at the same, full retail rate that they pay their utility for power. Throughout the year, there are only six different rate periods that need to be considered, allowing for simple, long-term calculations concerning the expected payback time for solar projects. Under NEM 3.0, the rate that California utilities will pay to people and companies for their excess solar power will be much more variable. There will be 576 different price rate periods throughout the year, determined by different hours, months, and days of the week.
What does this all mean?
How does NEM 3.0 affect my plans to install solar, storage, and/or EV solutions? If you have plans on installing solar for your commercial building or home, there is a strong incentive to secure it prior to NEM 3.0 rates coming into effect on April 15, 2023. Current solar systems, as well as those who submit their interconnection paperwork by this date, will be able to lock in the current NEM 2.0 rates for 20 years. This would allow for long term planning around simpler, higher export rates, increasing the profitability of solar installations and reducing payback periods.
This is a work in progress. Stay tuned for the next STAY COOL March newsletter to learn about new developments in this very important rule change!
Excerpts taken from catalyze.com.
