NEM 3.0 in California

Background:

On December 15, 2022, the California Public Utilities Commission (CPUC) approved updates to the state’s customer-owned solar energy generation program.

Links to information on NEM:

https://www.cpuc.ca.gov/NEM/

What is net energy metering (NEM), and what is NEM 3.0?  

• Net energy metering (NEM) is a billing structure designed to provide incentives to utility customers who produce their own solar energy. These customers earn bill credits for the excess solar energy they produce and send to the grid.  

• NEM 3.0 is California’s transition from traditional net metering rates to a net billing structure (NBT). 

Why is this important?

• Under the previous NEM 2.0 policy, export credits were a one-to-one offset, so the price of a kWh of electricity produced from solar was equal to the price per kWh pulled from the grid. 

• Under NEM 3.0, the value of excess electricity that solar customers send to the grid is expected to drop considerably, which will likely extend the average payback period of a grid-tied-only residential system in California.  

  • California’s three investor-owned utility companies (PG&E, SCE, and SDG&E) will offer their own rate plans under NEM 3.0, with increased monthly fixed charges and reduced payments for excess solar energy

How can customers still save money by going solar?

• Grandfathering into NEM 2.0

  • Customers can receive NEM 2.0 for 20 years if they sign a contract with Everbright and have a complete interconnection application filed with their utility on or before April 14th, 2023. Additionally, the system must be fully installed within 3 years.

    • “The interconnection applicate date for residential customers is defined as the submission date of an application that is free of major deficiencies and includes a complete application, a single-line diagram, and, as applicable, a properly executed contract, a California Contractors License Board Solar Energy System Disclosure Document, a signed California Solar Consumer Protection Guide, e-signature verification document/audit trail and oversizing attestation (if applicable).” 

      • Major deficiencies include: Blank fields on the application, incomplete or inaccurate documents, anything else requiring withdrawal and resubmission

      • Examples of common major deficiencies:

        • Wrong meter number

        • Wrong Service Agreement ID

        • Changes in Point of Interconnection

        • Material modifications, such as increasing system size

        • Failure to meet timelines

    • Interconnection applications can be submitted as soon as the required documents are obtained, regardless of which milestone the job is currently in.

    • Everbright is NOT notified if an application is denied.

    • NEM 2.0 grandfathering is from the date of PTO

  • Restrictions on change orders after NEM 2.0 application submission

    • Equivalent equipment substitutions are allowed

    • Systems size increases are not allowed

    • System size decreases of >20% are not allowed

• Changes in Ownership

  • NEM 2.0 rates stay with the system, not the customer

  • NEM 3.0 rates stay with the customer

    • Change of ownership means loss of ACC Plus Glide path adders (see NEM 3.0 Export Rate Schedules (CA Only) )

    • NEM 3.0 agreement will still be valid for 9 years

• System oversizing

  • A NEM 3.0 customer can install a system that will produce up to 150% of their previous 12-months’ energy usage as long as they attest they will increase their usage up to that amount in the next 12 months; for example, by converting natural gas appliances to electric or purchasing an EV they will charge at home.

• Battery storage

  • Adding battery storage to a solar system will allow the customer to export solar when local energy demand is at its highest.  Solar and battery owners can be credited more for their electricity during peak hours

    • If a battery is charged exclusively from solar, the customer can export from the battery to the grid for NEM credit

  • Self-Generation Incentive Program (SGIP) provides rebates for installing energy storage technology (batteries) at both households and non-residential facilities.

    • All proposals in EverBright automatically include existing federal tax credits, but in California, having the CPUC's own Self Generation Incentive Program (SGIP) on the proposal will show the customer the additional rebates available for battery storage.  

    • SGIP Fact Sheet - https://www.cpuc.ca.gov/-/media/cpuc-website/files/uploadedfiles/cpucwebsite/content/news_room/newsupdates/2020/sgip-factsheet-124020.pdf

• ACC Plus incentive

  • PG&E and SCE residential customers who sign up for NEM 3.0 will have access to a new incentive called the ACC Plus, which adds a little value to each kWh of exported solar energy

Information Table