Understanding NEM 3.0

What Is NEM?

Net energy metering (NEM) is a utility program for those with solar roofs. Participants who generate excess solar energy and export it to the grid for public use receive a credit on their monthly utility bill—this was one of the many advantages of a solar roof installation. However, a recent proposed decision is making waves of disapproval, as it threatens to drastically reduce these payments and harm the value of solar for the foreseeable future.?

How Does NEM 3.0 Affect Californians With Solar Roofs?

Out of the 18 different proposals from countless stakeholders, the California Public Utilities Commission took certain aspects from each one and drafted PD NEM 3.0, filed by judge Kelly Himes in December of 2021.?

This PD seeks to reduce customer compensation for excess solar energy sent to the grid by as much as 80%. For example, customers who normally receive about $2.04 per kWh would only receive $0.50 per kWh under NEM 3.0. To make matters worse, new monthly fees called grid benefits charges could cost commercial solar roof owners up to $75 per month.?

PD NEM 3.0 affects the following utility company customers in California:

• P&G
• SCE
• SDG&E

How Do Batteries Alleviate the Ramifications of NEM 3.0?

Revisions to the NEM program can negatively impact the future of residential solar power unless customers have battery storage. With a home battery, they don't have to rely on net metering governed by their utility company and can enjoy the benefits of their solar roof by avoiding monthly charges and reduced tax credits. However, if participants use a battery, they'll still deal with extended payback periods under NEM 3.0.

What Should Californians Do if PD NEM 3.0 Passes?

If NEM 3.0 passes, those who still want to use solar power would have to sign up for a highly differentiated time of use plan (TOU). This special rates plan would raise electricity costs while the grid is used the most and lower costs when it's used the least.?

A TOU rate was initially added to the PD to prompt current NEM customers to incorporate battery storage in their plan. Unless participants install batteries that store excess power, a TOU rate with high per kWh charges during peak usage in the evening would result in less savings. Therefore, it's best for solar customers in California to install batteries so they can store power during the day and run it at night while other appliances are in use.?

ROOFCORP Is Your Solar Roof Incentive and Installation Expert?

With so much still up in the air concerning the future of solar energy, ROOFCORP is staying educated on the issue. We're here to help you stay in the know. Doing what's best for the environment shouldn’t be a hassle. Our well-versed team can provide the insight you need to make an informed decision. Call us today to discuss your options.