California has always been at the forefront of the solar industry, from harnessing the sun for electricity in the 1970s to becoming the nation’s leading producer of solar energy today in terms of total installed capacity.

It is one of the best states to shift to clean energy because of its abundant sunlight and favorable pro-solar incentives. The Golden State’s generous local rebates and net metering programs encouraged residents to go solar.

Net metering is among the primary reasons homeowners invest in solar panels in California. But as NEM 2.0 expires, ushering in a new version of the policy, NEM 3.0, many consumer-generators are expecting a turn for the worse.    

Below is what you need to know about the NEM 3.0 timeline and its key points.

 

When Will NEM 3.0 Go into Effect?

When California enacted its first net metering policy in 1996, it aimed to spur industry growth and promote solar use among residents. Its second version, NEM 2.0, continued to compensate customers for sending surplus energy back to the grid. However, as it will sunset soon, the California Public Utilities Commission (CPUC) will implement new provisions for net metering under NEM 3.0. 

The NEM 3.0 timeline began in August 2020 when CPUC initiated reform for the current version. Based on the original schedule, the main proceedings will occur in 2021. The expected implementation will be in 2022—two years after discussions began, similar to California’s solar mandate on new constructions and major upgrades.  

Here is a breakdown of the NEM 3.0 timeline:

  • January 2021: CPUC finishes the study on the impact of net metering on consumers and the grid
  • February 2021: Finalizes guiding principles on NEM 3.0
  • March 2021: Opens proceedings for proposal inputs from interested groups or parties
  • April to August 2021: Holds hearings for changes to be included in the new policy before the final decision
  • November 2021: CPUC issues final decision following comprehensive discussions and deliberations
  • 2nd Quarter of 2022: Utility providers implement NEM 3.0 guidelines six months after approval

Based on the latest news, the new net metering policy proceedings are on hold until further notice as CPUC asks for more time to review. Even though the commission did not issue its final decision last November 2021 as originally planned, it released a proposed decision in December 2021 for further discussions.

 

Proposed Changes under NEM 3.0

Although the NEM 3.0 timeline is on indefinite pause, that doesn’t mean solar consumer-generators can heave a sigh of relief just yet. The proposed decision outlines significant changes to the current net metering policy, such as the following:   

Shift to Revised Time of Use (TOU) Plans

Under the new TOU plans for solar consumers, electricity rates are highly differentiated based on times of highest grid usage. As a result, expect to be charged higher during peak hours and lower for off-peak periods.

Lower Energy Credits

Currently, the credit for exported surplus energy ranges between $.022/kWh and $0.36/kWh. With NEM 3.0, the rate substantially decreases to only $0.047/kWh and $0.058/kWh. It was based on the state’s avoided cost calculator, which estimates the value of distributed excess solar energy to the public grid.   

Additional Monthly Fees

Besides higher rates for electricity consumed when solar panels aren’t generating power, NEM consumers have to pay $8 per installed kW of solar capacity monthly. The grid participation charge supposedly levels every consumer’s access to the public grid.

Shorter Term for NEM 1.0 and 2.0 Credits

Under NEM 3.0, all current solar owners will have a reduced term agreement, from 20 years to only 15, for their existing credits. However, the transition isn’t automatic since they need to sign an interconnection agreement to maintain NEM 2.0 for the next 15 years.  

 

What Homeowners Should Do Now

As the NEM 3.0 timeline remains suspended, the policy’s proposed changes have pushed back the value of going solar in supposedly one of the best states for sustainable energy. Instead of financial rewards, solar owners see fewer incentives while prospective consumers become less willing to make the switch.

 So how do you prepare for NEM 3.0?

Install Solar Panels

If you plan to go solar, now is the best time. Based on speculations, CPUC might exempt existing systems from policy changes and uphold the original terms of the agreement. Reap the benefits for 20 years because your system remains under NEM 2.0.  

Add Storage

NEM 3.0 makes putting excess energy back into the public gridless attractive because of lower credits and higher electricity rates. So instead, use the surplus energy to power your home when solar panels cannot produce with a backup storage system. 

 

Take Back the Power of the Sun

Don’t let NEM 3.0 cast a shadow on your solar system’s prospects. Instead, learn how you can continue enjoying the financial rewards of shifting to solar with Current Home.