Net Metering 3.0: What California Solar Customers Need to Know

Net Metering 3.0: What California Solar Customers Need to Know

California has long been a leader in solar energy adoption, thanks in part to a generous net metering policy that allows solar panel owners to sell excess energy back to the grid. However, the landscape is changing with the introduction of Net Metering 3.0 (NEM 3.0), which significantly alters how solar customers are compensated for their excess energy. This article breaks down the key changes under NEM 3.0 and what they mean for California residents served by different utility companies like PG&E, SCE, and MID.

Understanding Net Metering

Before diving into NEM 3.0, let’s recap how net metering works. When your solar panels produce more electricity than your home consumes, the surplus is sent to the grid. Under the previous net metering policies (NEM 1.0 and NEM 2.0), you received credits for this excess energy at the retail rate, meaning you were essentially paid the same price for the energy you exported as you paid for the energy you imported from the grid. This system helped offset the cost of energy consumption during times when your solar panels weren’t producing enough, such as at night or on cloudy days.

The Shift to NEM 3.0

NEM 3.0, effective April 15, 2023, introduces significant changes to this system. The most impactful change is the reduction in export rates. Instead of receiving retail credit for excess energy, solar customers now receive credits based on the Avoided Cost Calculator (ACC). The ACC value, which varies hourly, reflects the actual value of the energy exported to the grid, considering factors like wholesale energy prices and grid congestion. These values are typically much lower than retail rates, meaning you’ll receive less credit for your excess solar energy.

Key Changes Under NEM 3.0

Here are the primary changes under NEM 3.0:

• Reduced Export Rates: As mentioned, export rates are now based on the Avoided Cost Calculator, significantly lowering the value of your excess solar energy.
• Time-of-Use (TOU) Rates: NEM 3.0 strongly encourages Time-of-Use (TOU) rate plans, where electricity prices vary depending on the time of day. Peak hours, when demand is high, have higher rates, while off-peak hours have lower rates. This incentivizes shifting energy consumption to off-peak times.
• Grid Participation Charge: A new monthly fee, the Grid Participation Charge, is applied to solar customers. This fee aims to ensure that solar customers contribute to the maintenance and operation of the grid.
• Market Transition Credit: To soften the initial impact of NEM 3.0, the California Public Utilities Commission (CPUC) has implemented a Market Transition Credit for the first 10 years after enrolling in NEM 3.0. This credit provides a slightly higher compensation rate for exported energy during this period.

Impact on California Residents

The impact of NEM 3.0 varies depending on your location, energy consumption patterns, and the utility company that serves you. Here’s a breakdown for some of the major California utilities:

PG&E (Pacific Gas and Electric Company):

• PG&E customers under NEM 3.0 will experience a significant reduction in export rates compared to NEM 2.0.
• TOU rates are highly encouraged, with different rate plans available depending on your energy needs.
• The Grid Participation Charge for PG&E customers is based on the size of your solar system.

SCE (Southern California Edison):

• Similar to PG&E, SCE customers will see lower export rates under NEM 3.0.
• SCE also offers various TOU rate plans to encourage shifting energy usage to off-peak hours.
• The Grid Participation Charge for SCE customers is also based on system size.

MID (Modesto Irrigation District):

• MID has its own net metering program, which may differ slightly from the statewide NEM 3.0 framework.
• It’s crucial to check MID’s specific policies regarding export rates, TOU rates, and any applicable fees.

Other Utilities:

• Each utility company in California has its own implementation of NEM 3.0, so it’s essential to check with your specific provider for detailed information on rates and fees.

How to Maximize Your Solar Investment Under NEM 3.0

While NEM 3.0 presents new challenges for solar customers, there are still ways to maximize your investment and reduce your energy costs:

• Embrace Time-of-Use Rates: Shift your energy consumption to off-peak hours whenever possible. Run appliances like dishwashers and washing machines later in the evening or early in the morning.
• Consider Battery Storage: Batteries allow you to store excess solar energy generated during the day and use it during peak hours or at night, reducing your reliance on the grid and maximizing self-consumption.
• Optimize System Design: Work with a reputable solar installer to design a system that’s tailored to your energy needs and consumption patterns.
• Monitor Your Energy Usage: Track your energy consumption and solar production to identify areas where you can improve efficiency and reduce reliance on the grid.

The Future of Solar in California

Despite the changes introduced by NEM 3.0, solar energy remains a valuable investment for California homeowners. With careful planning and optimization, solar can still significantly reduce your energy bills and contribute to a cleaner environment.

Important Note: This article provides a general overview of NEM 3.0. It’s crucial to consult with Zoomin Solar today to have a representative explain it all for you. Visit the California Public Utilities Commission below to learn more.