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The future of solar - What you need to know


Today, California’s electric grid is significantly powered by clean solar panel energy during daytime hours, but peak electricity demands between 4:00PM - 9:00PM lead to a greater reliance on greenhouse gas emitting resources. NEM 3.0 aims to revise the net energy metering tariff to improve price signals by better aligning them with the electric grid’s conditions, both day and night.

NEM 3.0 will optimize grid use and incentivize homeowners to adopt rooftop solar paired with solar battery storage systems, helping California meet its climate goals and increase reliability, while making the transition to solar panel energy affordable across all income levels.

Net Energy Metering 3.0 - California

On December 15, 2022 the California Public Utilities Commission (CPUC) unanimously voted to approve Net Energy Metering 3.0 (NEM 3.0). Homeowners have 120 days to grandfather in to NEM 2.0 before the investor-owned utilities (IOU’s) start shifting new solar customers over to net billing.


Net Energy Metering (NEM 2.0) vs Net Energy Billing (NEM 3.0)

Net Energy Metering (NEM 2.0)

Under NEM 2.0, homeowners who installed solar panel energy became eligible for California's net metering program with no additional incentives for solar battery storage. NEM 2.0 allowed homeowners who generated their own clean energy to receive a financial credit on their electric bills for any surplus energy fed back to the utility (sold back) at retail rates (what other utility customers pay for traditional electricity).

Net Energy Billing (NEM 3.0)

Under NEM 3.0, homeowners who install solar panels become eligible for California's net energy metering program but will also receive added incentives when their solar panels are paired with solar battery storage. NEM 3.0 homeowners who transition to solar panel energy will receive a financial credit on their electric bills for any surplus energy sold back to the utility at wholesale rates (what the utility pays for energy).

Exisitng NEM 2.0 customers will be offered solar battery storage rebates if they switch to NEM 3.0 over a four-year period through the Storage Evolution Fund, so they can help California displace fossil fuel use at peak hours and become more resilient to natural disasters and wildfires.

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*Values averaged from the CPUC's Avoided Cost Calculators (ACC) for each IOU.

What Does This Do To Investment Payback?

Based on the current proposed decision by the California Public Utilities Commission, it will extend the solar loan payback periods from the average 2-5 years right now, to 5-10 years depending on the solar panel system size and energy usage. Solar will still make sense under NEM 3.0 however, solar paired with battery storage will become the new solar standard in California.

How Will This Change Impact Future Solar Customers?

The investor-owned utilities (IOU's) in California, including Southern California Edison (SCE), Pacific Gas & Electric (PGE) and San Diego Gas & Electric (SDGE) will be transitioning from NEM 2.0 to NEM 3.0 very soon. The NEM 3 export rates will be less favorable than NEM 2 for solar customers however, NEM 3.0 will launch the solar industry into the future so that it can support the modern grid by incentivizing solar paired with battery storage and the adoption of electric vehicles, heat pump water heaters, and other electrification appliances to better control electricity costs for all Californians. 

Under NEM 3.0, the average residential customers of Pacific Gas and Electric Company, Southern California Edison, or San Diego Gas & Electric installing solar paired with battery storage will save at least $136 a month on their electricity bill.

What Are The Proposed Benefits of NEM 3.0?

NEM 3.0 introduces new residential electricity rates that have significant differences between peak and off-peak prices to promote and incentivize technologies such as battery storage, electric vehicles, and heat pump water heaters, which are important for achieving carbon neutrality.

Can You Still Qualify For NEM 2.0?

On December 15, 2022 the California Public Utilities Commission (CPUC) unanimously voted to approve Net Energy Metering 3.0 (NEM). Homeowners have 120 daysbefore the IOU’s start shifting accounts over to net billing.


There is still time to grandfather a solar system into NEM 2, however this requires that we get a NEM application approved by SCE, PGE or SDGE for individual facilities and solar projects before April 15, 2023.


Reach out to us ASAP so we can discuss how to grandfather you into NEM 2 for the next 20 years

NEM 3.0 continues to support the solar industry as it pivots to a solar plus battery storage marketplace, which will bolster the local green energy economy.

There is Still Time to Grandfather Into NEM 2.0

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