Californians have a strong incentive to make the switch to solar energy sooner than expected, despite the fact that the federal solar credit has been reinstated at 30% for 30 years.
California Public Utilities Commission’s (CPUC), proposed Net Energy Metering (NEM-3) 3.0. If approved it will drastically change the utility bills structure, rates, and charges for solar-powered properties. This will result in lower monthly energy bills.
We will explain the operation of Net Metering, the planned adjustments, the utilities’ justifications, and the next stages towards NEM 3.0.
How Is Net Energy Metering (NEM) Defined?
Net energy measurement illustrates the utility bill structure that solar homeowners will pay. Typically, the utility will add solar energy to the grid along with energy charges. This is done over the course of one year.
If the customer’s solar system generates more energy than it uses, the excess energy is transferred back into the grid. For extra energy production, credits are awarded to the homeowner. This is paid back when the customer uses electricity from the grid.
Customers who overproduce will receive credits at the end. The utility will also pay wholesale rates for these credits. If the customer uses more energy than they produce, the utility will pay the rest to them in the end.
Net metering has many benefits. Solar owners can offset the higher energy consumption for months by using credits for months with greater solar output.
What Exactly Is NEM 3.0?
NEM 3.0 is a proposed new version of the CPUC’s net energy metering regulation. NEM 3.0’s proposal includes modifications in three distinct areas.
- Export value for solar energy
- Required solar customer rates
- Solar fees
An Illustration Of NEM 3.0
Aurora and CASSA created a case study that compared the benefits of solar energy under the NEM 2.0 and the NEM 3.0. This analysis is based primarily on the average rates, fees, and 6kW system sizes.
NEM 3.0 can result in lower monthly bills for homeowners. NEM 3.0 will drastically alter the payback period for California solar users, even with the additional 4-8 percent solar tax credit under the Inflation Reduction Act.
The Utilities’ Point Of View
All-electric grid customers rely on utilities to provide reliable, safe, affordable electricity. They were concerned by the possibility of cost-shifting from solar consumers to non-solar users, especially for low-income clients who are less financially capable to utilize distributed energy resources such as onsite solar and energy stock.
Additionally, utilities offer customers incentives to use storage in combination with solar power for residential installations.
The non-tiered cost-based rates that are now offered in NEM 3.0 are a component of the storage incentive that is currently being provided. In addition to this, it ensures that consumers will pay for any expenditures that they have incurred by imposing a customer charge on them. This ensures that customers will pay for any expenditures that they have incurred.
When put into reality, this means that customers who install a battery-storage system have the ability to avoid paying higher prices for power drawn from the grid during the night when the Time-of-Use rate (TOU), is higher.
