Net Metering: How NEM 3.0 Impacts California's Sustainable Future

Net Energy Metering (NEM) is a highly effective policy that grants those with solar energy systems the ability to save on their utility bills in exchange for sending the excess electricity they generate back to the grid.

What is Net Energy Metering?

Net Energy Metering (NEM) is a program that allows solar system owners to receive credits for excess electricity their systems produce and send back to the grid. When your solar panels generate more electricity than your home uses, that excess power flows to the utility grid, and you receive credits that can offset future electricity costs.

The Evolution of NEM

NEM 1.0

The original NEM program established the foundation for solar adoption in California, providing generous credits for excess solar energy production.

NEM 2.0

A major change brought about by the NEM 2.0 program was the pivot to a time-of-use (TOU) rate structure. TOU calls for the value of solar energy credits to vary based on the time of day electricity is used.

Key considerations for NEM 2.0 included:

• Grid maintenance costs
• Creating equity among customers' contributions to utility infrastructure
• Balancing incentives to maintain sustainable growth

NEM 3.0 (Net Billing Tariff)

NEM 3.0 represents the latest evolution of California's net metering policies. This new structure changes how excess solar energy is valued and compensated.

How NEM 3.0 Is Impacting Consumers

Key Changes Under NEM 3.0

• Lower export rates for excess solar energy
• Greater emphasis on battery storage to maximize self-consumption
• Time-of-use rates play a bigger role in savings calculations
• Payback periods may be longer without battery storage

Why Battery Storage Matters More Now

Under NEM 3.0, battery storage has become increasingly important for maximizing solar savings. By storing excess energy produced during the day for use during evening peak hours, homeowners can:

• Reduce reliance on grid electricity during expensive peak hours
• Maximize the value of their solar production
• Increase energy independence
• Have backup power during outages

The Future of Solar in California

Despite the changes brought by NEM 3.0, solar remains a smart investment for California homeowners. The combination of high electricity rates, abundant sunshine, federal tax credits, and rising utility costs means that solar continues to offer significant long-term savings.

Conclusion

While NEM 3.0 has changed the solar landscape in California, it hasn't diminished the value of going solar. Contact ESP to learn how NEM 3.0 affects your specific situation!