NEM 3.0 - Utility Companies are Changing the Rules in California

NEM 3.0 - Utility Companies are Changing the Rules in California

NEM 3.0 Begins April 2023

The Utilities Are Changing The Rules

In 2016 the utility companies petitioned the California Public Utilities Commission for changes to the Net Energy Metering guidelines, which had resulted in our current guidelines of NEM 2.0. Those changes have generally been unfavorable, yet due to the high energy cost in the Central Valley solar has still been able to flourish. The California Public Utilities Commission will be making changes again to Net Energy Metering (NEM 3.0) by the second quarter of 2023, and the proposed changes do not look good for consumers.

What is Net Energy Metering (NEM)?

NEM is an agreement with the utility companies (Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric) that when a solar project over produces, meaning more solar power is being produced than is needed, the utility purchases the energy and uses it where they need it. Then, the utility provides the business credits towards past or future use. This continues throughout the year, and at the end of the year the account is reconciled to determine if money is owed to the utility, or if the business receives a credit. This is called an Annual True Up.


Solar Carports in Parking Lot

NEM 3.0 Changes

Grid-benefits charge

This includes additional fees to connect solar to the grid. Think of it like a “solar tax” charged monthly based on system size, and the larger the system, the bigger the tax. The amount would be $8-$13 per KW installed, which would significantly EXTEND the return-on-investment timeline for commercial solar.

Export compensation

This changes the amount your energy is credited. For example, with NEM 2.0 you may send a retail credit of $0.25kWh to the grid when you produce more power than you’re using. Then, when you are under-producing you get a $0.23 kWh credit back. With the proposed changes of NEM 3.0, when you need those credits back, they would be reduced in value up to 80% ($0.04 value)!! They are simply taking some off the top. Another way the utilities’ are penalizing you for going solar under the proposed rules.

How NewGen Can Help

NewGen Energy can help you navigate the transition from NEM 2.0 to NEM 3.0. Projects initiated before the transition deadline may still qualify for more favorable NEM 2.0 terms. Contact us to learn more about NEM 3.0 and how we can help your commercial, agribusiness or non-profit organization.



Additional Links

Save California Solar
California Solar & Storage Association
Utilities Blocking Rooftop Solar Article

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