What is the California NEM 3.0, and How does it Affect Homeowners?

On 13th December 2021, The California Public Utilities Commission proposed a new solar Net Metering program proposal that will succeed the previous solar net-metering programs – dubbed the NEM 3.0. Although this proposal is still ineffective, solar system consumers have raised concerns about it. NEM 3.0 proposes a shift from a net-metering to a net-billing structure, setting the dollar value of credits on another level apart from the energy’s import price. Here are more details about California NEM 3.0 you should know about.

What is California NEM 3.0?

The California Public Utilities Commission (CPUC) proposed NEM 3.0 to adopt accurate signals that promote significant customer-sited storage. Under the proposal, the following changes will come into effect:

Allow Net Billing customers to increase their systems to a maximum of 150% of their historical loads to accommodate future vehicle and appliance electrification
Allow Net Billing of customers to rate with high differentials between the peak and off-peak prices to incent energy conservation or use stored solar energy during the net peak window that falls between 6 P.M. to 9 P.M.
Allow a monthly residential Grid Participation charge of $8 per kW of installed solar with exception to some low-income and tribal households based on their Grid Participation Charge
Create a four-year glide path for the solar industry through a monthly market transition
Set up to $600 Million Storage Evolution fund that provides storage benefits to the existing NEM 2.0 customers who will transit to California NEM 3.0 within the next four years by adding more storage systems and becoming more resilient to natural disasters and wildfires
Transit NEM 1.0 and 2.0 customers to NEM 3.0 after 15 years after being connected to the electricity grid, rather than the existing 20-year timeline

The four-year glide path proposes a maximum of $5.25 per kW except for residential solar-only systems and solar-plus-storage. This pricing will be locked for a maximum of ten years. The proposal also sets solar credits down to 25% a year for new customers, who will be locked in for up to 10 years.

What is the Basis of California NEM 3.0 Proposal?

The proposed California NEM 3.0 came from analyzing the high payment rates that hail from the existing NEM 1.0 and 2.0 customers. Typically, non-solar customers account for the money paid to solar-enabled consumers through the Net Metering program. According to a Next 10 report, non-solar customers will possibly account for up to $200 per year due to the existing NEM overpayments. As a result, multiple experts, including the Utilities Reform Network, arrived at a proposal under the NEM 3.0 to see significant changes in NEM policies.

What is the Solar Industry Reaction to this Proposal?

Incidentally, NEM 3.0 proposes a $57 per month solar penalty fee for an average residential solar system. This means that California will have the highest solar penalty fees in the country, despite the $15 per month credit that aims to offset the cost for at least ten years. The Save California Coalition has also aired its decision by claiming that the CPUC fell for-profit-grabbing proposal under the NEM 3.0 at the expense of energy consumers and California’s clean energy future. According to their statement, this proposal favors wealthy California residents at the expense of low and middle-income earners.

What’s Next with NEM 3.0?

The CPUC has proposed a 30-day public comment period, starting from 13th December 2021, which allows consumers to air their views about the proposal, awaiting the first CPUC meeting scheduled for 27th January 2022. Meanwhile, Solar Optimum can help you adhere to the terms of this new NEM proposal before it comes into effect. Contact us today, and let’s help you adjust to this proposal.