What is Net Energy Metering (NEM)
Net metering (also known as net energy metering or NEM) is a solar incentive framework allowing you to store energy in the electric grid. Essentially, when a rooftop solar system of a residence or business generates more energy than consumed, the owners have the ability to sell the excess production back to utilities and receive credits to their monthly bills. Then, at night or other times when your solar panels are underproducing, you pull energy from the grid and use these credits to offset the costs of that energy.
History of NEM
As the solar industry has matured, multiple iterations of NEM have been implemented by the California Public Utilities Commission. First introduced In 2013, under NEM 1.0, solar owner could expect free enrollment and no mandatory time-of-use rate plans. Customers were grandfathered in under the current rules for 20 years, even if net metering changed in the future.
In January 2016, NEM 2.0 was adopted and reduced a number of financial benefits a solar customer could expect. Compared to NEM 1.0, customers are required to pay a grid-connection fee, estimated between $75 and $150 (this cost is currently $20-$50 per month under NEM 2.0), pay a monthly transmission fee, and requires that all residential solar customers be put onto a time-of-use (TOU) rate
As NEM 2.0 is set to expire, California finds itself in a battle regarding NEM 3.0 which may be implemented as early as January 2022. As history has shown with the previous versions of net metering, each iteration introduces far less benefits to solar customers.
Adding complexity to this situation is Assembly Bill AB 1139, that would further reduce the incentives for homeowners and businesses from adding rooftop solar systems in favor of the local utilities.
In the bill’s current iteration, solar customers would be grandfathered for up to ten years. This is significantly less than the current twenty-year grandfathering that NEM 1.0 and NEM 2.0 customers have expected based on current regulations. Your solar credits would now be reduced in value to a wholesale rate and customers would now be forced to pay a monthly flat fee based on their energy consumption.
Despite being defeated, this attempted bill shows that the utility companies have the power to sway even ardent pro solar advocates to do their bidding. One can assume that NEM 3.0 certainly wont be as consumer friendly as the current program, time to jump on the solar train today!
What does this mean for those with solar?
While the legality of AB 1139 will be debated over the next few months, you can expect that NEM 3.0 will favor the local utilities compared to the previous versions of net metering that will result in higher costs and lower incentives to solar customers. However, until those decisions are made, the framework and guarantees of NEM 2.0 are still in effect including the twenty-year grandfathering clause of current benefits.
Most homeowners do not realize it can take 1-4 months after a contact is signed to installation and PTO (Permission To Operate) with the utility company. Depending on the municipality you live in and the scope of the project. We are expecting much higher demand than normal for the second half of the year.