NEM 3.0: Is Solar Still Worth It In California?

California's new Net Energy Metering (NEM) 3.0 law is a significant change for the state's solar energy industry and for solar energy consumers.

The law, which goes into effect on April 13, 2023, replaces the previous NEM 2.0 program and includes several changes that will impact how solar energy is valued and compensated.

Under NEM 2.0, solar energy consumers were credited for the excess energy they generated at the retail rate, which was the same rate they paid for their energy.

This allowed solar energy consumers to offset the cost of their energy bills and, in some cases, even receive a credit on their bills.

NEM 3.0, on the other hand, changes the way excess solar energy is compensated. Instead of being credited at the retail rate, excess solar energy will now be credited at a lower-than-retail rate — this is what makes NEM 3.0 less appealing to prospective California solar customers.

Solar energy consumers in California will be subject to the new NEM 3.0 rates and regulations, when the new program goes into effect on April 13, 2023.

After this deadline, you will be subject to the new NEM 3.0 rates.

Net metering is a billing system that credits solar energy consumers for the excess energy they generate and send back to the grid. Under California's new Net Energy Metering (NEM) 3.0 law, which will go into effect on April 13, 2023, solar energy consumers will still be credited for their excess solar energy at an average rate of $0.08, down about 75% from an average of $0.30.

Under NEM 3.0, excess solar energy is credited at a rate that is lower than the retail rate. It also introduces a "time-of-use" rate structure, which adjusts the price of energy based on the time of day it is used.

This is intended to incentivize solar energy consumers to use more of their excess solar energy during times of high demand, when the price of energy is higher.

In addition, NEM 3.0 gives solar energy consumers the option to receive compensation for their excess solar energy in the form of a credit on their bill or as a payment.

So, while the way solar energy is compensated under net metering has changed with the implementation of NEM 3.0, net metering itself is not going away in California.

That being said, solar energy can still be a good investment for many homeowners in California, as the state has strong solar incentives and abundant sunshine, which makes it easier for solar panels to generate electricity.

Especially if California residents quickly apply for solar, before the April 2023 deadline to be grandfathered into NEM 2.0.

Regardless, NEM 3.0 does also includes some benefits for solar energy consumers.

For example, under NEM 3.0, solar energy consumers will have the option to receive compensation for their excess solar energy in the form of a credit on their bill or as a payment.

This will give solar energy consumers more flexibility in how they choose to use their excess solar energy.

Another change included in NEM 3.0 is the introduction of a "time-of-use" rate structure, which adjusts the price of energy based on the time of day it is used.

This is intended to incentivize solar energy consumers to use more of their excess solar energy during times of high demand, when the price of energy is higher.

1. Shop around and get multiple quotes: It's important to shop around and get quotes from multiple solar energy companies to ensure you are getting the best deal. Don't be afraid to negotiate and ask questions about the specifics of the quote, such as the type of panels and inverters being offered.

2. Look into financing options: There are a number of financing options available for solar energy systems, including loans, leases, and power purchase agreements. Carefully consider the pros and cons of each option to determine which one is best for you.

3. Check for local solar incentives: Many states and localities offer incentives for solar energy, such as tax credits and rebates. Be sure to check what incentives are available in your area and factor them into your decision-making process.

4. Consider the long-term: Solar energy systems are a long-term investment, so it's important to consider the long-term costs and benefits. Look for a solar energy system with a good warranty and consider the anticipated maintenance costs over the lifetime of the system.

5. Hire a reputable solar energy company: It's important to work with a reputable solar energy company that has a track record of success and customer satisfaction. Be sure to do your research and read reviews before making a decision.